WO
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA IFIXITUSA LLC; and Sarkes Mrkdichian LLC, No. CV-21-00887-PHX-DGC
Plaintiffs, ORDER v.
iFixit Corporation,
Defendant. This case involves a dispute over the internet domain names IFIXITUSA.com and IFIXITUSABUSINESS.com. Plaintiffs IFIXITUSA LLC and Sarkes Mrkdichian LLC brought this action to halt the transfer of those domain names to Defendant iFixit.
Defendant moves to dismiss Plaintiffs’ second amended complaint. Docs. 28, 33. The motion is fully briefed (Docs. 34, 35), and neither side requests oral argument. For reasons stated below, the Court will grant the motion in part and deny it in part. I. Background.
In 2007, Defendant federally registered the “IFIXIT” trademark in connection with an online store featuring computers, related accessories, and electronic instruction and repair manuals. See Doc. 28 ¶¶ 6-8; U.S. Patent and Trademark Office, Trademark Elec. Search Sys. , https://tmsearch.uspto.gov/bin/showfield?f=doc&state=4805:nlo65e.2.7 (last visited May 28, 2022). [1] Plaintiffs registered the domain names with GoDaddy.com – IFIXITUSA.com in 2016 and IFIXITUSABUSINESS.com in 2020. Doc. 28 ¶ 33; Internet Corp. for Assigned Names and Numbers, Registration Data Lookup Tool , https://lookup. icann.org/en/lookup (last visited May 28, 2022).
After learning of the domain names in early 2021, Defendant initiated a domain
name transfer proceeding with the World Intellectual Property Organization (“WIPO”), a
United Nations agency that provides domain name dispute resolution pursuant to the
Uniform Dispute Resolution Policy (“UDRP”). Doc. 28 ¶¶ 3, 22;
see Baklan v. All Answers
Ltd.
, No. CV-20-00707-PHX-JZB,
Plaintiffs brought this action on May 18, 2021, asserting claims under the Anticybersquatting Consumer Protection Act (“ACPA”), Pub. L. No. 106-113, §§ 3001-10, 113 Stat. 1501 (1999). The ACPA amended the Lanham Act, 15 U.S.C. § 1051 et seq., which “protects the use of trademarks in interstate and foreign commerce.” Shenzhen Big Mouth Techs. Co. v. Factory Direct Wholesale, LLC , No. 21-CV-09545-RS, 2022 WL 1016666, at *3 (N.D. Cal. Apr. 5, 2022). The ACPA is codified in scattered sections of Title 15 of the United States Code, including 15 U.S.C. §§ 1114(2)(D) and 1125(d). See Mira Holdings, Inc. v. Regents of Univ. of Cal. , No. 6:18-cv-190-Orl-37GJK, 2018 WL 8244597, at *3 n.1 (M.D. Fla. Dec. 10, 2018).
A primary purpose of the ACPA is “to provide clarity in the law for trademark
owners by prohibiting the bad-faith and abusive registration of distinctive marks as Internet
domain names with the intent to profit from the goodwill associated with such marks – a
practice commonly referred to as ‘cybersquatting.’” S. Rep. No. 106-140, at 4 (1999). To
balance the rights given to trademark owners against cybersquatters, the ACPA also
provides some protection to domain name registrants against “overreaching trademark
owners.”
Id.
at 11;
see
15 U.S.C. §§ 1114(2)(D)(iv)-(v). Under § 1114(2)(D)(iv), a domain
name registrant may sue a trademark owner for making certain material misrepresentations
in the domain name dispute proceeding.
See Shenzhen
,
Count one of the second amended complaint seeks a declaration that Plaintiffs’ registration and use of the IFIXITUSA.com and IFIXITUSABUSINESS.com domain names are not unlawful under § 1125(d)(1). Doc. 28 ¶¶ 48-70; see § 1114(2)(D)(v). Count two seeks relief under the Declaratory Judgment Act, 28 U.S.C. § 2201. Doc. 28 ¶¶ 71-77. Count three claims that Defendant has engaged in “reverse domain name hijacking” under § 1114(2)(D)(iv) by misleading the WIPO into issuing the transfer order. Id. ¶¶ 78-96. Count four seeks an injunction against the pending transfer under § 1114(2)(D). ¶¶ 97-99. Defendant moves to dismiss each claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 33.
II. Rule 12(b)(6) Standard.
Under Rule 12(b)(6), the factual allegations of the complaint are taken as true and
construed in the light most favorable to the plaintiff.
See Bell Atl. Corp. v. Twombly
, 550
U.S. 544, 556 (2007);
Cousins v. Lockyer
, 568 F.3d 1063, 1067 (9th Cir. 2009). A
complaint that sets forth a cognizable legal theory will survive a motion to dismiss if it
contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”
Ashcroft v. Iqbal
,
III. Count One – Declaratory Relief Under the ACPA.
Section 1114(2)(D)(v) of the ACPA provides that “[a] domain name registrant
whose domain name has been suspended, disabled, or transferred . . . may, upon notice to
the mark owner, file a civil action to establish that the registration or use of the domain
name by such registrant is not unlawful under this chapter.” The parties do not dispute that
Plaintiffs registered the domain names IFIXITUSA.com and IFIXITUSABUSINESS.com
with GoDaddy.com, that those domain names essentially have been transferred to
Defendant per the WIPO order, or that Plaintiffs provided notice to Defendant before
bringing this action. Thus, the relevant question for count one is whether the complaint
sufficiently alleges that Plaintiff’s registration and use of the domain names is not unlawful
under the ACPA’s cyberpiracy prevention clause, § 1125(d)(1).
See
Doc. 28 ¶ 49;
AIRFX.com v. AirFX LLC
, No. CV 11-01064-PHX-FJM, 2012 WL 3638721, at *6 (D.
Ariz. Aug. 24, 2012) (discussing the elements of a claim under § 1114(2)(D)(v)));
Strong
Coll. Students Moving Inc. v. Coll. Hunks Hauling Junk Franchising LLC
, No. CV-12-
01156-PHX-DJH,
To show that their conduct is not unlawful under § 1125(d)(1), Plaintiffs must “prove either (1) they did not register, traffic, or use a domain name that is identical or confusingly similar to a distinctive mark, or (2) they did not have a bad faith intent to profit from that mark.” Strong Coll. Students Moving , 2015 WL 12602438, at *8 (citing § 1125(d)(1)(A)(i)-(ii)); see also Mira Holdings , 2018 WL 8244597, at *3 (“If the registrant ‘has a bad faith intent to profit’ from an owner’s mark and registers a domain name that ‘is identical or confusingly similar’ to a mark distinctive at the time the registrant registered the domain name, such is considered unlawful under the ACPA.”) (citing § 1125(d)(1)(A)(i)-(ii)); GoPets Ltd. v. Hise , 657 F.3d 1024, 1030 (9th Cir. 2011) (“To prevail on its ACPA claim, GoPets Ltd. must show (1) registration of a domain name, (2) that was ‘identical or confusingly similar to’ a mark that was distinctive at the time of registration, and (3) ‘bad faith intent’ at the time of registration.”) (quoting § 1125(d)(1)); Lahoti v. VeriCheck, Inc. , 586 F.3d 1190, 1197, 1202 (9th Cir. 2009) (noting that distinctiveness and bad faith are required to sustain an ACPA claim).
Defendant contends that count one fails to plead facts showing that the IFIXIT mark is not distinctive and that Plaintiffs have not acted in bad faith. Docs. 33 at 4-7, 35 at 1-6. According to Defendant, the allegations supporting count one are either irrelevant or merely recite the statutory elements without specific facts necessary to state a plausible claim under modern pleading standards. at 4-7. The Court does not agree.
A. Distinctiveness.
As noted, Plaintiffs can establish that they have not violated § 1125(d)(1) by
showing that the IFIXIT mark is not distinctive.
See Strong Coll. Students Moving
, 2015
WL 12602438, at *8. The complaint alleges that “I fix it, U fix it, we fix it, fix it, I fix, or
almost any combination of these words are not distinctive terms [and] instead are
[descriptive terms] commonly used to describe a business’s goods or services.” Doc. 28
¶¶ 38-39. The complaint further alleges that Defendant’s IFIXIT mark “is descriptive,
[and] is definitely not distinctive.”
Id.
¶ 16. Taking these allegations as true, as required
on a motion to dismiss,
see Twombly
,
Defendant asserts that the validly registered IFIXIT mark is “presumed to be
distinctive[.]” Doc. 33 at 5 (quoting
E. & J. Gallo Winery v. Consorzio del Gallo Nero
,
B. Bad Faith.
Section 1125(d)(1) “enumerates nine nonexclusive factors for courts to consider in
determining whether bad faith exists.”
Lahoti
,
Plaintiffs address several factors in the complaint, alleging that: (1) Plaintiffs have
priority and superior rights to the IFIXITUSA and IFIXITUSABUSINESS marks for
online stores featuring computers (Doc. 28 ¶ 60); (2) the domain names IFIXITUSA.com
and IFIXITUSABUSINESS.com do not include a personal name (
id.
¶ 57); (3) Plaintiffs
have used the domain names for the bona fide offering of goods and services (
id.
¶¶ 36, 45,
61-62); (4) Plaintiffs have made no attempt to disparage Defendant or divert its consumers,
and Plaintiffs’ use of the domain names is not likely to cause consumer confusion (
id.
¶¶ 43, 63, 67); (5) Plaintiffs have never offered to sell the domain names (
id.
¶ 44);
(6) Plaintiffs did not attempt to mislead or provide false contact information when they
registered the domain names (
id.
¶ 68); and (7) the IFIXIT mark is not distinctive (
id.
¶¶ 16, 39).
See
§ 1125(d)(1)(B)(i)(I)-(III), (V)-(VII), (IX). The complaint further alleges
that Plaintiffs have never tried to profit from the IFIXIT mark. Doc. 28 ¶ 53. Accepting
these allegations as true and construing them in the light most favorable to Plaintiffs,
see
Cousins
,
Defendant notes that the complaint lacks certain factual details that Plaintiffs could
have alleged, such as the goods and services Plaintiffs offered when using the domain
names and the contact information Plaintiffs provided to GoDaddy when they registered
the domain names. Doc. 33 at 6. But while Rule 8’s pleading standard “demands more
than an unadorned, the-defendant-unlawfully-harmed-me accusation,” it “does not require
‘detailed factual allegations[.]’”
Iqbal
, 556 U.S. at 678 (quoting
Twombly
, 550 U.S.
at 555);
see Clemens v. DaimlerChrysler Corp.
,
Defendant further asserts that the complaint provides no details that go beyond a
formulaic recitation of the statutory criteria, noting that Plaintiffs merely allege that they
“have never tried to profit from the [IFIXIT mark]” (Doc. 28 ¶ 53), “have made no attempt
to divert consumers” from Defendant (
id.
¶ 63), and “have made no attempt to disparage”
Defendant (
id.
¶ 67). Doc. 33 at 6. To be sure, the complaint could have provided greater
detail. “But it is hard to plead a negative with great specificity; that there was no [intent to
profit from the IFIXIT mark] is about as precise as one could be.”
Santarlas v. Atchley
,
No. 8:15-CV-374-T-23TBM,
Defendant’s reliance on
Stephens v. Trump Organization LLC
,
C. Conclusion.
The Court concludes that the allegations of Plaintiff’s complaint “possess enough
heft” to “nudge[] their [ACPA claim] across the line from conceivable to plausible[.]”
Twombly
,
IV. Count Two – Declaratory Judgment Under 28 U.S.C. § 2201.
Count two seeks relief under the Declaratory Judgment Act, 28 U.S.C. § 2201. Doc. 28 ¶¶ 71-77. The Act provides that “[i]n a case of actual controversy within its jurisdiction,” a federal court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a).
Defendant contends that count two should be dismissed to the extent it seeks the
same declaratory relief requested in the ACPA claims because count two would serve “no
useful purpose.” Doc. 33 at 7-8 (quoting
Adelman v. Rheem Mfg. Co.
, No. 15-cv-00190,
“The existence of another adequate remedy does not preclude a declaratory
judgment [under § 2201] that is otherwise appropriate.”
Kam-Ko Bio-Pharm Trading Co.
Ltd-Australasia v. Mayne Pharma (USA) Inc.
,
Defendant cites
Sallen v. Corinthians Licenciamentos LTDA
,
The Court cannot conclude from the face of the complaint that the declaratory relief
sought in count two is inappropriate or will serve no useful purpose.
See Shin
, 2021 WL
6117508, at *6 (noting that a declaratory judgment under § 2201 may be appropriate “when
it will terminate and afford relief from the uncertainty, insecurity, and controversy giving
rise to the proceeding”) (quoting
McGraw-Edison Co. v. Preformed Line Prods. Co.
, 362
F.2d 339, 342 (9th Cir. 1966));
Ricks v. BMEzine.com
, LLC,
/ / /
V. Count Three – Reverse Domain Name Hijacking Under § 1114(2)(D)(iv).
Count three claims that Defendant has engaged in reverse domain name hijacking under § 1114(2)(D)(iv) by misleading the WIPO into issuing the transfer order. Doc. 28 ¶¶ 78-96. Section 1114(2)(D)(iv) requires a showing that “the defendant (1) made a ‘knowing and material misrepresentation . . . that a domain name is identical to, confusingly similar to, or dilutive of a mark’ and (2) this misrepresentation caused a registration authority to transfer, disable, or cancel the domain name.” Shenzhen Big Mouth Techs. , 2022 WL 1016666, at *3; see Dent , 2018 WL 11318189, at *2 (same). Defendant argues that the complaint contains no allegations of a knowing and material misrepresentation to the WIPO that caused it to transfer the domain names to Defendant. Docs. 33 at 9-12, 35 at 7-9.
The complaint alleges that Defendant made certain misrepresentations to the WIPO and omitted other material facts. Specifically, the complaint alleges that Defendant misrepresented that (1) it had received reports of actual consumer confusion between the IFIXIT mark and Plaintiffs’ website (Doc. 28 ¶ 58), and (2) it has regularly sold computers since 2006, presenting a fabricated receipt in support ( id. ¶¶ 64, 86). The complaint further alleges that Defendant failed to disclose that the IFIXIT mark was in the process of being cancelled ( id. ¶¶ 31, 52, 83) and that the parties have been doing business together since 2017 ( id. ¶ 85).
Even if the alleged misrepresentations were knowing and material, § 1114(2)(D)(iv)
“includes a causation requirement. The transfer must be ‘based on’ the knowing and
material misrepresentation.”
ISystems v. Spark Networks Ltd.
, No. 3:08-CV-1175-N, 2014
WL 12714837, at *4 (N.D. Tex. Sept. 19, 2014). Nowhere in the complaint do Plaintiffs
allege that the WIPO decision to transfer the domain names to Defendant was based on the
alleged misrepresentations or caused by any omission.
See
Doc. 33 at 11-12.
[4]
While
Plaintiffs provide “many reasons why the WIPO panel may have made a poor decision,
[their] burden in pleading a reverse domain name hijacking claim is to establish that
WIPO’s poor decision was made based on Defendant’s knowing and material
misrepresentation.”
Baklan
,
Count four seeks an injunction prohibiting the transfer of the domain names pursuant to § 1114(2)(D). Doc. 28 ¶¶ 97-99. That provision of the ACPA states that “[t]he court may grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant.” § 1114(2)(D)(iv)-(v). [6]
Noting that count four merely cites § 1114(2)(D)’s allowance for injunctive relief, Defendant suggests that the Court should not “consider[] all of the other allegations in the complaint[.]” Doc. 33 at 15. But count four permissibly incorporates those allegations. Doc. 28 ¶ 97. The Court cannot simply ignore them.
Defendant asserts that count four should be dismissed because count one does not plausibly allege that Plaintiffs’ use of the domain names is lawful. Doc. 33 at 15. Because count one survives dismissal, the Court will deny the motion to dismiss count four. [7] / / /
/ / /
VII. Leave to Amend.
Plaintiffs note that the Court should grant leave to amend when justice so requires.
Doc. 34 at 16 (citing Fed. R. Civ. P. 15(a)). But Plaintiffs do not address the relevant
factors for leave to amend,
see Foman v. Davis
,
IT IS ORDERED:
1. Defendant’s motion to dismiss (Doc. 33) is granted on count three of the second amended complaint and denied with respect to counts one, two, and four.
2. The Court will set a Rule 16 case management conference by separate order. Dated this 13th day of June, 2022.
Notes
[1] In August 2020, a company owned by Sarkes Mrkdichian initiated a proceeding to cancel the IFIXIT mark. See Doc. 28 ¶¶ 11-12, 50; U.S. Patent and Trademark Office, Trademark Trial and Appeal Bd. Inquiry Sys. , https://ttabvue.uspto.gov/ttabvue/v?pno= 92075129 (last visited May 28, 2022). That proceeding is still pending. See id. ; Doc. 33 at 2.
[2] The WIPO panel concluded that the domain names were confusingly similar to the
IFIXIT mark, Plaintiffs had no right or legitimate interest in them, and Plaintiffs had
registered them in bad faith.
See id.
§ 7(A)-(C). The WIPO decision “is not accorded
deference on the merits in [this] federal court.”
Dent v. Lotto Sport Italia SpA
, No. CV-
17-00651-PHX-DMF,
[3] Because the ACPA claim asserted in count one survives dismissal and creates an actual controversy within the Court’s jurisdiction, see § 2201(a), the Court need not address whether a request for relief under the Declaratory Judgment Act can be brought as a standalone claim. See Docs. 33 at 8, 34 at 9.
[4] While the WIPO decision is not accorded deference, it is worth noting, as a factual matter, that the WIPO panel was aware of the proceedings to cancel the IFIXIT mark, and noted that while Defendant had claimed to receive reports of consumer confusion, it “provided no evidence of such alleged confusion.” See iFixit , No. D2021-0381, § 8.
[5] Given this ruling, the Court need not address Defendant’s argument that Plaintiffs were required to plead fraud in the WIPO proceedings with specificity. See Doc. 33 at 13-14 (citing Fed. R. Civ. P. 9(b)).
[6] The heading of count four cites § 1114(2)(D)(v) (Doc. 28 at 15), but injunctive relief is also available under § 1114(2)(D)(iv).
[7] Defendant’s request for an award of attorneys’ fees ( id. at 16-17) is denied.