Cybersquatting UDRP Domain Hijacking case updates 2019

Irving Materials, Inc. committed domain hijacking by filing a baseless UDRP complaint against in 2017. The UDRP froze the domain name and caused Jeffrey Black huge business losses.

Irving has caused significant harm to Mr. Black and to his International Monetary Investments business formed in 2016. Upon Irving’s filing of its UDRP complaint in 2017, Mr. Black’s domain registration was frozen per the procedural rules of the UDRP, such that he could not make changes to his website. (Findings, p.13; 6/10/19 Tr. at 252:23–253:2; 6/11/19 Tr. at 301:22–302:1.) Freezing of the domain was thus an automatic consequence of the UDRP filing, and certainly Irving and its counsel knew or should have known that would happen. Moreover, the filing of the complaint, accusing Mr. Black of cybersquatting, caused a venture capitalist to withdraw $10 million in funding for his business. (Findings, p.13; 6/11/19 Transcript at 310:10–311:7.)

Loss of the investment was foreseeable, and would have been known if Irving’s counsel had engaged in even minimal pre-filing diligence whatsoever, such as contacting Mr. BLACK’S MOTION FOR ATTORNEYS’ FEES 5 Case No. 5:17-cv-06734-LHK Black before publicly shaming him as an alleged cybersquatter — and costing him a lot of money to pay reasonable attorneys’ fees.

It is highly unusual to file a UDRP or any other trademark complaint without contacting the defendant first in an effort to gain voluntary compliance; i.e., a “cease and desist” notice. But Irving didn’t bother to even try, instead they just filed a reckless complaint and let the chips fall where they may — causing significant and wholly unjustified harm to Mr. Black and his business. And all for what? Irving produced zero evidence of any harm to itself or its customers — it just wanted a “more consistent” online brand experience.

Court: N.D.Cal. | Civil Action #: 5:17-cv-06734-LHK | Docket: 201

UDRP Order for Domain Hijacking

The UDRP panelist, The Honourable Neil Anthony Brown QC, failed to critically examine the complaint for inconsistencies and found that Jeffrey Black registered and used it in “Bad Faith” in his conclusory statement:

Finally, in addition and having regard to the totality of the evidence, the Panel finds that, in view of Respondent’s registration of the disputed domain name using the IMI mark and in view of the conduct that Respondent engaged in when using it, Respondent registered and used the disputed domain name in bad faith within the generally accepted meaning of that expression.
Complainant has thus made out the third of the three elements that it must establish.

The UDRP panelist Ordered that the domain name be TRANSFERRED from Respondent to Complainant on November 7, 2017.

ACPA Case to Get Domain Back

In response, Jeffrey Black promptly filed a Complaint in a Federal District court in the Northern District of California, on his own (In Pro Per – although, it looked like someone with legal training helped him write it based on a template.) In March 2018 Mr. Black filed a first amended Complaint before serving it on Irving Materials.

Mediation Didn’t Work For Domain Hijacking

The judge initially ordered that the parties try to mediate the dispute. Unsurprisingly, mediation didn’t work. (Mediation only works if you want a few bucks and you give away your domain name. In my experience, it’s a complete waste of money.)

Summary Judgment Motions for Reverse Domain Hijacking

The case heated up in January 2019. In May 2019, both sides filed motions for summary judgment.

Afterwards, there was a trial on an issue of fact and Irving failed to file any evidence of harm or losses because of Jeffrey Black’s 1994 domain registration of

[Stay tuned for more analysis on the issues briefed and the Judge’s rulings.]

Findings at the Domain Hijacking Trial

At trial,

Irving did not come close to proving that it owned a distinctive mark in 1994, as it was clearly required to do by the plain language of the cybersquatting statute. As the Court held: “Irving failed to produce any evidence showing consumer perception of the mark as of 1994, such as consumer surveys…. Irving further failed to produce evidence concerning the effectiveness or reach of its advertising.” (Findings, p.27 (citations omitted).) Thus, Irving wholly failed to prove the first substantial element of its claim.

Irving also failed to prove that any of the nine factors of the ACPA “bad faith” analysis weighed in its favor. (Findings, p.27-33.) Irving’s sole evidence of bad faith was the “for sale” page that Mr. Black posted behind the directory from 2002 to 2017. (Findings, p.15.) But that could not serve as evidence of bad faith under the ACPA, as it was clear that the domain name previously had been used in the bona fide offering of services. (See Findings, p.25 (factor VI).) That was clear from Irving’s discussion with Mr. Black in 1998. (See Findings, p.7; 6/10/19 Tr. 242:2-243:7 (Black to Howard: “ My business is called Internet Marketing, Inc. It’s still running….); BX-12 (memo outlining switching costs, discussed with Irving).) That was further proved by Irving’s knowledge that Internet Marketing, Inc. was an incorporated business with a live public website and email addresses at Indeed, and so that entity was named as a defendant in the draft federal lawsuit sent by Irving’s lawyers in 1998. (JX-6.)

Thus, Irving did not come close to proving either of the substantive elements of its ACPA counterclaim. Instead, Irving admitted that its sole purpose was not to alleviate consumer confusion as the Lanham Act is intended to do, but instead to take Mr. Black’s property through legal process in order to use it in Irving’s business “to make sure our brand is consistent”. (Findings, p.11; 6/11/19 Tr. at 503:24-504:6.) Such motivation is not legitimate, by any stretch of the imagination. Irving has caused grievous harm to Mr. Black. Mr. Black deserves to be compensated for his reasonable attorneys’ fees in beating back Irving’s illegitimate crusade to steal Mr. Black’s property. Such an award will certainly deter Irving from any such future conduct, and also would serve as a stark deterrent to other overreaching, abusive trademark owners. That was precisely the intent of the ‘reverse domain name hijacking’ provisions of the ACPA.

ACPA Legal Fees

Jeffrey Black’s 3 lawyers billed him a total of $480,843 in hourly billings in 2019 for his ACPA case that he initially filed Pro Per!

So Mr. Black spent $481,000+ to get $100,000 in damages on a domain that he was trying sell for $2,000,000 plus. Was it worth the risk?

Is This Exceptional Case, Where Mr. Black is Entitled to Recover His Reasonable Attorneys’ Fees as the Prevailing Party?

The Lanham Act provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). The Ninth Circuit has held that fees for claims brought under the ACPA are recoverable under this Section. Lahoti v. Vericheck, Inc., 636 F.3d 501, 510 (9th Cir. 2011) (affirming fee award); cited in, v. AirFX, LLC, 2013 WL 857976 at *3 (D. Ariz. Mar. 7, 2013) (finding cybersquatting counterclaim “groundless and unreasonable”, even after counterclaimant had won UDRP decision, and thus awarding fees under Section 1117(a) — “It was unreasonable for defendant to pursue its ACPA counterclaim once it discovered that was originally registered before the AirFX mark.”).

In 2014, the Supreme Court interpreted the “exceptional case” language to mean a “[case] that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). The Supreme Court further elaborated that “there is no precise rule or formula for making these determinations, but instead equitable discretion should be exercised in light of the considerations we have identified.” Id. (quoting Fogerty v. Fantasy, Inc., 510 U.S 517, 534 (1994) (internal quotations omitted). The Supreme Court additionally identified a number of factors that may be analyzed in determining whether a case is “exceptional” — including “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at n.6. (quoting Fogerty, 510 U.S. at 534).

While the Octane Fitness case specifically dealt with the award of fees in a patent dispute, the Ninth Circuit has adopted the holding to apply to the fee-shifting provision of the Lanham Act. SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1180–81 (9th Cir. 2016) (en banc). The Ninth Circuit held that “district courts analyzing a request for fees under the Lanham Act should examine the ‘totality of the circumstances’ to determine if the case [is] exceptional, exercising equitable discretion in light of the nonexclusive factors identified in Octane Fitness and Fogerty, and using a preponderance of the evidence standard.” Id.

As Judge Orrick has held:
Octane Fitness changed the standard and that change entails a “more relaxed” approach. See SunEarth, 839 F.3d 1179, 1181 (“Octane Fitness and Highmark have altered the analysis of fee applications under the Lanham Act”) (emphasis added); Amusement Art, LLC v. Life is Beautiful, LLC, 2017 WL 2259672, at *3 (C.D. Cal. May 23, 2017) (referring to Octane Fitness as a “more relaxed standard[ ]”); ThermoLife Int’l, LLC v. Myogenix Corp., 2017 WL 1235766, at *3 (S.D. Cal. Apr. 4, 2017) (“Under the new analysis, a case may warrant a fee award if the litigation is brought in subjective bad faith, or if the litigation is objectively baseless—both are no longer required.”) (emphasis in original).

Sazerac Co., Inc.,. v. Fetzer Vineyards, Inc., 2017 WL 6059271 at *4 (N.D. Cal. Dec. 7, 2017) (awarding fees as Plaintiff failed to prove trademark distinctiveness or any irreparable harm).

Finally, “[o]nce a prevailing party establishes its right to recover fees, the district court must determine whether the amount requested is reasonable.” E.g., Sazerac Co.,2017 WL 6059271 at *3.

Local Rule 54-5 sets forth the evidentiary support required for this motion, included in the Declaration of Mike Rodenbaugh, filed herewith. That includes a summary of the work performed in this case by Mr. Black’s attorneys, their experience and their billing rates which are certainly reasonable in this District. Complete Rodenbaugh Law time records can be provided in camera at the Court’s request. Notably, Mr. Black’s attorneys’ billing rates are far lower than opposing counsel’s billing rates. (See Dkt #47-2, p.5, stating Ms. Wirtschafter’s rate of $545/hr. — higher than Mr. Rodenbaugh’s rate, though he has 18 more years experience.)
Undoubtedly, total billings to Mr. Black in this case are far, far lower than those charged to Irving by Reed Smith, and thus should be deemed reasonable given that Mr. Black prevailed on all claims at trial.

Court: N.D.Cal. | Civil Action #: 5:17-cv-06734-LHK | Docket: 201

Stay tuned for more analysis on this case.