Contributory Cybersquatting Liability Exists but Not in Petroliam Nasional Berhad v. GoDaddy

In Petroliam Nasional Berhad v. GoDaddy.com, Inc., Petronas, the national oil company for Malaysia alleged a claim for contributory cybersquatting against GoDaddy, a domain name registrar. Cybersquatting is “the bad faith registration of a domain name that is identical or confusingly similar to another’s distinctive mark.”

Domain name registrars act as intermediaries between the party registering the domain name and the registries that maintain a master list of all domain names.  They are accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization that manages domain names and Internet Protocol addresses. GoDaddy is required to follow ICANN rules, including “maintain[ing] the status quo during a domain name dispute until receipt of directions from the registrant, an order from a court or arbitral tribunal, or the decision of an administrative panel.”

Petronas uses the domain names petronas.com.my and petronastwintowers.com.my. Registrant Heiko Schoenekess registered the domain names petronastower.net and petronastowers.net using GoDaddy. He also used GoDaddy’s “dashboard” interface to forward internet traffic from these two websites to the same porn website.

At first, Petronas only discovered  petronastower.net.  Petronas sent GoDaddy notice of the unauthorized use of its mark. GoDaddy responded by advising Petronas that “any disputes over ownership or wording of the domain name itself will need to be sent to either the registrant through an arbitration forum such as World Intellectual Property Organization….or the local court system.” Instead of using arbitration, Petronas filed a trademark claim to GoDaddy. Later, Petronas discovered the other website and sent a similar claim to GoDaddy again.

Petronas then filed two in rem actions against Petronastower.net and Petronstowers.net, meaning Petronas filed action against the domain name itself instead of the party who owns it. The court granted Petronas ownership.

Petronas also filed a complaint against GoDaddy in the Northern District of California, asserting contributory liability for cybersquatting. Both parties moved for summary judgment on this claim.

GoDaddy argued that a contributory cybersquatting claim does not exist. The court disagreed. The court relied on other district courts that have found “the ACPA [Anti-Cybersquatting Consumer Protection Act] was enacted  against the settled common law theories of contributory liability in the trademark context [and therefore] a judicially-created claim of contributory cybersquatting [is] valid.”

However, the district court did not agree that GoDaddy was liable for contributory cybersquatting. In Perfect 10 v. Visa, the Ninth Circuit held that contributory trademark infringement occurs when “one has knowledge of another’s infringement, and either materially contributes to or induces that infringement.” There must be direct infringement as well.

GoDaddy contends that it did not have knowledge or imputed knowledge that there was bad faith intent to profit from Petronas’ mark.  The court agreed. It relied on the fact that domain name forwarding is a form of routing and that “[p]ermitting a contributory cybersquatting claim based on a forwarding service cannot be squared with the Ninth Circuit’s rejection of such a claim based on the same conduct in the context of traditional trademark infringement.” Further, routing “cannot be considered the type of direct control over the use of the mark that is required for the application of secondary liability principles.”

Most significant to the court was the fact that Petronas could not establish the registrant’s bad faith intent to profit from the mark. Bad faith cannot be “infer[red].” Therefore, even direct cybersquatting could not be established with the registrant.

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