DSPT International, Inc. v. Nahum, No. 08-55062 (9^th Cir. Oct. 27, 2010).

 

In 1999, Paolo Dorigo, owner of DSPT International, a designer, manufacturer and importer of men's clothing, brought his friend Lucky Nahum into the business.  They decided to create a website at which DSPT could show its clothes and to have Nahum's brother create the website at the domain name <eq-italy.com>.  Nahum registered the domain name in his own name.  Over time, the website's importance to DSPT's business grew.

 

In 2005 Nahum's relationship with Dorigo soured.  Nahum's contact with DSPT was up for renewal in 2005 and Dorigo sent him a proposal for renewing their relationship.  DSPT also paid for Nahum to attend the West Coast Exclusive Wear show in Las Vegas where he spent time in a competitor's booth and arranged for employment with a competitor.  At the beginning of October, DSPT's website disappeared and was replaced with a page directing fashion related questions to be directed to Nahum.  Due to the importance of the website to DSPT's business, this created a crisis for DSPT's business.  DSPT asked Nahum to transfer the domain name, but he refused, claiming that DSPT owed him commissions.  Nahum's new employer eventually testified that Nahum had explained that DSPT wanted the domain name back but that he was keeping it as leverage to recover the commissions owed to him.

 

DSPT sued Nahum for cybersquatting and related claims.  A jury found in DSPT's favor and Nahum appealed, arguing that the Anti-Cybersquatting Consumer Protection Act had no application to this case.  According to Nahum, the ACPA did not apply because he did not register the domain name in bad faith.  The appellate court explained that while the intent of the ACPA was "to prevent cybersquatters from registering well-known brand names as internet domain names in order to make the trademark owners buy the ability to do business under their own names," the language of the statute was broad enough encompass Nahum's conduct.  The appellate court explained that under the terms of the ACPA, registration, trafficking in or use of a domain name in bad faith is actionable (this is in contrast to the Uniform Domain Name Dispute Resolution Policy, which requires registration and use of a domain name in bad faith before a transfer will be ordered).  Here, since Nahum had used the domain name to gain leverage in his discussions with DSPT, the appellate court found that the facts showed that Nahum had used the domain name in bad faith, since he could not have reasonably believed that he could legitimately believed that he could lawfully use the domain name once he stopped working for DSPT.  The appellate court further found that holding the domain name for ransom was use of the domain name in bad faith because it showed that Nahum intended to profit from the domain name, even if only by recovering the disputed commissions.