In Harrods Ltd. v. Sixty Internet Domain Names, the United States Court of Appeals for the Fourth Circuit unanimously held that the in rem provisions of the Anticybersquatting Consumer Protection Act (“ACPA”) are not limited to claims for bad faith registration of domain names, but also include trademark infringement and dilution claims. Other courts that had previously addressed this issue had reached the opposite conclusion. As a result, trademark owners who are unable to obtain jurisdiction over a domain name registrant, who has registered a domain name with a registry or registrar in the Fourth Circuit, such as Network Solutions, Inc., may now assert infringement or dilution claims in an in rem proceeding against the domain name under the ACPA.

The case arose out of a dispute between Harrods Limited (“Harrods UK”), the owner of the Harrods department store in London and Harrods (Buenos Aires) Limited (“Harrods BA”), a company that was formerly a wholly-owned subsidiary of Harrods UK but is now a separate entity that until recently operated a Harrods store in Buenos Aires, Argentina. Harrods BA registered the trademark HARRODS in a number of South American countries, including Argentina, Brazil, Paraguay and Venezuela. Harrods UK has the exclusive right to the mark HARRODS throughout the rest of the world, including the United States. In 1999, Harrods UK registered the domain name harrods.com and began selling merchandise through an online retail store in November of that year. Also in late 1999, Harrods BA began registering approximately 300 Harrods-formative domain names.

On February 16, 2000, Harrods UK commenced an in rem action in the United States District Court for the Eastern District of Virginia against sixty different harrods-related domain names that were registered by Harrods BA (the “Domain Names”) and also asserted claims for trademark infringement and dilution. Initially, the district court dismissed the complaint because Harrods UK had failed to allege bad faith and because the ACPA’s in rem provisions did not authorize claims for trademark infringement and dilution. The court, however, permitted Harrods UK to file an amended complaint in which it alleged bad faith, but dismissed with prejudice the trademark infringement and dilution claims.

Thereafter, on October 6, 2001, the district court granted partial summary judgment in favor of the following six domain names: harrodsargentina.com, harrodsargentina.net, harrodsargentina.org, harrodsbuenosaires.com, harrodsbuenosaires.net and harrodsbuenosaires.org. The court relied upon a decision in another proceeding in which that court found that Harrods BA had an implied right to use the Harrods mark in South America. As such, since these six domain names contained the name of Harrods BA or described the location where its business was located, namely, Argentina, they were not registered in bad faith. The case proceeded to trial with respect to the remaining 54 names. After a bench trial, the district court entered judgment in favor of Harrods UK, finding that those domain names were registered in bad faith and directed that the 54 domain names be transferred to Harrods UK. Both sides appealed.

The Fourth Circuit reversed the district court, holding that the district court had improperly dismissed Harrods UK’s claims for trademark infringement and dilution under the in rem provisions of the ACPA. The relevant language in the ACPA is set forth in 15 U.S.C. § 1125(d)(2)(A):

The owner of a mark may file an in rem action against a domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located if -


Section 1125(d)(1) provides that a trademark owner may recover against a person who: (1) has a “bad faith intent to profit” from the trademark owner’s mark and (2) “registers, traffics in or uses” a domain name that is confusingly similar or identical to a famous or distinctive mark.

Other courts interpreting the language in section 1125(d)(2)(A) had previously determined that the in rem provisions only apply to actions against a domain name whose owner had “a bad faith intent to profit” and not to trademark infringement or dilution claims because of the references in section 1125(d)(2)(A)(ii) to a “person who would have been a defendant in a civil action under paragraph (1)”. These courts reasoned that since “paragraph (1),” namely, section 1125(d)(1), related only to bad faith claims, in rem actions under to ACPA were limited to bad faith claims and did not include trademark infringement or dilution claims.

The Fourth Circuit based its contrary holding on statutory interpretation of the ACPA and a review of the legislative history. In particular, the Court noted that the language of section 1125(d)(2)(A)(i) permits a trademark owner to file an in rem action against a domain name where the domain name “violates any right of the owner of a mark, registered in the Patent and Trademark Office, or protected under subsection (a) or (c)” (emphasis added).” In the Court’s view, had Congress intended to limit in rem actions to bad faith registration claims, it would not have used the words “any right” and would not have specifically referenced subsections (a) and (c) which relate to infringement and dilution claims, respectively. The Court found support for this view in the legislative history of the ACPA, citing a Senate Report which states, among other things, that the in rem provisions of the ACPA permit trademark owners to “proceed against the domain names themselves, provided that they are in fact, infringing or diluting under the Trademark Act.” The Fourth Circuit reconciled the seemingly problematic language in section 1125(d)(2)(A)(ii), namely, the reference to a “person who would have been a defendant in a civil action under paragraph (1),” by finding that “...this language is best understood as a shorthand reference to the current registrant of the domain name, who would be the defendant in any trademark action involving a domain name.”

With respect to the bad faith claims, the Court upheld the lower court’s determination at trial that 54 domain names were registered in bad faith. The Court also reversed the grant of partial summary judgment in connection with the remaining six domain names on the ground that it was premature to grant summary judgment prior to affording Harrods UK the opportunity to complete discovery on the issue of bad faith.