Steve Cattaneo

Just a point of interest for those who are using the work “Porsche” in their domain names. Porsche loses first round in court.

A question for the attorneys out there,

Does this dismissal if not appealed, becomes a dismissal with prejudice? And if so does this become case law for any person defending themselves against a personal suit from Porsche for the use of their name. Not me.

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
PORSCHE CARS NORTH AMERICA, INC., and DR. ING. H.C.F. PORSCHE AG,
Plaintiffs,
v.
PORSCH.NET, et al.,
Defendants.
CIVIL ACTION NO. 99-0006-A
MEMORANDUM OPINION
At issue is whether the Court can exercise in rem jurisdiction to cancel Internet domain names that allegedly dilute protected trademarks, even though the Trademark Dilution Act would only appear to authorize in persona proceedings against those who registered the domain names in question. For the reasons given below, the Court will DISMISS the Complaint.
Facts
The Internet is an electronic network that links millions of computers together so that they can communicate with each other. The World Wide Web is an electronic facility that enables people to view some of the information that is available through the Internet, and it is divided into individual "web sites" -- much like individual books in an enormous library.
Each web site has an "internet protocol number" -- e.g., "156.121.20.201" -- that uniquely identifies it and that a person can "dial" in order to access the information contained therein. Because an internet protocol number can be difficult to remember, each web site usually has an alphanumeric "domain name" as well -- e.g., "WWW.USCOURTS.GOV." See Thomas v. Network Solutions, Inc., 1999 WL 300619, at *1 -- *2 (D.C. Cir. May 14, 1999). The distinction between an internet protocol and a domain name roughly compares to the difference between the telephone number (such as "1-800-529-2665") and the mnemonic number (such as "1-800-LAW-BOOK") that a business might use in order to attract customers. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1325 (9th Cir. 1998). This framework assumes that no two web sites should share the same internet protocol or the same domain name, and as a result, the federal government has designated a private company, Network Solutions, Inc. ("NSI"), to act as the exclusive registrar for the assignment of these unique "identifiers. See Thomas, 1999 WL 300619, at *3.
Those who hope to find a particular web site rarely will know the right internet protocol number off hand, and will rely instead on its known or expected domain name -- much in the way that a person might not know the telephone number for Holiday Inn hotels but might guess that dialing "I-800-HOL-IDAY" would suffice. As a result, companies that seek to advertise their products on web sites typically will ask NSI for domain names that mnemonically promote themselves and thereby increase the likelihood that people will be able to locate their presence on the Web. The Microsoft Corporation, for example, maintains a web site at "WWW.MICROSOFT.COM" -- presumably both to reinforce its brand identity and to attract customers more easily than with a less intuitive domain name such as "WWW.185927852.COM."
Just as they can have several telephone numbers, companies can register multiple domain names in order to maximize the chances that customers will find their web site. But in so doing, companies often discover that NSI already has assigned some of those domain names to others. This situation can arise because two parties happen to use the same marks in their business, see TeleTech Customer Care Management (California), Inc. v. Tele-Tech Co., 977 F.Supp. 1407 (C.D. Cal. 1997), because one party has purchased a prized domain name with the goal of reselling it to the other party at a higher price, see Intermatic Inc. v. Toeppen, 947 F.Supp. 1227 (N.D. Ill. 1996), or because one party hopes to use a confusingly-similar domain name in order to siphon off customers that the other party has cultivated for itself, see Washington Speakers Bureau, Inc. v. Leading Authorities, Inc., 33 F.Supp. 2d 488 (E.D. Va. 1999).
The Plaintiffs, Porsche Cars North America, Inc. and Dr. Ing. h.c.F. Porsche AG (collectively referred to as "Porsche"), have encountered precisely this dilemma. Porsche markets cars, goods, accessories, and services under the "Porsche" and "Boxster" names. Although it has registered "PORSCHE.COM" and "PORSCHE-USA.COM" as the domain names for its web site, it has discovered that others have registered 128 additional domain names, such as "PORSCH.COM" and "BOXSTER.COM," that similarly implicate and that arguably dilute the strength of its "Porsche" and "Boxser" marks. Some of the domain names are in use while others are dormant, but the fact remains that none of them channels consumers to Porsche's web site.
Rather than filing an in personam action against those who registered the allegedly offending domain names, Porsche has responded by initiating an in rem proceeding against the domain names themselves. In order to facilitate this procedure, NSI has surrendered the underlying registration certificates to the Court for a determination of their status, and with the res now in limbo, the Complaint asks the Court (1) to conclude that the domain names violate the Trademark Dilution Act, see 15 U.S.C. §1125(c); and (2) to issue an order canceling their registration certificates or reassigning them to Porsche. Two of the domain names at issue -- "PORSCHE.NET" and "PORSCHECLUB.NET" -- have appeared through counsel and move to dismiss for lack of jurisdiction and failure to state a claim.
Standard of Review
A Motion to Dismiss for lack of jurisdiction requires the Court to weigh the evidence and satisfy itself of its power to hear a case. See Williams v. United States, 50 F.3d 299, 304 (4th Cir. 1995). Although conclusory arguments about the merits will not suffice to defeat jurisdiction, See Bell v. Hood, 327 U.S. 678, 682 (1946), the Plaintiff bears the burden of proving that jurisdiction actually exists, and the Court must dismiss the action if the facts so require. See Richmond, Fredericksburg & Potomac Ry. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).
Assuming that jurisdiction exists, a challenge for failure to state a claim requires the Court to test the legal sufficiency of a complaint. See Randall v. U.S., 30 F.3d 518, 522 (4th Cir. 1994). Such motions "should be granted only in very limited circumstances," Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir. 1989), and a complaint will survive as long as it sets out sufficient facts for the Court to infer that each element of a cause of action is present, see Wolman v. Tose, 467 F.2d 29, 33 n.5 (4th Cir. 1972). Even so, the Court must dismiss a case when it "'appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" De Sole v. U.S., 947 F.2d 1169, 1177 (4th Cir. 1991) (quoting Coakley & Williams, Inc. v. Shatterproof Glass Corp., 706 F.2d 456, 457 (4th Cir. 1983)).
Analysis
I. Subject Matter Jurisdiction
"PORSCHE.NET" and "PORSCHECLUB.NET" first raise a challenge to subject matter jurisdiction, arguing that Porsche's case is unripe and that the Complaint fails to present a federal question. The Court will consider each of these issues in turn.
a. Ripeness
Because Article III of the Federal Constitution defines judicial power in terms of the authority to adjudicate actual cases or controversies, see U.S. Const. art. III, §2, federal courts have long refused to hear matters that are not ripe for immediate review, see Lewis v. Continental Bank Corp., 494 U.S. 472, 477 (1990). Advisory opinions are not well-taken, and, "[t]o invoke the jurisdiction of a federal court, a litigant must have suffered, or be threatened with, an actual injury [that is] traceable to the defendant and likely to be redressed by a favorable judicial decision." Lewis, 494 U.S. at 477.
Porsche's Complaint more than suffices to meet this standard. "PORSCHE.NET" and "PORSCHECLUB.NET" are registered domain names that Porsche cannot use because NSI already has assigned them away to others. Both domain names are dormant in the sense that they have no connection to other existing web sites, but the mere act of registration creates an immediate injury by preventing Porsche from utilizing those domain names itself in order to channel consumers to its own web site. Customers might try to contact Porsche through "PORSCHE.NET," for example, only to find that they have reached a "dead end" on the Web and then to conclude that the strength of Porsche's brand name is not as great as they first thought.
Whether the Trademark Dilution Act would grant relief under these circumstances is a question on the merits, but within the meaning of the ripeness doctrine, Porsche has alleged an actual and immediate injury that arises out of the registration of these allegedly offending domain names. Cf. Standard Oil Co. of New Mexico, Inc. v. Standard Oil Co. of California, 56 F.2d 973, 975 (10th Cir. 1932) (concluding that the defendant's adoption of a corporate name that resembled the plaintiff's, constituted an act of unfair competition, even though the defendant had merely reserved the name in its articles of incorporation without actually beginning to promote that name in commerce). Against this background, an actual case or controversy appears to exist so as to permit judicial review.
b. Federal Question Jurisdiction
Federal question jurisdiction is equally clear. 28 U.S.C. §1332 provides federal courts with original jurisdiction to hear civil actions that arise under federal law. In order to trigger this provision, a complaint must implicate a federal question on its face, either by pleading a cause of action that federal law directly creates, see Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27 -- 28 (1983), or by raising a claim that federal law indirectly affects, see Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199 (1921).
Porsche's Complaint specifically asks for relief under the Federal Trademark Dilution Act. See 15 U.S.C. §1125(c). The statute creates the cause of action at issue and raises a number of federal questions such as (1) whether the "Porsche" and "Boxster" names are the types of "famous mark[s]" that Congress intended to protect; (2) whether registration of the allegedly offending domain names constitutes an inappropriate "commercial use" of these marks; and (3) whether such use dilutes their "distinctive qualit[ies]." Id. Under these circumstances, the Complaint clearly falls within the Court's subject matter jurisdiction even if challenges can be made on the merits.
II. Personal Jurisdiction
The Defendants also contend that the Court lacks personal jurisdiction over the domain names at issue because the Trademark Dilution-Act does not permit in rem proceedings.
Rule 4(n) of the Federal Rules of Civil Procedure authorizes federal courts to exercise in rem jurisdiction over property within their domain, either (1) if a federal statute so provides; or (2) if state law so permits and personal jurisdiction over the property owner cannot be had. Rule 4(n)(1) is the only conceivable basis for in rem jurisdiction in this case because the Complaint only seeks relief under a federal statute, and because in any event, neither the Virginia legislature nor the Virginia courts have recognized claims for trademark dilution under state law. See Circuit City Inc. v. Officemax, Inc., 949 F.Supp. 409, 418 (E.D. Va. 1996).
Even so, Rule 4(n)(1) applies only if the Trademark Dilution Act [1] under which Porsche has sued can be read to permit in rem actions that name the allegedly offending marks at issue without suing the persons who use them. Although there are no published decisions that address the issue directly, at least one federal court has expressed serious concern in this regard. See Sterling Consulting Corp., Inc. v. The Indian Motorcyle Trademark, 1997 WL 827450, at *1 (D. Colo. Sept. 5, 1997). The reason for this concern is clear -- even though the statute does not expressly preclude in rem lawsuits, its language speaks strongly in favor of allowing in personam actions alone.
Rather than authorizing an injunction against a diluting mark itself, for example, the Act only provides a remedy against another "person's" commercial use of that mark. See id. §1125(c)(1). The statute similarly contemplates the assessment of money damages against a "person" who willfully dilutes a famous mark, because a mark itself logically cannot be made to pay damages. See id. §1125(c)(2). The Act defines a "person" to include natural persons as well as "firm[s], corporation[s], union[s], association[s], [and] other organization[s]" -- without including "marks" within this definition. 15 U.S.C. §1127.
Had Congress intended the Trademark Dilution Act to permit in rem actions against diluting marks, it easily could have drafted the statutory language to achieve that result. The Lanham Act, for example, proscribes the importation of goods that have a false designation of origin, not by barring "persons" from importing them but rather by specifying that the "goods [themselves] ... shall not be imported into the United States." 15 U.S.C. §1125(b). The Tariff Act analogously empowers the International Trade Commission to combat the importation of goods distributed through unfair methods of competition, either by issuing cease and desist orders against those responsible or by issuing exclusion of entry orders against the goods themselves. See 19 U.S.C. §§1337(d) & (f). In marked contrast to both of these statutes, the Trademark Dilution Act speaks only of remedies against "persons" who commit trademark dilution.
In any event, to construe the Trademark Dilution Act so as to permit in rem actions against allegedly diluting marks would needlessly call the constitutionality of the statute into doubt. Although in rem proceedings purport to affect nothing more than the disposition of property, they necessarily affect the interests of persons as well. See Shaffer v. Heitner, 433 U.S. 186, 207 (1977) (quoting Restatement (Second) of Conflict of Laws §56 Introductory Note (1971)). As a result, courts generally cannot exercise in rem jurisdiction to adjudicate the status of property unless the Due Process Clause would have permitted in personam jurisdiction over those who have an interest in the res. See Shaffer, 433 U.S. at 207.
In light of this constitutional requirement, the Trademark Dilution Act cannot be read to permit in rem actions against allegedly diluting marks without regard to whether in personam jurisdiction could have been exercised against those who use those marks in commerce. But Porsche's Complaint would have the Court do precisely that -- by validating an in rem proceeding that would cancel or reassign certain domain names, merely because NSI maintains the underlying registration certificates within this district, without regard to the interests of those who registered them, and even though in personam jurisdiction against registrants who live elsewhere might violate due process. The Court cannot presume that Congress intended the Trademark Dilution Act to operate in a way that so blindly ignores "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
Porsche correctly observes that some of the domain names at issue have registrants whose identities and addresses are unknown and against whom in personam proceedings might be fruitless. But most of the domain names in this case have registrants whose identities and addresses are known, and who rightly would object to having their interests adjudicated in absentia. The Due Process Clause requires at least some appreciation for the differences between these two groups, and Porsche's pursuit of an in rem remedy that fails to differentiate between them at all is fatal to its Complaint. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 317 -- 18 (1950) (requiring an in personam proceeding with service by mail to the known beneficiaries of a disputed common trust, even if notice by publication might suffice as to unknown claimants).
Because the language of the Trademark Dilution Act does not appear to permit in rem actions against allegedly diluting marks, and because a contrary reading of the statute would unnecessarily put its constitutionality in doubt, see Johnson v. Mayor and City Council of Baltimore, 731 F.2d 209, 213 n.13 (4th Cir. 1984 , the Court must conclude that the Complaint should be dismissed for lack of personal jurisdiction.
Conclusion
For the foregoing reasons, the Court will GRANT the Motion to Dismiss that the Defendants "PORSCHE.NET" and "PORSCHECLUB.NET" have filed. Because all of the Defendants are similarly-situated, the Complaint will be DISMISSED in its entirety as to all of the parties in this case.
/s/
United States District Judge
June 8th, 1999
Alexandria, Virginia



<img src="graemlins/beerchug.gif" border="0" alt="[cheers]" />

Tony

I think i will read that just before i go to bed ....LOL

Interesting though!

Randy V

A well drafted ruling. Porsche just went the easy route on this round, proceeding against the domain names rather than the people who registered them.

They (Porsche) will undoubtably prevail in the next round with a class-action complaint against all the named individuals.

Cool that the little guys won this battle though.

Scott Turnbull

YES! I understand!.......what was the middle part again?

(Nod to Kevin Klien in, A Fish Called Wanda.)

Big Dave

The ruling has no significance with respect to Porsche's larger goal of stripping domain name registrants of their domain names. It was likely a test case. Porsche is sure to follow up with a complaint in the proper jurisdiction.

Since we're on the topic, I'll note that courts are basically punting on this larger issue. If someone has a registered trademark for a name, they jump to the conclusion that trademark dilution trumps everthing. Porsche has been using this scheme for years with success.

The judges in the various courts hearing these types of cases are simply taking an intellectual vacation and are not diving into the meaty issues that need to be resolved..... that is, whether dilution is actually occurring. I suggest that it is not. If this website had been permitted to use the Porsche name, visitors would see that the Porsche brand is stronger, not weaker. It's a case by case analysis that court's aren't making.

Oh well.

<img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" />

Snowball the 81 white 928

you saying porsche wants to sue every imposter from maine to washington? i don't think so. much easier to jump on network solutions and get them ordered to surrender the list of domain names. class actions are really not used in this manner, usually where several similarly situated sue one entity. porsche knew what the statute said as to jurisdiction and got technicaled out. this is just one trial court opinion and does not preclude future suits, even against the same domain names so long as the registrants are named as defendants. on to plan "b" for porsche.

when a court starts citing international shoe and mullane, you know they're worried about shafting someone, hence the reference to "fair play" and "substantial justice." this opinion is old news anyway and i don't think you see any imposters who are worried, so, don't sweat it.

That'll be $50 for 15 min.

Big Dave

Snowball:

Don't you bill by the 1/10 hour? That ought'a be $60 for .3 hrs.

Snowball the 81 white 928

no, i'm old school. i round up to the next 1/4 hr.

Incendier

Stop it stop it STOP IT!

I've come to this board for frothy discussion of my car, not to relive my first-year nightmares of being taught Civ Pro by the Dean! <img src="graemlins/crying.gif" border="0" alt="[crying]" />

Although it is nice to know that Snowy is one of us...

Snowball the 81 white 928

yeah, can you believe it, frank booth, atty.?