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Electronics Boutique Holding Corp. v. Zuccarini

Court issues permanent injunction under the Anticybersquatting Consumer Protection Act ("ACPA"), enjoining defendant, described by the court as a "notorious cybersquatter," from continuing to operate web sites at domains containing common misspellings of plaintiff's registered service marks. The court also awarded plaintiff $530,653.34, which included both the maximum $100,000 statutory award for each domain name improperly used, as well as plaintiff's attorney's fees and costs.

Plaintiff Electronics Boutique Holding Corporation ("Electronics Boutique") is a company engaged in the sale of electronic goods to the public. Plaintiff uses its federally registered service marks "EB" and "Electronics Boutique" to aid it in these endeavors. Plaintiff sells its products both in retail stores and over the Internet at the domains www.ebworld.com and www.electronicsboutique.com.

Defendant, long after plaintiff commenced operation of these web sites, registered the five domain names at issue -- www.electronicboutique.com, www.electronicbotique.com, www.ebwold.com, and www.ebworl.com and www.eletronicsboutique.com. When a user enters one of these urls, he is "mousetrapped" and forced to view a series of separate screens, each advertising a different product. A user cannot avoid these advertisements, either by hitting the back button or closing the screen on which they appear. Either act instead causes another advertisement to appear. Apparently, after viewing a number of these advertisements, the user will be taken to plaintiff's site. Defendant profits from this activity by receiving a fee for each user who clicks on any of these advertisements.

Defendant has engaged in activity of this kind on a number of other occasions. Defendant has registered thousands of domains, many of which contain misspellings of the names of famous people, or of the trademarks of others. Defendant estimated that he receives between $800,000 and $1 million annually from the domain names he registered. Defendant's activities have resulted in a number of lawsuits being brought against him. In one of these actions, also commenced in the Eastern District of Pennsylvania (Shields v. Zuccarini), defendant was enjoined from using domain names substantially similar to those of the trademark holder, and directed to pay $10,000 in statutory damages for each domain name improperly registered, as well as the attorneys' fees incurred by the trademark holder.

Plaintiff commenced this suit, claiming that defendant's activities violated both the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. Section 1125(d) and the Lanham Act, and constituted dilution, common law service mark infringement and unfair competition. Defendant did not appear in the action despite receiving notice of it. The court, on plaintiff's motion, found that defendant violated the ACPA and awarded the relief detailed below.

It is a violation of the ACPA to register a domain name that is identical or confusingly similar to a distinctive or famous mark registered to another with a bad faith intent to profit thereby.

The court found that defendant had violated the ACPA. First, the court determined that plaintiff's marks were both distinctive and famous. In reaching this result, the court relied, in part, on the fact that the Electronics Boutique mark was registered with the PTO in 1987, and had been used to generate extensive revenues, and promoted heavily by the plaintiff for over 20 years.

The court also found that defendant, by using urls containing common misspellings of plaintiff's marks, had used marks confusingly similar to those owned by plaintiff.

Lastly, the court found that defendant conducted his activities in bad faith with an intent to profit from plaintiff's marks. In reaching this conclusion, the court relied predominantly on testimony defendant gave in another action commenced as a result of his domain use activities. This testimony, the court concluded, established that "Zuccarini registered the domain misspellings in order to generate advertising revenue for himself, despite being aware of the Electronics Boutique stores and website." The evidence showed that defendant had made extensive profits from the advertising that appeared on the various domains he registered, and that he did not offer any goods or services that relate in any way to the domain names in question, i.e. electronic goods.

As a result, the court issued a permanent injunction, enjoining defendant from further use of the domain names at issue.

The court also awarded plaintiff the maximum statutory penalty permitted under the ACPA (15 U.S.C. section 1117(d)), which equated to $100,000 for each domain improperly registered, or a grand total of $500,000. This decision was motivated not only by the defendant's actions in the case at bar, but by the fact (a) that defendant had allegedly done the same thing to a number of others and (b) that defendant registered the domain names and took the other acts described above after the Pennsylvania District Court, in another action, had enjoined defendant from undertaking similar activities with respect to another plaintiff, and had awarded lesser statutory damages ($10,000 per domain name).

In so holding the court stated that "Zuccarini boldly thumbs his nose at the rulings of this Court and the laws of our country. Therefore, I find that justice in this case requires that damages be assessed against Mr. Zuccarini in the amount of $100,000 per infringing domain name, for a total of $500,000."

Lastly, the court awarded plaintiff attorneys' fees and costs in the amount of $30,653.54.