United States District Court, E.D. Virginia, Alexandria Division
November 15, 2016
NFX LLC, Plaintiff,
REPORT AND RECOMMENDATION
Theresa Carroll Buchanan, United States Magistrate Judge.
matter comes before the Court on plaintiffs' Motion for
Default Judgment. (Dkt. 11.) After a representative for
defendants failed to respond to plaintiffs' Motion or to
appear at the hearing before the undersigned Magistrate Judge
on October 28, 2016, the undersigned took plaintiff's
Motion under advisement.
NFX is a California limited liability company having its
principal place of business at 558 Hawthorne Avenue, Palo
Alto, California 94301. (Compl. ¶ 1.) Plaintiff is an
invite only guild for digital networks and marketplaces.
(Id. at ¶ 9.) Plaintiff runs a three month
program in the Bay Area twice per year which covers the
unique challenges that face digital networks and
marketplaces. (Id.) Plaintiff acquired all rights,
title, and interest to the NFX.com domain name on
November 15, 2014. (Id. at ¶ 10.) Plaintiff has
used the distinctive NFX trademark in connection with its
guild and programs since May 2013. (Id.) Between
September 2015 and May 2016, an unauthorized and unknown
third party hacked into the email account of co-founder of
NFX Guild, James Currier, and fraudulently transferred a
number of domain names, including NFX.com, to an
account at another registrar without authorization.
(Id. at ¶ 11.) Plaintiff believes defendant is
in full control over the stolen domain and any changes to the
NFX website could cause damage to NFX business. (Id.
at ¶¶ 13-14.)
is a domain name that was owned by plaintiff but "has
been stolen from plaintiff and is now in possession of
Defendant 'Zhaoyuechao.'" (Id. at
August 18, 2016, plaintiff filed this action under the
Anticybersquatting Consumer Protection Act ("ACPA")
15 U.S.C. § 1125(d) in an effort to regain control of
the domain name. Plaintiff seeks the entry of an order
directing defendant to transfer and register the
NFX.com domain name to plaintiff and directing the
domain name registry Verisign Inc. to change the registrar of
record for NFX.com to a registrar selected by
plaintiff. (Mot. Default J. 1; Dkt. 11.)
Jurisdiction and Venue
the Court can render default judgment, it must have both
subject matter and personal jurisdiction over the defaulting
Court has subject matter jurisdiction pursuant to 28 U.S.C.
§§ 1331 and 1338, which provide that district
courts shall have original jurisdiction over all civil
actions arising under the Constitution, laws, or treaties of
the United States, and over civil actions arising under any
federal law relating to patents, plant variety protection,
copyrights, and trademarks. Plaintiff's cyberpiracy claim
arises under the Anticybersquatting Consumer Protection Act,
15 U.S.C. § 1125(d). The Court has in rem
jurisdiction over defendant pursuant to 15 U.S.C. §
1125(d)(2)(A) which establishes jurisdiction over a domain
name under the ACPA in the judicial district where either the
domain name register or registry is located and Verisign,
Inc.- the registry of the defendant- is located in this
District. (Compl. ¶ 5.) Venue is proper under 15 U.S.C.
§ 1125(d)(2)(C) due to Verisign's presence in this
Service of Process
plaintiff bringing an in rem action under the ACPA
may serve process by 1) sending notice of the lawsuit to the
listed email and physical addresses of the domain name
registrant, and 2) publishing notice of the action as
directed by the court. 15 U.S.C. § 1125(d)(2)(A)(ii).
Plaintiff moved the Court to affirm service on September 1,
2016. (Dkt. 4.) Plaintiff demonstrated that notice of the
lawsuit was sent by email and U.S. mail. Subsequently,
plaintiff received a response by email from a person
"who claimed ownership of the defendant NFX.com
domain name." (Id. at ¶ 3, Ex. E.) The
Court deemed service of process was accomplished as required
by 15 U.S.C. § 1125. (Dkt. 6.)
Grounds for Default Judgment
has not answered or otherwise timely responded in this case.
Seeking to proceed in rem against defendant pursuant
to the ACPA, plaintiff filed a motion for an order affirming
service and which the Court granted on September 2, 2016.
(Dkt. 6.) The Court found plaintiff's email exchange with
defendant demonstrated actual notice so that the requirement
of service by publication may be waived. (Id.)
Defendant filed a late opposition to the motion for order
affirming service 11 days after the Court entered its order.
(Dkt. 7.) Since that response, defendant has not appeared,
answered, or otherwise filed any responsive pleadings in this
case. On September 22, 2016, the Clerk of Court entered
defendant's default. (Dkt. 9.) Plaintiff filed the
instant motion on October 11, 2016. No defendant appeared at
the October 28, 2016 hearing on the motion and the
undersigned took the matter under advisement to issue this
Report and Recommendation.
FINDINGS OF FACT
on the Complaint, plaintiff's Motion for Default
Judgment, and plaintiff's Memorandum of Support of Motion
for Default Judgment, the undersigned Magistrate Judge makes
the following findings.
NFX is a California limited liability company with its
principal place of business in Palo Alto, California. (Compl.
¶ 1.) Plaintiff is an invite only guild for digital
networks and marketplaces that provides a program to assist
with challenges in digital business. (Id. at ¶
9.) Plaintiff acquired all right, title, and interest to the
NFX.com domain name on November 15, 2014.
(Id. at ¶ 10.)
is a domain name that was owned by plaintiff but has been
stolen from plaintiff and is now in possession of defendant
"Zhaoyuechao" located in China. (Id. at
¶ 2.) The domain name registrar for the NFX.com
domain name is eName Technology Co., Ltd. located in China.
(Id. at ¶ 4.) The domain name registry for the
NFX.com domain name is Verisign, Inc., a Delaware
corporation with its principal place of business in Reston,
VA. (Id. at ¶ 5.)
from September 2015 to May 2016, the email account of the
person responsible for managing the domain name portfolio was
hacked. (Id. at ¶ 11.) The hacker fraudulently
transferred the NFX.com domain name out of
plaintiff's control. (Id. at ¶ 12.) The
registration of the defendant domain name is now with another
registrar company eName Technology Co. Ltd. (Id.)
EVALUATION OF PLAINTIFF'S COMPLAINT
defendant has defaulted, the facts set forth in the
plaintiff's complaint are deemed admitted. Before
entering default judgment, however, the Court must evaluate
the plaintiff s complaint to ensure that the complaint
properly states a claim. GlobalSantaFe Corp. v.
Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va.
2003). As such, it is appropriate to evaluate plaintiffs'
claim against the standards of Federal Rule of Civil
ACPA allows the owner of a mark to file an in rem
civil action against a domain name if the domain name
violates the owner's trademark rights, and if the owner
of the mark satisfies certain procedural provisions. 15
U.S.C. § 1125(d)(2)(A). The procedural provisions
include establishing that the Court lacks in
personam jurisdiction over the defendants, or that the
plaintiff has been unable to locate the defendants through
due diligence. Id. § 1125(d) (2) (A) (ii). In
an in rem action, the remedies are limited to
forfeiture, cancellation, or transfer of the Infringing
Domain Name to the owner of the mark. Id. §
to be entitled to relief in rem, the owner of a mark
must prove a violation of "any right of the owner of a
mark registered in the Patent and Trademark Office, " or
of subsections 1125(a) or (c). Id. §
1125(d)(2)(A)(i). The phrase "any right of the owner of
a mark" encompasses claims brought under Section
1125(d)(1). Harrods Ltd. v. Sixty Internet Domain
Names, 302 F.3d 214, 224, 228, 232 (4th Cir. 2002).
alleges that defendant engaged in cyberpiracy in violation of
15 U.S.C. § 1125(d). (Compl. ¶¶ 6, 18.) That
provision creates civil liability for registering,
trafficking in, or using a domain name that is
"identical or confusingly similar" to a
plaintiff's mark, with a bad faith intent to profit from
that mark. 15 U.S.C. § 1125(d)(1)(A). Thus, to establish
such a cybersquatting violation, a plaintiff must prove: (1)
plaintiff's ownership of a valid and protectable mark;
(2) defendant's use of a domain name that is
"identical or confusingly similar" to
plaintiff's mark; and (3) defendant's bad faith
intent to profit from the mark. See Harrods Ltd.,
302 F.3d at 228, 232, 247.
Plaintiff Possesses a Valid and Protectable
ACPA protects both registered marks as well as unregistered
common law marks. See 15 U.S.C. §§
1125(a), 1125(d)(2)(A)(i); B & J Enters, v.
Giordano, 329 F.App'x 411, 416 (4th Cir. 2009). The
undersigned finds that the plaintiff has sufficiently pled
protectable rights in the NFX mark alleged in the Complaint.
Plaintiff alleges it ""acquired all right, title,
and interest to the NFX.com domain name" and
since November 2014, "NFX has diligently renewed and
maintained its ownership of the NFX.com domain
name." (Compl. ¶ 10.) Plaintiff further alleges it
has used the distinctive NFX trademark in connection with its
guild and programs for digital networks and marketplaces.
(Id.) Accordingly, "Plaintiff's
registration of the . . . [domain names] and use of them in
business since that registration establishes [its] common law
rights in the marks." Traffic Names, Ltd. v.
Zhenghui Yiming, No. 14-cv-1607, 2015 WL 2238052, at *4
(E.D. Va. May 12, 2015).
Defendant Registered Confusingly Similar Domain
undersigned finds that plaintiff's Complaint sufficiently
demonstrates that the defendant domain name is confusingly
similar to the mark in which plaintiff possesses protectable
rights. The confusing similarity standard is satisfied when a
domain name is virtually identical to the plaintiff's
mark. See Agri-Supply Co. v. Agrisupply.com, 457
F.Supp.2d 660, 663 (E.D. Va. 2006). Here, the defendant
domain name is not merely similar to plaintiff s common law
trademark, but is plaintiff s own domain name re-registered
by another individual. (Compl. ¶¶11-13.)
Defendant Has Acted with a Bad Faith Intent
the undersigned finds that plaintiff's Complaint pleads
facts evidencing defendants' bad faith intent to profit
from plaintiff's mark. Under the ACPA, bad faith intent
may be shown by weighing nine factors. 15 U.S.C. §
1125(d)(1)(B)(i). The factors are given to courts as a guide
and need not be exhaustively considered in every case.
Lamparello v. Falwell, 420 F.3d 309, 319-20 (4th
Cir. 2005). In pertinent part, the factors relevant to a
finding of bad faith include: a defendant's lack of
intellectual property rights in the domain name; a
defendant's intent to divert consumers from the mark
owner's website in such a way that could harm the
goodwill of the mark due to a likelihood of confusion as to
affiliation or endorsement of the site; a defendant's
provision of false contact information when applying for
registration of the domain name; and a defendant's
registration of multiple domain names that the defendant
knows are identical to marks of another which are distinctive
at the time of registration. 15 U.S.C. §§
1125(d)(1)(B)(i)(I), (V), (VII), (VIII).
on these factors, the undersigned finds that defendants have
acted with bad faith intent to profit from plaintiff's
mark in violation of the ACPA. Plaintiff contends the actions
taken by defendant domain name of hacking an account and
making an unauthorized transfer itself exhibits bad faith.
(Mem. Supp. Mot. Default J. 4); See also Traffic Names,
Ltd., 2015 WL 2238052, at *5. Plaintiff indicates it is
the only entity or person to plaintiff's knowledge to use
the NFX trademark and to use the NFX.com domain name
in connection with such rights. (Mem. Supp. Mot. Default J.
4.) Accordingly, plaintiff pleads facts regarding actions
taken by the current registrant of the defendant domain name
that demonstrate bad faith pursuant to the factors enumerated
in 15 U.S.C. § 1125(d)(1)(B)(i).
the remaining procedural provisions of 15 U.S.C. §
1125(d) have been satisfied, the Court may order the
forfeiture or cancellation of the defendant domain name or
the transfer of the domain name to plaintiff. 15 U.S.C.
§§ 1125(d)(1)(C), 1125(d)(2)(D)(i).
requests the Court enter default judgment in plaintiff's
favor and issue an order directing Verisign, Inc., the domain
name registry for the NFX.com domain name, to change
the registrar of record or the NFX.com domain name
to a registrar selected by plaintiff, restoring registration
to plaintiff. (Mot. Default J. 1; Dkt. 11.)
reasons outlined above, the undersigned recommends that
default judgment be entered in favor of plaintiff against
defendant Zhaoyuechao or defendant domain name for its
violations of the Anti-Cybersquatting Consumer Protection
Act, 15 U.S.C. § 1125(d). To that end, the undersigned
recommends that the district judge enter an order containing
the specific language requested by plaintiff on page five of
plaintiff's Memorandum in Support of Motion for Default
parties are advised that objections to this Report and
Recommendation, pursuant to 28 U.S.C. § 636 and Rule
72(b) of the Federal Rules of Civil Procedure, must be filed
within fourteen (14) days of its service. Failure to object
to this Report and Recommendation waives appellate review of
any judgment based on it.
 The record before the Court includes
the Complaint ("Compl.") (Dkt. 1), plaintiffs'
Motion for Default Judgment ("Mot. Default J.")
(Dkt. 11), plaintiffs' Memorandum in Support of Motion
for Default Judgment ("Mem. Supp. Mot. Default J.")
(Dkt. 12), and all attachments and exhibits submitted with