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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE QSOFT CONSULTING, LIMITED Plaintiff, v. TEDDY TONG and TDTONG LTD. Defendants. ) ) ) ) ) ) ) ) )
C.A. No. 07-_______-(____)
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF QSOFT CONSULTING LIMITED'S MOTION FOR PRELIMINARY RELIEF
GREENBERG TRAURIG, LLP Donald J. Detweiler (I.D. #3087) Sandra G. M. Selzer (I.D. # 4283) The Nemours Building 1007 North Orange Street, Suite 1200 Wilmington, DE 19801 302-661-7000 [email protected] Attorneys for Plaintiff, QSoft Consulting Limited
GREENBERG TRAURIG, LLP Paul D. McGrady Anthony L. Abboud Paul A. Del Aguila Jason B. Elster 77 West Wacker Drive, Suite 2500 Chicago, Illinois 60601 312 456-8400
Dated: Wilmington, Delaware June 19, 2007
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TABLE OF CONTENTS STATEMENT OF CASE ................................................................................................... 1 SUMMARY OF ARGUMENT .......................................................................................... 2 STATEMENT OF FACTS ................................................................................................. 3 A. B. C. D. A. B. C. QSoft's Online Presence ..............................................................................3 QSoft's Gaydar Website Membership Terms And Conditions ...................5 Teddy Tong's Spam.....................................................................................6 Tong's Violations of QSoft's Membership Contract...................................8 Legal Standard For Granting A Preliminary Injunction ..............................8 QSoft Is Likely To Succeed On The Merits Of Its Claims Under The CAN-SPAM Act...................................................................................9 QSoft Is Likely To Succeed On Its Claim Under The ACPA ...................13 1. 2. 3. D. E. F. GAYDAR Is A Distinctive And Famous Mark Entitled To Protection .......................................................................................14 Defendants' Infringing Domain Names Are Confusingly Similar To QSoft's GAYDAR Mark .............................................15 Defendants Registered The Infringing Domain Names With The Bad Faith Intent To Profit From Them...................................17
ARGUMENT...................................................................................................................... 8
QSoft Will Be Irreparably Harmed If Preliminary Injunctive Relief Is Not Granted............................................................................................19 Granting Preliminary Relief Will Not Result In Harm To Defendants .................................................................................................21 Preliminary Relief Enjoining And Preventing Spam Is In The Public Interest ............................................................................................22
CONCLUSION................................................................................................................. 23
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TABLE OF AUTHORITIES Federal Cases Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153 (3d Cir. 1999).................................................................................... 9 Coca-Cola Co. v. Purdy, 382 F.3d 774 (8th Cir. 2004) ......................................................................... passim Estate of Presley v. Russen, 513 F.Supp. 1339 (D.N.J. 1981) ........................................................................... 23 Freedom Calls Found. v. Bukstel, No. 05-CV-5460, 2006 WL 2620648 (E.D.N.Y. Sept. 12, 2006) ........................ 20 FTC v. Phoenix Avatar, LLC, No 04 C 2897, 2004 WL 1746698 (N.D. Ill. July 30, 2004) ................................ 22 Her, Inc. v. Re/Max First Choice, LLC, 468 F.Supp.2d 964 (S.D. Ohio 2007) ................................................................... 16 Hotmail Corp. v. Van$ Money Pie Inc., 47 U.S.P.Q. 2d 1020 (N.D. Cal. 1998) ................................................................. 20 Hypertouch, Inc. v. Kennedy-Western Univ., No. C 04-05203 SI, 2006 U.S. Dist. LEXIS 14673 (N.D. Cal. March 8, 2006)..... 9 Kos Pharmaceuticals, Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004)........................................................................ 9, 20, 21 MySpace, Inc. v. The Globe.com, Inc., No. CV 06-3391-RGK(JCx) C.D. Cal. February 27, 2997) ................................... 9 Northern Light Technology v. Northern Lights Club, 97 F. Supp. 2d 96 (D. Mass. 2000) ........................................................................15 Novartis Consumer Health, Inc. v. Johnson-Merck Consumer Pharm. Co., 290 F.3d 578 (3d Cir. 2002)............................................................................ 21, 22 Opticians Ass'n v. Indep. Opticians, 920 F.3d 187 (3d Cir. 1990).................................................................................. 23 Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800 (3d Cir. 1998).................................................................................. 19
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Shields v. Zuccarini, 254 F.3d 476 (3d Cir. 2001)........................................................................... passim Victoria's Secret Stores v. Artco Equipment Co., Inc., 194 F. Supp. 2d 704 (S.D. Ohio 2002) ........................................................... 18, 19 White Buffalo Ventures, LLC v. University of Texas, 420 F.3d 366 (5th Cir. 2005) .................................................................................. 9 State Cases Joffe v. Acacia Mortgage Corp., 211 Ariz. 325 (Ariz. Ct. App. 2005) ..................................................................... 10 Statutes 15 U.S.C. § 1125................................................................................................... 13, 14, 17 15 U.S.C. § 7701......................................................................................................... 11, 22 15 U.S.C. § 7704(a)(1)............................................................................................ 9, 10, 11 15 U.S.C. § 7706(g) ............................................................................................................ 9 47 U.S.C. § 231(e)(4).......................................................................................................... 9 Other Authorities BLACK'S LAW DICTIONARY 1164 (8th ed. 2004)..................................................... 11 Rules and Regulations Implementing the CAN-SPAM Act of 2003 and the TCPA, 69 FR 55765-01, 19 FCC Rcd. 15927, 15933, ¶ 16, 2004 WL 1794922 (2004).. 10
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STATEMENT OF CASE Plaintiff QSoft Consulting Limited ("Plaintiff" or "QSoft") is the world's leading provider of online gay and lesbian oriented services. QSoft owns and operates several online communities where QSoft members can meet, chat, and access other Internetbased services. In November 2006, QSoft began receiving complaints from its members about being targeted by recurring, unsolicited commercial messages promoting websites that not only offer services in direct competition with QSoft's online services, but that also infringe on QSoft's protected GAYDAR mark. The competing and infringing
websites are all registered to Teddy Tong (individually, "Tong") and tdtong ltd. (collectively, "Defendants"). Concurrently herewith, QSoft filed its Complaint against Defendants seeking relief under the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act, 15 U.S.C. § 7701 et seq (the "CAN-SPAM Act"), the Computer Fraud and Abuse Act 18 U.S.C. § 1020 et seq, the Anticybersquatting Consumer Protection Act 15 U.S.C. § 1125 ("ACPA"), Section 43(c) of the Lanham Act 15 U.S.C. § 1125, Delaware's Deceptive Trade Practice Act, 6 Del. C. § 2531 et seq, and also asserting common law trespass to chattel and breach of contract claims.1 Plaintiff's lawsuit is necessary to protect its customers from Defendants' ongoing transmission of unsolicited commercial text messages that promote pornography and services in direct competition with QSoft, as well as Defendants' acts of cybersquatting. Moreover, Defendants' actions are causing immediate harm to QSoft and QSoft's members. The unsolicited commercial messages, which began in November 2006, are
1
This Motion is limited to QSoft's claims for violations of the CAN-SPAM Act and the ACPA.
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still being sent to QSoft members despite QSoft's requests, on two occasions, to cease and desist from such activities. As fully addressed below, QSoft is entitled to preliminary relief under the federal CAN-SPAM Act and the ACPA. SUMMARY OF ARGUMENT QSoft seeks injunctive relief to 1) enjoin Defendants from spamming QSoft customers with unsolicited commercial messages and 2) enjoin Defendants' infringing use of QSoft's protected marks through acts of cybersquatting by transferring infringing domain names to QSoft. Defendants have violated CAN-SPAM by transmitting the type of messages expressly prohibited by the CAN-SPAM Act. Specifically, Defendants sent unsolicited commercial messages to QSoft members that contained false and misleading information and lacked statutorily required opt-out information. Additionally, Defendants continued to send the unsolicited commercial messages even after they were twice instructed by QSoft to cease and desist such activity. Defendants also have violated ACPA by registering domain names that are confusingly similar to the QSoft's famous and distinctive trademark, GAYDAR, and QSoft's corresponding GAYDAR websites, with the bad faith intent to profit from the infringing domain names. For example, Defendants registered and used infringing the
domain names
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In order to address Defendants' continuing violations of the CAN-SPAM Act and the ACPA, QSoft is seeking two forms of preliminary injunctive relief. First, QSoft requests an order enjoining Defendants from continuing their ongoing spamming attack on QSoft's customers. Second, QSoft requests an order enjoining Defendants from continuing to use the infringing domain names and an order transferring the infringing domain names to QSoft. STATEMENT OF FACTS A. QSoft's Online Presence
QSoft, a private British corporation, is a technology company with a network of complimentary media brands that include the world's leading gay and lesbian dating websites and an online digital radio station. In May 1999, QSoft registered the domain name
RAINBOW NETWORK, and the related URLs
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registering the GAYDAR websites in 1998 and registered its most recent in 2005.2 QSoft's network of websites serve more than 300 million page impressions per month to over three million registered and audited users. Of its three million registered and audited users, 409,026 are residents of the United States. QSoft currently operates its online dating and chat line services through the domain names
2
QSoft registered the following primary GAYDAR websites on the following dates:
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print advertisements are attached hereto as Exhibit 1. QSoft has also developed search engine optimization strategies to maximize its visibility on the Internet. Over the years, QSoft has invested substantial amounts of money, creative energy, and time into developing, maintaining, and upgrading its GAYDAR websites and their associated services. QSoft personnel expend significant time and energy to minimize any disruption by indiscriminate and unauthorized mass mailings of unsolicited commercial email ("spam"). QSoft regulates its GAYDAR websites and services in part by strictly prohibiting the sending of spam through the GAYDAR websites. B. QSoft's Gaydar Website Membership Terms And Conditions
QSoft's prohibitions against unsolicited commercial messages, registration of multiple user accounts per individual, submission of false registration information, and promotion of other products or services are set forth in its contract with its members. QSoft's contract with Gaydar Members is referred to as the Gaydar Website Membership Terms and Conditions ("Membership Contact"). QSoft's current Membership Contract is publicly posted on its website and is available at http://gaydar.co.uk, a true and correct copy of which is attached hereto as Exhibit 2. The Membership Contract specifically prohibits a Gaydar Member from, among other things, supplying false or inaccurate information to QSoft, having more than one account per member, and from advertising or promoting the user's or a third-party's products or services in any manner.3 The Membership Contract also governs the use of the GAYDAR websites. In order to become a member of the GAYDAR websites, to
3
While
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communicate with other Gaydar Members, and to make use of the services provided by QSoft, a user must agree to be bound by the MTC before being allowed to register for an account and become a Gaydar Member. C. Teddy Tong's Spam
Upon information and belief, Defendants Teddy Tong and tdtong ltd. are residents of New Jersey, with a claimed address in Princeton, New Jersey, and are the registrants of record for the following domain names:
Defendants' unauthorized registration of the Infringing Domain Names AND
"bargeincidence."
Tong fraudulently created his
specific purpose of sending unsolicited commercial messages to Gaydar Members. Tong used his fraudulently created
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transmitted to Gaydar Members were sent by an automated program commonly referred to as a "bot" and not a human being. The unsolicited commercial messages sent to Gaydar Members advertise the Defendants' Infringing Domain Names and corresponding websites by providing links to those websites. Tong's used the fraudulently created accounts to create the false impression that the spam messages came from other individual Gaydar Members rather than an individual or entity unaffiliated with QSoft. The unsolicited commercial messages do not identify themselves as advertisements, nor do they contain clear and conspicuous notice that a Gaydar Member has the opportunity to decline to receive messages from Tong. The unsolicited commercial messages also lack a valid physical address for Tong or tdtong ltd. QSoft took immediate action to block Defendants' illegal activities, by among other things, sending Defendants a cease and desist letter on November 24, 2006, notifying them that the unsolicited commercial chat room messages were, and are, illegal, and warning that Defendants would be liable to QSoft for damages resulting therefrom. A copy of the November 2006 cease and desist letter is attached hereto as Exhibit 5. QSoft subsequently discovered that Tong registered
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purpose are collectively attached hereto as Exhibit 7.
Defendants are using the
Infringing Domain Names for the promotion of online gay and lesbian oriented services that directly compete with QSoft and CupidoCam. Defendants are not affiliated with QSoft and, as a result, are not authorized to use the GAYDAR mark in any manner - in particular, they are not authorized to advertise a competing business. D. Tong's Violations of QSoft's Membership Contract
Tong's unsolicited commercial chat room messages were sent in violation of QSoft's Membership Contract. Tong has continued to send unsolicited commercial The illegal
messages even after receiving cease and desist letters from QSoft.
commercial messages sent by Tong to Gaydar Members has caused QSoft to incur substantial bandwidth and delivery-related costs. QSoft has also been forced to devote its employees' time, money and resources to the problems caused by Tong's activities. Defendants' wrongful acts have resulted in substantial and irreparable harm to QSoft in its reputation, loss of goodwill, loss of profits, employee costs, attorneys' fees, and other pecuniary damages. For instance, attached collectively as Exhibit 8 are
examples irate QSoft customers believing that the Spam messages were sent (or could have been sent) by QSoft or one its GAYDAR websites. ARGUMENT A. Legal Standard For Granting A Preliminary Injunction
In the Third Circuit, "a party seeking a preliminary injunction must show: (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief." Kos
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Pharmaceuticals, Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (citing Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d Cir. 1999)). As explained below, QSoft is entitled to the requested preliminary injunctive relief under each of these factors. B. QSoft Is Likely To Succeed On The Merits Of Its Claims Under The CAN-SPAM Act
QSoft is likely to succeed on its CAN-SPAM Act claims since defendant's violations have been clear, repeated, and willful. The CAN-SPAM Act authorizes a "provider of Internet access services" to maintain an action for injunctive relief and/or damages in federal court for, among other things, 1) a violation of the CAN-SPAM Act's prohibition against false or misleading header information and 2) any pattern or practice that violates the general requirements for sending unsolicited electronic messages. See 15 U.S.C. §§ 7706(g); 7704(a)(1-5). There is no question that QSoft is a provider of internet access services under the CAN-SPAM Act.4 Tong has repeatedly violated the CAN-SPAM Act's prohibition against initiating the transmission of false or misleading header information that accompanies, or is contained within, an electronic mail message.5 See 15 U.S.C. § 7704(a)(1). Under the
4
A provider of Internet access services is an entity that provides "a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers." Communications Act of 1934, 47 U.S.C. § 231(e)(4); see 15 U.S.C. § 7702(11) ("The term `Internet access service' has the meaning given to that term in section 231(e)(4) of the Communications Act of 1934"). Courts have held that "a provider of e-mail service alone, without any other services, qualifies as an ISP." Hypertouch, Inc. v. Kennedy-Western Univ., No. C 04-05203 SI, 2006 U.S. Dist. LEXIS 14673, *9 (N.D. Cal. March 8, 2006); see also, White Buffalo Ventures, LLC v. University of Texas, 420 F.3d 366, 369 (5th Cir. 2005) (finding a school to be an Internet access service provider because of its provision of email addresses to faculty, staff, and students). QSoft has standing to bring a claim under the CAN-SPAM Act because QSoft, in addition to providing a multitude of online services, is a provider of email services and therefore a provider of Internet access services under the CAN-SPAM Act.
5
As addressed in the unreported but exceedingly similar case MySpace, Inc. v. The Globe.com, Inc., the CAN-SPAM Act applies to electronic messages at issue here. See MySpace, Inc. v. The Globe.com, Inc., No. CV 06-3391-RGK(JCx) at 4-5 (C.D. Cal. February 27, 2997); see also CAN-SPAM Act, 15 U.S.C. § 7702(2), (5-6) (defining commercial electronic mail messages); Joffe v. Acacia Mortgage Corp., 211
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Act, header information is materially misleading if, among other things, an email message contains or is accompanied by header information "that is technically accurate but includes an originating electronic mail address, domain name, or Internet Protocol address the access to which for purposes of initiating the message was obtained by means of false or fraudulent pretenses or representations." 15 U.S.C. § 7704(a)(1)(A). Here, Tong used false or fraudulent pretenses to obtain access to the
Membership Contract prohibits a user from, among other things, supplying false or inaccurate information to QSoft, having more than one account per (guest) member, and advertising or promoting the user's or a third party's products or services. See Exhibit 2. Tong clicked his assent to QSoft's Membership Contract when he first created and registered a
continuing violation of its terms indicates that Tong obtained the multiple Gaydar accounts, which were used to spam Gaydar Members through false or fraudulent pretenses or representations in violation of § 7704(a)(1)(A) of the CAN-SPAM Act.
Ariz. 325 (Ariz. Ct. App. 2005) (applying the CAN-SPAM Act to computer-to-phone text messages); Rules and Regulations Implementing the CAN-SPAM Act of 2003 and the TCPA, 69 FR 55765-01, 19 FCC Rcd. 15927, 15933, ¶ 16, 2004 WL 1794922 (2004) (same). A true and correct copy of the opinion issued in MySpace, Inc., is attached hereto as Exhibit 9.
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In addition to its prohibition on false or misleading headers, the CAN-SPAM Act prohibits a "pattern or practice" of: transmitting a deceptive subject heading, § 7704(a)(2); sending commercial messages that do not contain clear and conspicuous identification that the message is an advertisement or solicitation and a clear and conspicuous return address that allows the recipient to opt-out of future messages, §§ 7704(a)(3), (5); and sending commercial messages to recipients after they have requested not to receive such messages from the sender, § 7704(a)(4). While the CANSPAM Act does not define a "pattern or practice" for purposes of §§ 7704(a)(2-5), "pattern" is defined in Black's Law Dictionary to mean "a mode of behavior or series of acts that are recognizably consistent." BLACK'S LAW DICTIONARY 1164 (8th ed. 2004). At a minimum, therefore, "pattern or practice" involves more than a single incident. Here, Tong has engaged in a pattern or practice of creating nearly 200 false user accounts on the
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automated program. For example, in response to an automated message initiated by Tong that reads "you seem like someone we'd like to chat with," the Gaydar Member's response "how do u know that" shows that he believed he was communicating with a human being. See Exhibit 8. Tong's pattern of initiating hundreds of misleading spam messages clearly violates § 7704(a)(2)'s prohibition on transmitting deceptive subject headings. Thus, QSoft is likely to prevail on its claim that Defendants transmitted deceptive subject headings in violation of the CAN-SPAM Act. Moreover, in violation of § 7704(a)(4) of the CAN-SPAM Act, Tong continued to send these misleading spam messages to Gaydar Members after they requested not to receive any additional messages. Because Tong's unsolicited and unwelcomed spam messages did not provide a way for Gaydar Members to request not to receive future messages (an opt-out option), QSoft, first on November 24, 2006 and again on May 18, 2007, instructed Tong to cease and desist his transmission of the spam messages. See Exhibits 5 and 6.6 Despite being directed to cease his spamming attacks, Tong continued to send Gaydar Members unsolicited spam messages. To date, Gaydar Members continue to receive unsolicited spam messages advertising Defendants' Infringing Domain Names and competing products and services. For these reasons, QSoft is likely to prevail on its claim that Defendants' continued spamming attacks violated § 7704(a)(4) of the CAN-SPAM Act. Additionally, the CAN-SPAM Act requires that any commercial electronic mail include "clear and conspicuous identification that the message is an advertisement or solicitation," notice of the opportunity "to decline to receive further commercial electronic mail messages from the sender," and "a valid physical postal address of the
6
Teddy Tong registered
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sender." §§ 7704(a)(3), (5). The spam messages transmitted by Tong do not contain any of the information required by the CAN-SPAM Act. They do not identify themselves as advertisements on behalf of the various competing and infringing websites, nor do they contain clear and conspicuous notice of the Gaydar Member's opportunity to opt out or decline to receive further messages from Tong. See Exhibit 8. Further, they also lack a valid physical postal address for Defendants. See id. QSoft is therefore also likely to succeed on its claims against Defendants under any of these provisions of the CANSPAM Act. Defendants' violations of the CAN-SPAM Act are egregious and are likely to be found as willful because they were perpetrated in violation of QSoft's MTC to which Tong assented before sending any of the spam messages. In addition, Tong continued to send spam messages even after QSoft sent him two cease and desist letters. By
continuing to engage in the creation of multiple accounts for false and fraudulent purposes and continuing to send out unsolicited commercial email communications containing materially false or misleading information, Defendants have acted willfully and knowingly. C. QSoft Is Likely To Succeed On Its Claim Under The ACPA
In 1999, Congress enacted the ACPA in order to prevent the misappropriation of trademarks by stopping conduct known as "cybersquatting." The ACPA defines
"cybersquatting" as registering or using with a "`bad faith' intent to profit from an Internet domain name that is `identical or confusingly similar' to the distinctive or famous trademark or internet domain name of another person or company." Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001) (quoting 15 U.S.C. § 1125(d)). QSoft is
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likely to succeed on the merits of its claim because it can establish that: 1) GAYDAR is a distinctive or famous mark entitled to protection; 2) Defendants' domain names are identical or confusingly similar to QSoft's GAYDAR mark; and 3) Defendants registered the domain names with the bad intent to profit from them. Id. at 482 (citations omitted). 1. GAYDAR Is A Distinctive And Famous Mark Entitled To Protection.
The GAYDAR mark is both "distinctive" and "famous" and, therefore, entitled to protection under the ACPA. In evaluating this element, the following factors may be considered: (A) the degree of inherent or acquired distinctiveness of the mark; (B) the duration and extent of the use of the mark in connection with the goods or services with which the mark is used; (C) the duration and extent of advertising and publicity of the mark; (D) the geographical extent of the trading area in which the mark is used; (E) the channels of trade for the goods or services with which the mark is used; (F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the person against whom the injunction is sought; (G) the nature and extent of use of the same or similar marks by third parties. Shields, 254 F.3d at 482 (citing 15 U.S.C. § 1125(c)(1)). A review of these factors clearly establishes that QSoft's GAYDAR mark is both distinctive and famous. In May 1999, QSoft registered the domain name
services, for the gay and lesbian community under the GAYDAR mark and brand name and through its GAYDAR websites.
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QSoft's network of GAYDAR websites serve more than 300 million page impressions per month to over three million registered and audited users. (See Verified Complaint at ¶ 15.) The GAYDAR websites thus give GAYDAR a global presence. Of the three million registered and audited users, over 400,000 are residents of the United States. (See id. at ¶ 16.) Over the years, QSoft has invested substantial amounts of time, creative energy, and money in developing, promoting and maintaining its GAYDAR mark and its GAYDAR websites. QSoft has engaged in extensive national and
international advertising on the Internet, in newspapers, and on radio stations, to promote the GAYDAR mark and the GAYDAR websites. In 2005, QSoft spent $124,145.00 in advertising the GAYDAR name and GAYDAR websites in the United States alone. (See id. at ¶ 37.) As a result of QSoft's substantial efforts and investments, the GAYDAR mark has come to represent QSoft's goodwill and recognition as a leading source of online gay and lesbian dating services and has become one of the biggest and most recognized names in the global gay and lesbian marketplace. Accordingly, the
GAYDAR mark is undoubtedly a famous and distinctive mark entitled to protection. See Shields, 254 F.3d at 482-83 (finding mark entitled to protection where corresponding website received "in excess of 700,000 visits per month"). 2. Defendants' Infringing Domain Names Are Confusingly Similar To QSoft's GAYDAR Mark.
In determining whether Defendants' Infringing Domain Names are confusingly similar to, or in the case of famous marks, dilutive of, QSoft's GAYDAR mark, the Court is to make a "direct comparison between the protected mark and the domain name itself." Northern Light Technology v. Northern Lights Club, 97 F. Supp. 2d 96, 117 (D. Mass. 2000); see also Coca-Cola Co. v. Purdy, 382 F.3d 774, 783 (8th Cir. 2004) ("It is the
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challenged domain name and the plaintiff's mark which are to be compared."). The question under the ACPA is therefore not whether Defendants' Infringing Domain Names are likely to be confused with QSoft's domain name, but whether they are identical or confusingly similar to QSoft's protected marks. See Coca-Cola, 382 F.3d at 783. Defendants' Infringing Domain Names,
7
A domain name typically consists of a top level extension, such as .com, .org, or .net, and a second level domain name, such as google in google.com. Coca-Cola, 38 F.3d at 783.
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3.
Defendants Registered The Infringing Domain Names With The Bad Faith Intent To Profit From Them.
Defendants intentionally chose to use the Infringing Domain Names to profit from the distinctive and famous GAYDAR mark. The ACPA provides nine non-exclusive factors to assist courts in determining when a person has acted with bad faith intent: (I) the trademark or other intellectual property rights of the person, if any, in the domain name; (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; (III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services, (IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name; (V) the person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; (VI) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct; (VII) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct; (VIII) the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and (IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of this section. Shields, 254 F.3d at 484-485 (citing 15 U.S.C. § 1125(d)(1)(B)(i)). The first four factors are seen as reasons why a defendant might have, in good faith, registered a certain domain name incorporating another's mark, while the remaining five factors are indicia of bad faith. Coca-Cola, 382 F.3d at 785 (citation omitted). Eight of the nine statutory
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factors weigh in favor of finding that Defendants acted with a bad faith intent to profit from the GAYDAR mark. The first four statutory factors (factors I through IV, supra) all weigh in favor of finding that the Defendants had a bad faith intent. First, Defendants have no legal rights in any of the marks that the Infringing Domain Names incorporate. In fact, the only part of the Infringing Domain Names that could possibly be entitled to protection is GAYDAR, a mark that is already the intellectual property of QSoft. Second, Defendants are not known by any of the Infringing Domain Names - in other words, no variation of the name Teddy Tong is to be found in any of the Infringing Domain Names. Third, Defendants have not previously used any of the Infringing Domain Names in the offering of goods and services. In fact, a presumption of bad faith arises in situations where the senior user's trademark is famous in the marketplace and the junior user was aware of the trademark and its fame. Victoria's Secret Stores v. Artco Equipment Co., Inc., 194 F. Supp. 2d 704, 722 (S.D. Ohio 2002). Fourth, Defendants do not use the Infringing Domain Names for a non-commercial or "fair use" purpose. In fact, the opposite is true. The Infringing Domain Names are used to promote online services that directly compete with QSoft. With respect to the remaining five factors (factors V, VII through IX, supra), four of them weigh in favor of finding that Defendants acted with bad faith intent to profit from the GAYDAR mark. Using misleading contact information, the Defendants
registered multiple domain names, knowing that the domain names were confusingly similar to QSoft's distinctive and famous GAYDAR mark. Defendants did so, not for any legitimate purpose, but to divert consumers from QSoft's GAYDAR websites to
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websites accessible through the Infringing Domain Names in a manner that could harm the goodwill of QSoft's GAYDAR mark by creating confusion as to the source of the domain names. Indeed, consumers intending to view and/or access QSoft's GAYDAR websites could be, and in some instances were, diverted to Defendants' Infringing Domain Names and corresponding websites, which promote online gay and lesbian oriented services that compete directly with QSoft. Although Defendants have yet to offer to sell or transfer the Infringing Domain Names to QSoft (factor VI, supra), the other eight factors all weigh in favor of finding that the Defendants acted with a bad faith intent to profit from QSoft's GAYDAR mark. See Coca-Cola, 382 F.3d at 786-787 (holding that plaintiffs would likely establish that defendant acted with bad faith intent to profit where eight of the nine statutory factors weigh in favor of such a finding). As the foregoing analysis shows, the Defendants have unquestionably engaged in "cybersquatting" by registering multiple domain names that are confusingly similar to QSoft's GAYDAR mark with the bad faith intent to profit from the GAYDAR mark. QSoft, therefore, has demonstrated a strong probability of success on the merits of its ACPA claim. D. QSoft Will Be Irreparably Harmed If Preliminary Injunctive Relief Is Not Granted
QSoft has been, and will continue to be, irreparably harmed by Defendants' spamming attacks and domain name infringement if immediate injunctive relief is not granted. Irreparable harm includes "loss of control of reputation, loss of trade and loss of goodwill." Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998). Defendants' unsolicited spamming attacks have already degraded the user-
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experience of each affected GAYDAR Member, clogged the
messages likely to lead Gaydar Members into believing that the Infringing Domain Names and competing services are affiliated with or endorsed by QSoft are particularly harmful because of "the loss of goodwill and reputation arising from customer confusion about the source of defendants' spam e-mails and/or plaintiff's affiliation or sponsorship of them. This kind of harm is not easily quantified and not adequately compensated with money damages." Hotmail Corp. v. Van$ Money Pie Inc., 47 U.S.P.Q. 2d 1020, 1025-26 (N.D. Cal. 1998). Additionally, Defendants Infringing Domain Names are confusingly similar to QSoft's GAYDAR mark and GAYDAR websites. Such a showing supports a strong presumption of irreparable harm to QSoft.8 See Coca-Cola, 382 F.3d at 789 ("A showing that confusion is likely supports a strong presumption of irreparable harm."); Shields, 254 F.3d at 486 (irreparable injury can be based on a finding of likelihood of confusion). QSoft has therefore already suffered, and, if Defendants are not enjoined, will continue to suffer, irreparable harm from the distribution, promotion, and use of Defendants' spam campaign and Infringing Domain Names. In addition, if the Court does not enjoin the Defendants' operation of the Infringing Domain Names and the corresponding websites, QSoft will continue to suffer
8
Although there is no appellate authority regarding whether or not irreparable harm may be presumed in cybersquatting actions upon a showing of likelihood of success on the merits (as there is in trademark infringement actions), several district courts have addressed the issue. For example, the court in Freedom Calls Found. v. Bukstel, No. 05-CV-5460, 2006 WL 2620648 (E.D.N.Y. Sept. 12, 2006), found "following other district courts of the Second Circuit, this Court also finds that irreparable harm may be presumed for the Lanham Act cyber-squatting claim because Plaintiff has shown a likelihood of success on the merits." Since Congress embedded the ACPA within the Lanham Act, it seems consistent that irreparable harm will be presumed in cybersquatting cases upon a showing of likelihood of success on the merits (at least in those circuits holding that the harm is presumed in infringement cases). The Third Circuit is one of those circuits. See Kos, 369 F.3d at 726 (holding that plaintiff is entitled to a presumption that it will suffer irreparable harm absent an injunction once it was able to show a likelihood of success on its trademark claim).
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irreparable harm. Defendants' Infringing Domain Names are likely to confuse Gaydar Members as to the source and sponsorship of the corresponding websites and to divert Gaydar Members from their intended website destinations. See Coca-Cola, 382 F.3d at 789-790. In fact, Defendants' Infringing Domain Names direct customers to websites that are in direct competition with the services provided by QSoft. See Exhibit 7. Moreover, QSoft will suffer damage to its reputation and a loss of goodwill should Defendants be allowed to continue to operate their Infringing Domain Names and corresponding websites. See Shields, 254 F.3d at 486. E. Granting Preliminary Relief Will Not Result In Harm To Defendants
Defendants will not suffer any greater harm should a preliminary injunction be issued. Courts will balance the harm that QSoft would suffer in the absence of an
injunction with the harm that the Defendants will suffer if an injunction is issued. Kos, 369 F.3d 727, 728. As noted above, QSoft will suffer a loss of customers and goodwill should an injunction not be granted. Any economic harm to the Defendants from being ordered to discontinue sending spam messages and the loss of the Infringing Domain Names would be minimal, at best. Moreover, any injury to Defendants is one that they brought upon themselves by knowingly registering Infringing Domain Names, breaching QSoft's MTC, and sending spam messages. Indeed, the Third Circuit has recognized that "the injury a defendant might suffer if an injunction were imposed may be discounted by the fact that the defendant brought that injury upon itself." Novartis Consumer Health, Inc. v. JohnsonMerck Consumer Pharm. Co., 290 F.3d 578, 596 (3d Cir. 2002). To hold otherwise "would allow `a knowing infringer [that] construct[s] its business around its
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infringement' to avoid an injunction by claiming it would have a `devastating effect' on that business, `a result we cannot condone.'" Kos, 369 F.3d at 728-729 (quoting Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir. 1983)). In addition, "where the plaintiff is more likely to win, the less heavily need the balance of harm weigh in his favor." Novartis, 290 F.3d at 597. Given QSoft's strong showing of its likelihood of success on its CAN-SPAM Act and ACPA claims, as well as the fact that Defendants accepted the risk of injury (if any exists) by knowingly continuing to send spam messages and registering, in bad faith, the Infringing Domain Names, the Court should find that the balance of harms weigh in QSoft's favor. F. Preliminary Relief Enjoining And Preventing Spam Is In The Public Interest
A preliminary injunction against Defendants serves public interest. In passing the CAN-SPAM Act, Congress found that electronic mail had "become an extremely important and popular means of communication, relied on by millions of Americans on a daily basis." 15 U.S.C. § 7701(a)(1). Congress also found that spam imposes significant monetary costs on the public and that the problems associated with the rapid growth and abuse of unsolicited commercial electronic mail must be regulated. § 7701. See 15 U.S.C.
As one court has found, the public interest in deterring spam that forces
recipients to incur the costs of needlessly expending energy and time evaluating and eventually discarding unsolicited messages is great. See FTC v. Phoenix Avatar, LLC, No 04 C 2897, 2004 WL 1746698, *14 (N.D. Ill. July 30, 2004) (granting a preliminary injunction against defendants for spamming in violation of the CAN-SPAM Act). Hence, an injunction enjoining Defendants from their spamming activities is in the public interest.
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The public interest is equally served by enjoining the Defendants from the use of the Infringing Domain Names and the corresponding websites. As the Third Circuit has held in trademark cases, the "public interest ... is a synonym for the right of the public not to be deceived or confused." Opticians Ass'n v. Indep. Opticians, 920 F.3d 187, 197 (3d Cir. 1990); see also Estate of Presley v. Russen, 513 F.Supp. 1339, 1382 (D.N.J. 1981) ("[T]he public is interested in fair competitive practices and clearly opposed to being deceived in the marketplace."). As shown above, Defendants' use of the Infringing Domain Names is commercially misleading. The Infringing Domain Names are likely to confuse and divert customers from their intended online destinations and to damage QSoft's goodwill. Accordingly, the public interest is served by the granting of a
preliminary injunction. CONCLUSION Defendants' harmful and illegal spamming attacks and cybersquatting must cease. Defendants are in violation of the CAN-SPAM Act through their transmissions of hundreds of spam messages to Gaydar Members. While the spam messages themselves violate the CAN-SPAM Act, Defendants' continued transmission of these messages to Gaydar Members, after being directed by QSoft to cease and desist on two prior occasions, requires this Court's immediate intervention, as does Defendants' promotion of competing products and services through the continued use of the Infringing Domain Names and corresponding websites. QSoft has been and continues to suffer irreparable harm due to Defendants' actions. QSoft therefore respectfully requests that the Court grant QSoft the requested injunctive relief set out in the attached proposed Preliminary Relief Order.
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