Fourth Circuit Archives

It’s PRUdent to Refrain from Cybersquatting: ACPA Applies to Domain Name Re-Registration

The US Court of Appeals for the Fourth Circuit joined the Third and Eleventh Circuits in ruling that the re-registration of an infringing domain name with a bad faith intent to profit violates the Anti-Cybersquatting Consumer Protection Act (ACPA). Prudential Ins. Co. of Am. v. Shenzhen Stone Network Info. Ltd., Case No. 21-1823 (4th Cir. Jan. 24, 2023) (Diaz, Thacker, Floyd, JJ.)

The ACPA, 15 U.S.C. § 1125(d), protects trademark owners from cybersquatters that register, traffic in, or use a domain name “identical or confusingly similar to or dilutive of” a distinctive or famous mark with the “bad faith intent to profit.” The ACPA jurisdictional requirement states that a trademark owner may either establish that a court has in personam jurisdiction over the defendant or, if personal jurisdiction cannot be established, bring an in rem action against the domain name.

Prudential Insurance Company of America’s trademark portfolio includes the term PRU and other PRU-formative marks. Shenzhen Stone Network Information (SSN) acquired the domain name PRU.COM from an online domain name marketplace, which leads to a parked page containing advertisements displaying Prudential’s trademarks and the marks of Prudential’s competitors. Prudential attempted to acquire the PRU.COM domain name twice—once through a domain name brokerage service and once after filing a Uniform Domain Name Dispute Resolution Policy (UDRP) administrative action with the World Intellectual Property Organization (WIPO). SSN rejected both offers. SSN claimed that it planned to develop the website into a foreign exchange and economic news platform, but it never substantively altered the parked page. Prudential subsequently dismissed the UDRP action and filed suit in the Eastern District of Virginia alleging cybersquatting and infringement against the CEO of SSN, Zhang (in personam), and PRU.COM (in rem). Zhang moved to dismiss the action or transfer it to the District of Arizona for lack of personal jurisdiction and in rem jurisdiction. The district court held that although it lacked personal jurisdiction over Zhang, in rem jurisdiction was appropriate at the time the complaint was filed. The district court then dismissed Prudential’s trademark infringement claim as moot, granted summary judgment to Prudential on its cybersquatting claim and ordered SSN to transfer the PRU.COM domain name. SSN timely appealed to the Fourth Circuit.

The Fourth Circuit, reviewing the district court ruling de novo, affirmed. As an initial matter, the Court held that the district court had proper in rem jurisdiction over the PRU.COM domain name because Zhang, as a corporate officer of SSN, lacked standing to defend SSN’s property interests and the domain name registry was located in Virginia. Moreover, in rem jurisdiction is assessed at the time the complaint is filed and cannot be destroyed during the pendency of the case if a proper defendant is later revealed.

Regarding the ACPA claim, SSN argued that since the initial domain name registrant registered PRU.COM in good faith, SSN, as a re-registrant, is not subject to the ACPA. The Fourth Circuit joined the Third and Eleventh Circuits in holding that the term “registration” in the ACPA is [...]

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Lost and “Found”: Fourth Circuit Interpretation of Discovery in Support of Foreign Litigation Opens Circuit Split

The US Court of Appeals for the Fourth Circuit held that a corporation that is not physically present in a district is not “found” in the district for purposes of the federal statute that authorizes courts to order discovery for use in a foreign tribunal. In re Eli Lilly and Co., Case No. 22-1094 (4th Cir. 2022) (Niemeyer, Diaz, JJ.; Floyd, Sr. J.) The Court rejected the approach of the Second Circuit, which previously had held that a district court’s power to order discovery under 28 USC § 1782 was coextensive with the minimum contacts inquiry of specific jurisdiction.

After acquiring a patent portfolio related to the psoriasis drug Taltz, Novartis AG sued Eli Lilly for patent infringement in several European courts. Eli Lilly requested discovery from Novartis in the Eastern District of Virginia under § 1782, which authorizes a district court “of the district in which a person resides or is found” to “order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal.” Novartis is based in Switzerland and has no offices or employees in the Eastern District of Virginia.

Following a magistrate judge’s grant of Eli Lilly’s ex parte application for a discovery subpoena, the district court vacated that order. The Fourth Circuit affirmed, substantially echoing the district court’s reasoning.

There was no dispute that Novartis did not “reside” in the district; the only issue was whether Novartis could be “found” there. The Fourth Circuit considered the plain meaning of “found,” Supreme Court precedent interpreting similar statutory language, and the legislative history of the statute, and held “that a corporation is found where it is physically present by its officers and agents carrying on the corporation’s business.”

The Fourth Circuit rejected Eli Lilly’s counterargument that the satisfaction of specific jurisdiction requirements was sufficient for a corporation to be “found” in a district, including Eli Lilly’s reliance on the 2019 Second Circuit decision in In re del Valle Ruiz, which held that a corporation was “found” wherever it could be subject to specific jurisdiction. The Fourth Circuit concluded that In re del Valle Ruiz failed to give “found” its plain meaning, incorrectly ignored Supreme Court precedent and did not give appropriate weight to the legislative history of § 1782.

Even if the Fourth Circuit had disagreed with the district court’s interpretation of § 1782, the Court would still have affirmed based on the deferential abuse-of-discretion standard. Because § 1782 permits, but does not require, an order of discovery, the Court found that the district court’s determination that to “request[ ] [ ] a substantial volume of data and materials located abroad [to] be brought into the United States for subsequent use in proceedings abroad, [would be] a nonsensical result” was well reasoned.

With this decision, the Fourth Circuit broke with the Second Circuit and created a circuit split in the interpretation of § 1782.

Ian Howard, a summer associate in the Washington, DC, office, also contributed [...]

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It’s PRUdent to Refrain from Cybersquatting: ACPA Applies to Domain Name Re-Registration

Lost and “Found”: Fourth Circuit Interpretation of Discovery in Support of Foreign Litigation Opens Circuit Split

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