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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

------------------------------------------------*

HARRODS LIMITED,

Plaintiff-Appellant,

SIXTY INTERNET DOMAIN NAMES;

HARRODSARGENTINA.COM;No. 00-2414

HARRODSARGENTINA.NET;

HARRODSARGENTINA.ORG;

HARRODSBUENOSAIRES.COM;

HARRODSBUENOSAIRES.NET;

HARRODSBUENOSAIRES.ORG,

Defendants-Appellees.

------------------------------------------------*

HARRODS LIMITED,

Plaintiff-Appellee,

FIFTY-FOUR INTERNET NAMES;

HARRODSSUDAMERICA.COM;

HARRODSSUDAMERICA.NET;

HARRODSSUDAMERICA.ORG;

HARRODSSOUTHAMERICA.COM;No. 01-1928

HARRODSOUTHAMERICA.NET;

HARRODSSOUTHAMERICA.ORG;

HARRODSBRASIL.COM;

HARRODSBRASIL.NET;

HARRODSBRASIL.ORG;

HARRODSBRAZIL.COM;

HARRODSBRAZIL.NET;

HARRODSBRAZIL.ORG;

CIBERHARRODS.COM;

------------------------------------------------*

CIBERHARRODS.NET;

CIBERHARRODS.ORG;

CYBERHARRODS.COM;

CYBERHARRODS.NET;

CYBERHARRODS.ORG;

HARRODSBANK.COM;

HARRODSBANK.NET;

HARRODSBANK.ORG;

HARRODSBANKING.COM;

HARRODSBANKING.NET;

HARRODSBANKING.ORG;

HARRODSFINANCIAL.COM;

HARRODSFINANCIAL.NET;

HARRODSFINANCIAL.ORG;

HARRODSSERVICES.COM;

HARRODSSERVICES.NET;

HARRODSSERVICES.ORG;

HARRODSVIRTUAL.COM;

HARRODSVIRTUAL.NET;

HARRODSVIRTUAL.ORG;

HARRODSSTORE.COM;

HARRODSSTORE.NET;

HARRODSSTORE.ORG;

TIENDAHARRODS.COM;

TIENDAHARRODS.NET;

TIENDAHARRODS.ORG;

HARRODSAMERICA.COM;

HARRODSAMERICA.NET;

HARRODSAMERICA.ORG;

SHOPPINGHARRODS.COM;

SHOPPINGHARRODS.NET;

SHOPPINGHARRODS.ORG;

HARRODSSHOPPING.COM;

HARRODSSHOPPING.NET;

HARRODSSHOPPING.ORG;

HARRODSBASHOPPING.COM;

------------------------------------------------*

HARRODSBASHOPPING.NET;

HARRODSBASHOPPING.ORG;

HARRODSSHOPPINGBA.COM;

HARRODSSHOPPINGBA.NET;

HARRODSSHOPPINGBA.ORG,

Defendants-Appellants.

------------------------------------------------*

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-00-262-A)

Argued: April 3, 2002

Decided: August 23, 2002

Before WILKINS and MICHAEL, Circuit Judges, and
HAMILTON, Senior Circuit Judge.

____________________________________________________________

Affirmed in part, reversed in part, and remanded by published opin-

ion. Judge Michael wrote the opinion, in which Judge Wilkins and

Senior Judge Hamilton joined.

____________________________________________________________

COUNSEL

ARGUED: Ralph Arthur Taylor, Jr., DORSEY & WHITNEY,

L.L.P., Washington, D.C., for Appellants. Susan J. Kohlmann,

PILLSBURY WINTHROP, L.L.P., New York, New York, for Appel-

lees. ON BRIEF: Kevin B. Bedell, DORSEY & WHITNEY, L.L.P.,

Washington, D.C.; Bruce R. Ewing, Lile H. Deinard, DORSEY &

WHITNEY, L.L.P., New York, New York, for Appellants. Rodney H.

Glover, Attison L. Barnes, III, Charles C. Lemley, GARDNER, CAR-

TON & DOUGLAS, Washington, D.C., for Appellees.

____________________________________________________________

OPINION

MICHAEL, Circuit Judge:

This case involves a dispute over Internet domain names between

two companies named "Harrods," both with legitimate rights to the

"Harrods" name in different parts of the world. The plaintiff, Harrods

Limited ("Harrods UK"), is the owner of the well-known Harrods of

London department store. The defendants are 60 Internet domain

names ("Domain Names" or "Names") registered in Herndon, Vir-

ginia, by Harrods (Buenos Aires) Limited ("Harrods BA"). Harrods

BA, once affiliated with Harrods UK, is now a completely separate

corporate entity that until recently operated a "Harrods" department

store in Buenos Aires, Argentina. Harrods UK sued the 60 Domain

Names under 15 U.S.C. § 1125(d)(2), the in rem provision of the

recently enacted Anticybersquatting Consumer Protection Act

(ACPA), Pub. L. No. 106-113, 113 Stat. 1501A-545 (codified in scat-

tered sections of 15 U.S.C.) (1999). Harrods UK alleged that the

Domain Names infringed and diluted its American "Harrods" trade-

mark and that Harrods BA registered the Names in bad faith as pro-

hibited by 15 U.S.C. § 1125(d)(1).¹ The district court dismissed the

infringement and dilution claims, holding that in rem actions could

only be maintained for bad faith registration claims under

§ 1125(d)(1). As discovery was just beginning, the district court

granted summary judgment to six of the Domain Names on Harrods

UK's bad faith registration claim. After full discovery and a bench

trial, the court awarded judgment to Harrods UK against the remain-

ing 54 Domain Names and ordered those names to be transferred to

Harrods UK. Both sides now appeal. For the reasons that follow, we

____________________________________________________________

¹ Harrods UK actually brought four claims against the Domain Names

under various sections of Title 15. Count One alleged infringement of a

registered mark under § 1114. Count Two alleged dilution of a famous

mark under § 1125(c). Count Three alleged bad faith registration under

§ 1125(d)(1). Count Four alleged unfair competition under § 1125(a),

which, roughly speaking, is an infringement claim that can be brought

regardless of whether the mark is registered. See 4 J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition § 27:14 (4th ed.

2002). We will refer to Harrods UK's claims under § 1114 and § 1125(a)

together as a claim for infringement.

affirm the judgment as to the 54 Domain Names, reverse the dismissal

of Harrods UK's infringement and dilution claims, reverse the grant

of summary judgment to the six Domain Names, and remand for fur-

ther proceedings.

I.

Harrods UK and its predecessors have operated a department store

named "Harrods" in the Knightsbridge section of London, England,

since 1849. In 1912 Harrods UK created a wholly owned subsidiary,

Harrods South America Limited, to carry on business in South Amer-

ica. Harrods South America Limited created Harrods BA as an inde-

pendent company, and in 1914 Harrods BA opened a department

store under the name "Harrods" in a new building in downtown Bue-

nos Aires designed to look like Harrods UK's historic London build-

ing. Over the following decades Harrods BA registered "Harrods" as

a trademark in Argentina, Brazil, Paraguay, Venezuela, and a number

of other South American countries. Harrods UK and Harrods BA

quickly drifted apart: by the 1920s Harrods BA was operating largely

independently of Harrods UK, and the last remaining legal ties

between the two companies were severed in 1963.

In the early 1990s Harrods UK and Harrods BA entered into nego-

tiations for Harrods UK to buy Harrods BA's South American trade-

mark rights in the name "Harrods." At one point Harrods UK offered

$10 million for the rights, but the parties never reached agreement.

Later, in 1995, Harrods UK sued Harrods BA in British court, alleg-

ing breach of contract, breach of fiduciary duty, and passing off, all

arising from Harrods BA's use of the name "Harrods" in South Amer-

ica.² The British High Court of Justice, Chancery Division, dismissed

the contract and fiduciary duty claims against Harrods BA, and this

decision was affirmed in 1998 by the Court of Appeal, Civil Division.

Harrods Ltd. v. Harrods (Buenos Aires) Ltd., [1997] F.S.R. 420 (Ch.),

aff'd, [1999] F.S.R. 187 (C.A.). The Court of Appeal held that Har-

rods BA had an implied contractual right to carry on business under

the name "Harrods" anywhere in South America. Neither British court

____________________________________________________________

² "Passing off" is a common law unfair competition tort and was the

precursor to modern unfair competition legislation, such as the Lanham

Act. See 1 McCarthy §§ 5:2-5:4.

ruled on the passing off claim because that claim was withdrawn by

Harrods UK on the condition that Harrods BA limit its business to

South America. Here, we have not been asked to conclusively deter-

mine the legitimacy and scope of Harrods BA's rights in the name

"Harrods" throughout South America. It appears, however, that Har-

rods BA has the right to use the name "Harrods" in Argentina and

much of South America, and for the limited purposes of this litigation

Harrods UK does not attempt to prove otherwise.

Harrods UK, for its part, has exclusive trademark rights in the

name "Harrods" in much of the rest of the world, including the United

States, where retail catalog and Internet sales generate millions of dol-

lars in revenue each year. Harrods UK's retail business has thrived in

recent years, but Harrods BA's business has been in decline since the

early 1960s. Over the years, Harrods BA occupied less and less of its

large Buenos Aires department store building and leased more and

more of the space to other vendors. Some time around 1998 Harrods

BA ended its department store operation entirely, and the building

now sits vacant. Harrods BA's only current revenue is about $300,000

annually from the continued operation of the building's parking

garage.

In February of 1999 Harrods UK launched a website at the domain

name harrods.com, and the website became a functioning online retail

store in November of 1999. Harrods BA executives testified that

sometime in 1999 they also began planning to launch a Harrods store

on the Internet. Toward that end, Harrods BA hired a consultant, a

Mr. Capuro, to prepare a proposal for an online business. In the fall

of 1999, around the same time that Harrods UK was launching its

Internet business (and announcing this in the press), Harrods BA

began registering the first of what eventually became around 300

Harrods-related domain names. The 60 Domain Names that are defen-

dants in this case were registered with Network Solutions, Inc. (NSI),

a domain name registry located in Herndon, Virginia. At that time

NSI served as the exclusive worldwide registry for domain names

using .com, .net, and .org.³

____________________________________________________________

³ In June of 2000 NSI became a wholly owned subsidiary of VeriSign,

Inc., and VeriSign continues to serve as the exclusive worldwide registry

for .com, .net, and .org domain names.

A brief explanation of the nature and terminology of Internet

domain names is warranted before we continue with the details of

Harrods BA's domain name registrations. A domain name is the "ad-

dress" at which a computer user accesses a website on the Internet.⁴

A typical domain name is www.ca4.uscourts.gov, which is the

domain name for the website of the United States Court of Appeals

for the Fourth Circuit. Domain names consist of sections of alpha-

numeric characters separated by periods, called "dots." These sections

are referred to, working from right to left, as the top-level domain, the

second-level domain, and so on. The top-level domain is the ending

suffix, such as .gov (as in ca4.uscourts.gov) or .com (as in vw.com).

The second-level domain is the section just to the left of the top-level

domain (in the above examples, uscourts and vw serve as the second-

level domains). For obvious reasons, most companies want their pri-

mary trademark to serve as their second-level domain, as in vw.com

for Volkswagen of America. See Virtual Works, Inc. v. Volkswagen

of Am., Inc., 238 F.3d 264 (4th Cir. 2001).

Harrods BA registered each of its Harrods-related domain names

under the .com, .net., and .org top-level domains. For example, Har-

rods BA registered the second-level domain harrodsbuenosaires as

harrodsbuenosaires.com, harrodsbuenosaires.net, and harrodsbueno-

saires.org. This case involves 20 distinct second-level domain names,

each registered under the three top-level domains .com, .net, and .org,

for a total of 60 defendant Domain Names.⁵ All told, Harrods BA reg-

istered about 300 Harrods-related domain names in the United States.

The 20 second-level domain names at issue in this case are harrods-

buenosaires, harrodsargentina, harrodssudamerica, harrods-

southamerica, harrodsbrasil, harrodsbrazil, harrodsamerica, tiendahar-

rods, cyberharrods, ciberharrods, harrodsbank, harrodsbanking,

harrodsfinancial, harrodsservices, harrodsvirtual, harrodsstore, shop-

____________________________________________________________

⁴ For a useful glossary of Internet and domain name terminology, see

http://www.verisign-grs.com/glossary/.

⁵ For simplicity's sake we will refer to the names by the second-level

domains, such as harrodsbuenosaires, with the understanding that this

reference encompasses the three permutations of that second-level

domain created by combining it with the three top-level domains, .com,

.net, and .org.

pingharrods, harrodsshopping, harrodsbashopping, and harrods-

shoppingba.

We now return to the events leading up to this lawsuit. In Decem-

ber of 1999 Capuro finished his proposal for Harrods BA's online

business. The report suggested using the Harrods-related domain

names registered by Harrods BA to set up a website portal where

users could shop at various stores within the Harrods BA website.

This suggested arrangement was much like the physical Harrods

department store in Buenos Aires, where Harrods BA had until

recently housed a number of vendors (who were lessees) in its famous

four-story building under the umbrella of the Harrods name. Under

the proposal Harrods BA would not sell any merchandise itself but

would simply earn commissions from vendors that it sponsored. The

proposal thus treated the well-known Harrods name as the primary

asset that Harrods BA could offer vendors to induce them to join the

Harrods portal site and pay commissions. The report included an

illustration of a transaction occurring through the proposed Harrods

BA website. The illustration shows an online shopper designated as

a "UK citizen" purchasing a Burberry sweater (a British brand) at the

Harrods BA website and paying for the purchase with funds from

Barclays Bank (a British bank). The "Harrods" logo on the webpage

illustration is not the distinct "Harrods" logo used by Harrods BA;

instead, it is identical to the script logo long used by Harrods UK.

Harrods BA used this proposal to solicit potential investors and part-

ners in Argentina, the United States, and Europe (mostly via the Inter-

net). No party expressed interest, and by January of 2000 Harrods BA

had rejected the Capuro proposal and had solicited Ernst & Young to

prepare a new business plan. The Ernst & Young plan was not intro-

duced or described at trial.

On February 16, 2000, Harrods UK sued 60 of the Harrods-related

domain names in the United States District Court for the Eastern Dis-

trict of Virginia. Harrods UK sued under 15 U.S.C. § 1125(d)(2),

which permits the owner of a protected mark to bring an in rem action

against domain names that violate "any right of the owner of a mark,"

subject to certain limitations. For example, the in rem action is avail-

able only when the plaintiff cannot find or cannot obtain personal

jurisdiction over the domain name registrant.⁶ Harrods UK claimed

____________________________________________________________

⁶ Section 1125(d)(2) actually says that the in rem action is available

only when the plaintiff cannot find or obtain personal jurisdiction over

that the Domain Names violated 15 U.S.C. § 1125(d)(1), which pro-

hibits bad faith registration of domain names with intent to profit, and

15 U.S.C. §§ 1114, 1125(a) & (c), which together prohibit trademark

infringement and dilution. Harrods BA was easily identified as the

registrant of the defendant Domain Names, but the mere act of regis-

tering the Domain Names in Virginia was deemed insufficient to pro-

vide personal jurisdiction over Harrods BA. See, e.g., Heathmount

A.E. Corp. v. Technodome.com, 106 F. Supp. 2d 860, 866-69 (E.D.

Va. 2000). Because Harrods UK could not obtain personal jurisdic-

tion over Harrods BA, the suit was filed in rem against the 60 Domain

Names themselves.

The initial complaint did not allege bad faith registration on the

part of Harrods BA. The Domain Names moved to dismiss, arguing

that bad faith must be pled and proven in all cases filed under the in

rem provision of the ACPA, § 1125(d)(2). The district court dis-

missed the infringement and dilution claims with prejudice, holding

that § 1125(d)(2) provided in rem jurisdiction only for bad faith

claims under § 1125(d)(1). The court also dismissed without prejudice

Harrods UK's bad faith registration claim under § 1125(d)(1) because

the complaint failed to allege bad faith. Harrods UK promptly filed

an amended complaint, this time alleging bad faith under

§ 1125(d)(1). Before discovery got under way, the Domain Names

moved for summary judgment as to just six of the names, specifically

the .com, .net, and .org permutations of harrodsbuenosaires and har-

rodsargentina (the "Argentina Names"). The district court granted

summary judgment to the Argentina Names, reasoning that Harrods

BA had legitimate trademark rights in Argentina and that these

Names on their face were clearly identified as Buenos Aires- and

Argentina-related.

____________________________________________________________

"a person who would have been a defendant in a civil action under para-

graph (1)." 15 U.S.C. § 1125(d)(2)(A)(ii). The reference to paragraph (1)

means § 1125(d)(1), which applies to a person who "registers, traffics in,

or uses a domain name" with the bad faith intent to profit. 15 U.S.C.

§ 1125(d)(1)(A)(ii). For simplicity's sake, we will refer to § 1125(d)(1)

as covering the registration of a domain name in bad faith, but we

acknowledge that the section also applies to bad faith trafficking or use.

After extensive discovery and a bench trial, the district court found

bad faith intent to profit on the part of Harrods BA with respect to the

remaining 54 Domain Names and ordered that those names be trans-

ferred to Harrods UK. (Forfeiture, cancellation and transfer of domain

names are the only remedies available under the in rem provision. 15

U.S.C. § 1125(d)(2)(D)(i).) Harrods UK appeals the district court's

order dismissing its infringement and dilution claims and the order

granting summary judgment to the six Argentina Names. The Domain

Names appeal the court's order entering judgment after trial for Har-

rods UK against the remaining 54 Domain Names.

II.

The central issue for both the six Argentina Names and the other

54 Names is whether Harrods BA registered the Domain Names in

bad faith as that term is outlined by the ACPA. Ultimately, we con-

clude that the district court did not err in holding that Harrods BA

registered the 54 Names in bad faith, but the court did err in granting

summary judgment to the six Argentina Names before Harrods UK

had an adequate opportunity for discovery. Before we deal with the

issue of bad faith registration, we must consider several other issues

raised by the parties. First, the Domain Names assert a due process

challenge to the district court's in rem jurisdiction on the ground that

the Names lack sufficient minimum contacts with the forum. Second,

the Domain Names argue that claims of bad faith under § 1125(d)(1)

must be proven by clear and convincing evidence, not by a preponder-

ance of the evidence, which is the usual standard. For its part, Harrods

UK argues that § 1125(d)(2) provides in rem jurisdiction not only for

violations of § 1125(d)(1) but also for other trademark violations,

such as infringement and dilution. We conclude that the district court

properly exercised jurisdiction over the Domain Names and that the

normal preponderance of the evidence standard applies to bad faith

claims under § 1125(d)(1). We further conclude that a plaintiff bring-

ing an in rem action under § 1125(d)(2) may, in appropriate circum-

stances, pursue infringement and dilution claims as well as bad faith

registration claims under § 1125(d)(1). We discuss these issues here

in part II, and then in part III we discuss the question of Harrods BA's

alleged bad faith.

A.

On appeal the Domain Names claim that the district court's exer-

cise of in rem jurisdiction over them violates the Due Process Clause

because they lack sufficient minimum contacts with the forum. The

Due Process clause of the Fifth Amendment permits a federal court

to exercise personal jurisdiction over a defendant only if that defen-

dant has "certain minimum contacts with [the forum] such that the

maintenance of the suit does not offend `traditional notions of fair

play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S.

310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463

(1940)). "[T]he minimum contacts rule of International Shoe . . .

applie[s] to actions in rem and quasi in rem, as well as to actions in

personam." Pittsburgh Terminal Corp. v. Mid Allegheny Corp., 831

F.2d 522, 526 (4th Cir. 1987) (construing Shaffer v. Heitner, 433 U.S.

186 (1977)). Accordingly, we apply the minimum contacts test to the

district court's exercise of in rem jurisdiction over the Domain

Names. Under this test we ask whether there has been "some act by

which the defendant purposefully avail[ed] itself of the privilege of

conducting activities within the forum State, thus invoking the bene-

fits and protections of its laws." Hanson v. Denckla, 357 U.S. 235,

253 (1958). A federal district court can exercise personal and in rem

jurisdiction to the same extent as courts in the state where the district

court is located. Thus, to determine whether the Domain Names have

sufficient minimum contacts to justify the exercise of in rem jurisdic-

tion by the district court in this case, we must determine whether the

Domain Names have sufficient contacts with the Commonwealth of

Virginia to justify the exercise of in rem jurisdiction by the courts of

Virginia. See ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 622

(4th Cir. 1997).

In the case of disputes involving property, the presence of the prop-

erty in the jurisdiction does not always justify the exercise of in rem

jurisdiction, but "when claims to the property itself are the source of

the underlying controversy between the plaintiff and the defendant, it

would be unusual for the State where the property is located not to

have jurisdiction." Shaffer, 433 U.S. at 207 (internal footnote omit-

ted). See also 4A Charles A. Wright & Arthur R. Miller, Federal

Practice & Procedure § 1072 (3d ed. 2002). Specifically, the

Supreme Court said in Shaffer that in rem jurisdiction is appropriate

in "suits for injury suffered on the land of an absentee owner, where

the defendant's ownership of the property is conceded but the cause

of action is otherwise related to rights and duties growing out of that

ownership." Shaffer, 433 U.S. at 208. The dispute in this case is

roughly analogous to such a suit. Harrods UK has allegedly suffered

injury by way of property, the Domain Names, owned by Harrods

BA, an absentee owner. Harrods BA's initial ownership of the Names

is conceded, but the cause of action is related to Harrods BA's rights

and duties arising out of that ownership.

Likewise, Virginia's "interests in assuring the marketability of

property within its borders and in providing a procedure for peaceful

resolution of disputes about the possession of that property" also sup-

port the exercise of in rem jurisdiction in this case. Id. (internal foot-

note omitted). Moreover, Virginia's interest in not permitting foreign

companies to use rights emanating from, and facilities located in, its

territory to infringe U.S. trademarks also supports the exercise of in

rem jurisdiction. By registering these Domain Names in Virginia,

Harrods BA exposed those Names to the jurisdiction of the courts in

Virginia (state or federal) at least for the limited purpose of determin-

ing who properly owns the Domain Names themselves. This is not a

case where "the only role played by the property is to provide the

basis for bringing the defendant into court." Id. at 209. Rather,

because "claims to the property itself are the source of the underlying

controversy," id. at 207, and because Virginia has important interests

in exercising jurisdiction over that property (the Names), we conclude

that courts in Virginia, the state where the Domain Names are regis-

tered, may constitutionally exercise in rem jurisdiction over them.

Thus, the district court's exercise of in rem jurisdiction over the

Domain Names was constitutional.⁷

____________________________________________________________

⁷ The Domain Names also argue that domain names do not constitute

a form of property over which in rem jurisdiction can be exercised. The

Domain Names have waived this objection to the district court's in rem

jurisdiction by failing to raise it before the district court. See United

States v. Republic Marine, Inc. 829 F.2d 1399, 1401-05 (7th Cir. 1987);

5A Charles A. Wright & Arthur R. Miller, Federal Practice & Proce-

dure § 1351, at 245-47 (2d ed. 1990). Accordingly, we will not address

the issue. We note that the issue of whether domain names constitute a

form of property for the purpose of in rem jurisdiction is dealt with in

Porsche Cars North Am., Inc. v. Porsche.net, ___ F.3d ___ (4th Cir.

Aug. 23, 2002).

B.

The Domain Names argue that proving bad faith under

§ 1125(d)(1) requires proof by clear and convincing evidence rather

than by a preponderance of the evidence, the usual standard. The dis-

trict court concluded that the preponderance of the evidence standard

applies, and we agree. We can find no other cases discussing the

proper standard of proof under the ACPA, so we are the first to take

a direct crack at the question. We note, however, that none of the

courts applying the ACPA have mentioned a heightened burden of

proof. See, e.g., People for the Ethical Treatment of Animals v.

Doughney, 263 F.3d 359 (4th Cir. 2001); Virtual Works, 238 F.3d

264; Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489

(2d Cir. 2000). This suggests, at the very least, that courts have

assumed that the usual preponderance of the evidence standard

applies to bad faith claims under the ACPA.

The Supreme Court has explained that under "[c]onventional rules

of civil litigation . . . parties . . . need only prove their case by a pre-

ponderance of the evidence" and that "[e]xceptions to this standard

are uncommon." Price Waterhouse v. Hopkins, 490 U.S. 228, 253

(1989) (plurality opinion). "Because the preponderance-of-the-

evidence standard results in a roughly equal allocation of the risk of

error between litigants, we presume that this standard is applicable in

civil actions between private litigants unless `particularly important

individual interests or rights are at stake.'" Grogan v. Garner, 498

U.S. 279, 286 (1991) (quoting Herman & McLean v. Huddleston, 459

U.S. 375, 389 (1983)). The Supreme Court has applied a heightened

standard of proof in proceedings to terminate parental rights, involun-

tary commitment proceedings, and deportation proceedings. See Her-

man, 459 U.S. at 389 (listing cases). The interests implicated by the

cybersquatting provision of the ACPA are important, but they are not

in the same category as those listed in Herman .

The Domain Names argue that even if this case does not involve

"particularly important individual interests" of the type referred to in

Herman, the clear and convincing standard still applies because

§ 1125(d)(1) requires proof of bad faith. Indeed, in Addington v.

Texas, 441 U.S. 418, 424 (1979), the Supreme Court acknowledged

that "[o]ne typical use of the [clear and convincing] standard is in

civil cases involving allegations of fraud or some other quasi-criminal

wrongdoing by the defendant." A leading treatise adds that "[n]ot all

instances of requirements of proof more than [by a preponderance of

the evidence] concern cases involving individual liberty." 2 McCor-

mick on Evidence § 340, at 426 (John W. Strong et al. eds., 5th ed.

1999). In addition to cases involving the important interests of indi-

vidual liberty, "this special standard of persuasion commonly has

been applied [to, among other things,] . . . charges of fraud." Id. The

Domain Names argue that the clear and convincing standard of proof

should apply because the bad faith element of § 1125(d)(1) is equiva-

lent to an element of fraud.

We acknowledge that the clear and convincing evidence standard

has been applied in certain cases involving fraudulent or bad faith

conduct. See, e.g., Grossman v. Comm'r of Internal Revenue, 182

F.3d 275, 277 (4th Cir. 1999) (clear and convincing evidence required

to prove intent to defraud in civil tax fraud case under the Internal

Revenue Code); Shepherd v. ABC, 62 F.3d 1469, 1477-78 (D.C. Cir.

1995) (litigation misconduct must be proven by clear and convincing

evidence in order for the district court to enter default judgment as a

sanction for such misconduct). Indeed, courts have required clear and

convincing evidence for the proof of certain fraud-based claims under

the Lanham Act, such as a claim of fraudulent registration or a claim

for attorneys' fees when the infringer's conduct was fraudulent or in

bad faith. See Resorts of Pinehurst, Inc. v. Pinehurst Nat'l Corp., 148

F.3d 417, 420 (4th Cir. 1998) (fraudulent registration); Pebble Beach

Co. v. Tour 18 I Ltd., 155 F.3d 526, 555 (5th Cir. 1998) (attorneys'

fees). The heightened burden of proof was imposed in these instances

by the courts and not by the text of the Lanham Act. But while clear

and convincing evidence is required for some fraud-based claims, in

many instances a heightened burden of proof is not required. See, e.g.,

Grogan, 498 U.S. at 288-89 (listing federal fraud-related statutes to

which the preponderance standard applies); United States v. Trues-

dale, 211 F.3d 898, 908 (5th Cir. 2000) (criminal defendants whose

convictions were reversed must show by a preponderance of the evi-

dence that the government's position was in bad faith in order to

recover attorneys' fees under the Hyde Amendment); Donald v. Lib-

erty Mut. Ins. Co., 18 F.3d 474, 484 (7th Cir. 1994) (under Indiana

law, tort of bad faith dealing by an insurer is proved by a preponder-

ance of the evidence). Moreover, the Supreme Court has applied the

presumption that the preponderance standard applies even in civil

cases that involve fraud. For example, in Grogan the Court held that

a claim that a debt was incurred through actual fraud, which would

exempt the debt from general discharge under the Bankruptcy Act,

need only be proven by a preponderance of the evidence. Grogan,

498 U.S. at 290-91.

We can see no clear, overarching principle that separates the fraud

or bad faith claims requiring proof by clear and convincing evidence

from those fraud or bad faith claims requiring proof by a preponder-

ance of the evidence. Even so, the Supreme Court's analysis of the

relevant standard of proof in Herman does provide some guidance.

The Court explained that the heightened burden of proof requirement

arose out of a concern by courts of equity that charges of fraud could

be fabricated too easily. Herman, 459 U.S. at 388 n.27. This concern,

the Court reasoned, is not necessarily valid when modern statutes are

involved. In this case, for example, guidelines for establishing the ele-

ment of bad faith under the ACPA are set forth and explained in detail

both in the statute and in the legislative history. As we discuss fully

in part III, infra, § 1125(d)(1)(B)(i) contains nine factors to guide

courts in determining whether bad faith exists in a given case. These

factors include, among other things, any trademark rights of either

party in the domain name, any bona fide prior use of the domain

name, and any offer by the registrant to sell the domain name to the

owner of the mark in question. 15 U.S.C. §§ 1125(d)(1)(B)(i)(I), (III),

(VI) & (IX). The nine factors are also explained at length in the legis-

lative history to the ACPA. See, e.g., Sen. Rep. No. 106-140, at 13-

16 (1999); H.R. Rep. No. 106-412, at 10-13 (1999). The detailed

guidelines for proving a claim of bad faith registration under the

ACPA relieve the worry that claims can be easily fabricated, the

worry that motivated courts of equity to impose a higher burden of

proof in routine fraud cases. Because Congress spelled out the bad

faith factors so thoroughly, we expect that Congress would have

explicitly imposed a heightened burden of proof had it intended for

one to apply. In Grogan the Supreme Court explained that "silence [in

the text and the legislative history of the bankruptcy code] is inconsis-

tent with the view that Congress intended to require a special, height-

ened standard of proof." Grogan, 498 U.S. at 286. Faced with a

similar silence in the ACPA's text and legislative history, both of

which explain the bad faith requirement in detail, we conclude that

the usual preponderance of the evidence standard applies to claims of

bad faith registration of domain names under § 1125(d)(1).

C.

The final issue we must consider before reaching the question of

bad faith is the scope of the in rem provision of the ACPA, 15 U.S.C.

§ 1125(d)(2). Harrods UK argues that § 1125(d)(2) provides for in

rem jurisdiction against domain names for traditional infringement

and dilution claims under §§ 1114, 1125(a) & (c) as well as for claims

of bad faith registration with the intent to profit under § 1125(d)(1).

The Domain Names argue that the district court correctly limited the

scope of the in rem provision to claims under § 1125(d)(1) for bad

faith registration of a domain name with the intent to profit. This

argument has not yet been settled by any federal circuit court. Only

a handful of district courts have considered the issue, and most of

them agree with the district court here that § 1125(d)(2) applies only

to violations of § 1125(d)(1), bad faith registration with intent to

profit. See Cable News Network L.P. v. Cnnews.com, 177 F. Supp. 2d

506, 522-23 (E.D. Va. 2001); Hartog & Co. v. Swix.com, 136 F.

Supp. 2d 531, 539-40 (E.D. Va. 2001); Broadbridge Media, L.L.C. v.

Hypercd.com, 106 F. Supp. 2d 505, 511 (S.D.N.Y. 2000). At least one

district court and two commentators have endorsed the contrary view

that § 1125(d)(2) authorizes an in rem action for the violation of sev-

eral substantive provisions of federal trademark law. See Jack in the

Box, Inc. v. Jackinthebox.org, 143 F. Supp. 2d 590, 591 (E.D. Va.

2001); 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair

Competition § 25:79, at 25-290 (4th ed. 2002); Jonathan S. Jennings,

Significant Trademark/Domain Name Issues in Cyberspace, 663

PLI/Pat 649, 664 (2001). While we consider this to be a close ques-

tion of statutory interpretation, we ultimately conclude that

§ 1125(d)(2) is not limited to violations of § 1125(d)(1); it also autho-

rizes in rem actions for certain federal infringement and dilution

claims.

We begin our analysis with the text of the statute. Section

1125(d)(2)(A) provides that the "owner of a mark" may file an in rem

action against a domain name if:

(i) the domain name violates any right of the owner of a

mark registered in the Patent and Trademark Office, or pro-

tected under subsection (a) [infringement] or (c) [dilution];

and

(ii) . . . the owner -

(I) is not able to obtain in personam jurisdiction

over a person who would have been a defendant in

a civil action under paragraph (1) [§ 1125(d)(1)];

(II) through due diligence was not able to find a

person who would have been a defendant in a civil

action under paragraph (1) . . . .

15 U.S.C. § 1125(d)(2)(A). We start with the first clause, subsection

(d)(2)(A)(i), which provides that an in rem action is available if "(i)

the domain name violates any right of the owner of a mark registered

in the Patent and Trademark Office, or protected under subsection (a)

or (c)." 15 U.S.C. § 1125(d)(2)(A)(i) (emphasis added). The broad

language "any right of the owner of a mark" does not look like it is

limited to the rights guaranteed by subsection (d)(1), but appears to

include any right a trademark owner has with respect to the mark.

This language, by itself, would include rights under § 1125(d)(1), and

it would also include, for example, rights under § 1125(a) against

trademark infringement and rights under § 1125(c) against trademark

dilution. If Congress had intended for subsection (d)(2) to provide in

rem jurisdiction only for subsection (d)(1) claims, it could easily have

said so directly. For example, Congress could have said that an in rem

action is available if "the domain name violates subsection (d)(1)."

Again, if the first key phrase Congress gave us - "any right of the

owner of a mark" - is considered in isolation, it would authorize the

in rem pursuit of any of the actions that could be brought in personam

under U.S. trademark law, including infringement (subsection (a)),

dilution (subsection (c)), and cybersquatting (subsection (d)(1)). See

4 McCarthy § 25:79, at 25-290; Jennings, supra, at 664.

Of course, subsection (d)(2)(A)(i) does not create a claim for the

owner of any mark, but rather for the owner of "a mark registered in

the Patent and Trademark Office [PTO], or protected under subsec-

tion (a) or (c)." Thus, to understand the scope of subsection

(d)(2)(A)(i), we must also consider the implications of this additional

language. Generally speaking, trademark protection is a common law

right that arises from the use of a mark to identify the source of cer-

tain goods or services. Brittingham v. Jenkins, 914 F.2d 447, 452 (4th

Cir. 1990); 3 McCarthy § 19:3. By its terms, subsection (d)(2)(A)(i)

does not provide an in rem action for the owner of any type of mark

protected under trademark law, but only for the owner of a mark that

is either (1) registered in the PTO or (2) protected under §§ 1125(a)

or (c).

First, we consider the protection offered a mark registered in the

PTO. The owner of a mark may register that mark with the PTO. 15

U.S.C. § 1051. While it is the use of a mark, not its registration, that

confers trademark protection, Brittingham, 914 F.2d at 452, registra-

tion does confer certain benefits on the owner; for example, it serves

as prima facie evidence of the mark's validity. Id.; 15 U.S.C.

§ 1057(b). Subsection (d)(2)(A)(i) provides an additional benefit for

registration of a mark: registration now entitles the owner of the mark

to proceed on an in rem basis under § 1125(d)(2). The rights of an

owner whose mark is registered in the PTO are not limited to rights

under § 1125(d)(1), however. They also include, for example, rights

against infringement of a registered mark under § 1114.

Second, subsection (d)(2)(A)(i) ends with the provision that even

if a mark is not registered, the mark's owner may proceed on an in

rem basis under § 1125(d)(2) if the mark is "protected under subsec-

tion (a) or (c)." Subsections (a) and (c) are the infringement and dilu-

tion provisions of § 1125. Because subsection (d)(2) provides for an

in rem action for the violation of "any right . . . of a mark . . . pro-

tected under subsection (a) or (c)," it seems to provide in rem jurisdic-

tion over a domain name that infringes a mark under § 1125(a) or

dilutes a famous mark under § 1125(c). See Jennings, supra, at 664

("The explicit language of the in rem provision . . . suggests a broader

application [than just subsection (d)(1) claims], by stating that it pro-

tects against domain names violating the rights of owners of marks

registered in the PTO, or protected under Section 43(a) or Section

43(c) of the Lanham Act."). The Domain Names do not offer a com-

peting interpretation of this last provision of subsection (d)(2)(A)(i)

that reconciles this provision with their argument that subsection

(d)(2) applies only to bad faith claims under subsection (d)(1). If in

rem jurisdiction is only available for subsection (d)(1) bad faith

claims, we cannot understand why Congress described the types of

marks covered under subsection (d)(2) as those "registered in the

[PTO], or protected under subsection (a) or (c)." Subsection

(d)(2)(A)(i)'s reference to a mark "registered in the [PTO], or pro-

tected under subsection (a) or (c)" reinforces our sense that the phrase

"any right" includes more than just subsection (d)(1) rights.

According to the Domain Names, the problem with interpreting

subsection (d)(2) as covering more than just bad faith claims under

subsection (d)(1) is that subsection (d)(2)(A)(ii) conditions the avail-

ability of in rem jurisdiction on proof that the plaintiff is unable to

find or obtain personal jurisdiction over the "person who would have

been a defendant in a civil action [for bad faith registration] under

paragraph (1)," that is, § 1125(d)(1). As the district court explained,

"because Congress chose to include in the in rem action the definition

of potential defendants used in paragraph (1), we must therefore con-

clude that Congress intended for the `bad faith intent to profit' ele-

ment to be part of any in rem action." Harrods Ltd. v. Sixty Internet

Domain Names, 110 F. Supp. 2d 420, 426 (E.D. Va. 2000). We real-

ize that it is possible to get the impression from reading subsection

(d)(2)(A)(ii) that the in rem action is available only for subsection

(d)(1) violations. But it is important to distinguish between the lan-

guage discussing the subject matter covered by the in rem provision

and the language discussing the proper defendant in a cybersquatting

case. Subsection (d)(2)(A)(i) deals with the former, and subsection

(d)(2)(A)(ii) deals with the latter. Subsection (d)(2)(A)(i) identifies

the substantive rights actionable under the in rem provision, stating

in broad terms that the in rem provision protects "any right of the

owner of a mark" that is registered in the PTO or "protected under

subsection (a) or (c)." Subsection (d)(2)(A)(ii) deals with the proper

defendant to a cybersquatting claim, stating that in rem jurisdiction is

available only when personal jurisdiction over the registrant is lack-

ing. It would be odd for Congress to have placed a significant limita-

tion on the scope of the substantive rights identified in subsection

(d)(2)(A)(i), which deals with the subject matter of in rem actions, by

indirectly tacking something on to subsection (d)(2)(A)(ii), which

deals with the proper defendant in cybersquatting actions.

If the only way to understand the phrase "a person who would have

been a defendant in a civil action under paragraph (1)" was as a refer-

ence to subsection (d)(1)'s bad faith requirement, we would be forced

to confront the tension between this language and subsection

(d)(2)(A)(i)'s broad language of "any right of the owner of a mark."

However, the phrase "a person who would have been a defendant in

a civil action under paragraph (1)" can fairly be understood as a short-

hand reference to the current registrant of the domain name. See 4

McCarthy § 25:79, at 25-290 (This reference to paragraph (1) "does

not add an extra element" to subsection (d)(2), but simply "defines the

proper defendant in an in rem proceeding as the present domain name

registrant."). This reading avoids tension with subsection

(d)(2)(A)(i)'s reference to "any right of the owner of a mark," which

does not appear to be limited to rights protected by subsection (d)(1).

Nonetheless, it is possible to disagree about the meaning of the

phrase "a person who would have been a defendant in a civil action

under paragraph (1)." As noted above, the district court understood

this language not as a shorthand reference to the current domain name

registrant, but as limiting in rem jurisdiction to subsection (d)(1) bad

faith claims. Harrods Ltd., 110 F. Supp. 2d at 426. Because the mean-

ing of this phrase in conjunction with the phrase "any right of the

owner of a mark" is not altogether clear, it is appropriate to "look to

the legislative history for guidance in interpreting the statute." United

States v. Childress, 104 F.3d 47, 53 (4th Cir. 1996). The legislative

history confirms that the phrase "a person who would have been a

defendant in a civil action under paragraph (1)" should be read as a

shorthand reference to the domain name registrant, not as requiring

a bad faith element in all in rem actions. The House Report says that

"in rem jurisdiction is . . . appropriate in instances where personal

jurisdiction cannot be established over the domain name registrant."

H.R. Rep. No. 106-412, at 14 (1999). The registrant is the person who

would be the defendant both in a subsection (d)(1) bad faith registra-

tion action and in a traditional infringement or dilution action involv-

ing the improper use of a domain name.

The Domain Names do not give up easily. They point to other leg-

islative history that describes the general purpose of the ACPA in

terms of outlawing "cybersquatting," which is always discussed as

bad faith registration with intent to profit. For example, the Senate

Judiciary Committee report on the ACPA opens by explaining that

"the purpose of the bill" is to protect consumers and businesses by

"prohibiting the bad-faith and abusive registration of distinctive

marks as Internet domain names with the intent to profit from the

goodwill associated with such marks - a practice commonly referred

to as `cybersquatting.'" Sen. Rep. No. 106-140, at 4 (1999). See also

H.R. Rep. No. 106-412, at 6. As the district court explained, this

might suggest that the entire bill, including both subsection (d)(1) and

subsection (d)(2), is aimed solely at bad faith registration with the

intent to profit. See Harrods, 110 F. Supp. 2d at 426; see also CNN,

177 F. Supp. 2d at 523 ("The ACPA's purpose is . . . to deter, prohibit

and remedy `cyberpiracy,' which is defined in the legislative history

as the bad faith registration or use of a domain name . . . [and] [t]his

purpose is given proper effect by resolving the ambiguity in favor of

requiring bad faith in ACPA in rem actions.").

This reading of the language describing the general purpose of the

ACPA is trumped, however, by the language Congress used when it

discussed the purpose of subsection (d)(2) specifically. The Senate

Report states that the in rem jurisdiction provision "allows a mark

owner to seek the forfeiture, cancellation, or transfer of an infringing

domain name by filing an in rem action against the name itself, pro-

vided the domain name itself violates substantive Federal trademark

law." Sen. Rep. No. 106-140, at 10 (emphasis added). See also H.R.

Rep. No. 106-412, at 14 (containing a statement that is nearly verba-

tim). Later on, the Senate Report notes that the in rem provision

allows trademark owners to "proceed against the domain names them-

selves, provided they are, in fact, infringing or diluting under the

Trademark Act." Sen. Rep. No. 106-140, at 11 (emphasis added).

Elsewhere, the in rem provision is described as authorizing an injunc-

tion against a domain name "provided the mark owner can show that

the domain name itself violates substantive federal trademark law

(i.e., that the domain name violates the rights of the registrant of a

mark registered in the Patent and Trademark Office, or section 43(a)

or (c) of the Trademark Act)." 145 Cong. Rec. S14,714 (daily ed.

Nov. 17, 1999).⁸ This language from the legislative history is not

framed in terms of subsection (d)(1) or bad faith; it does not say the

____________________________________________________________

⁸ For parallel statements from the House of Representatives for this and

our subsequent citations to the Congressional Record, see the discussion

of the ACPA appearing in 145 Cong. Rec. H11,769 (daily ed. Nov. 9,

1999).

in rem action is available if the domain name violates the substantive

cybersquatting provision of the ACPA. Rather, it says the in rem

action is available for domain names that violate "substantive Federal

trademark law" or which are "infringing or diluting under the Trade-

mark Act." Sen. Rep. No. 106-140, at 10-11. Thus, when the legisla-

tive history addresses subsection (d)(2) specifically, it speaks in terms

of violations of trademark law generally and of subsections (a) and

(c); it does not repeat the references to bad faith registration that

appear elsewhere. Just like the text of subsection (d)(2)(A)(i), this lan-

guage in the legislative history suggests that the in rem action is avail-

able to enforce several of the substantive provisions of Federal

trademark law.

On balance, we are left with the following. On its face, subsection

(d)(2)(A)(i) provides an in rem action for the violation of "any right"

of a trademark owner, not just rights provided by subsection (d)(1).

Moreover, subsection (d)(2)(A)(i) authorizes in rem jurisdiction for

marks "protected under subsection (a) or (c)," the very subsections

underlying two of the claims that were dismissed by the district court

as outside the scope of subsection (d)(2). While subsection

(d)(2)(A)(ii) provides that the in rem action is available only if the

plaintiff is unable to find or obtain personal jurisdiction over the "per-

son who would have been a defendant in a civil action under para-

graph (1)," we believe this language is best understood as a shorthand

reference to the current registrant of the domain name, who would be

the defendant in any trademark action involving a domain name.

Finally, the legislative history of the ACPA specifically discussing the

in rem provision speaks in terms of domain names that violate "sub-

stantive Federal trademark law" or that are "infringing or diluting

under the Trademark Act." Sen. Rep. No. 106-140, at 10-11. This

reinforces the language of subsection (d)(2)(A)(i), which suggests that

the in rem provision is not limited to bad faith claims under subsec-

tion (d)(1). Thus, we conclude that the best interpretation of

§ 1125(d)(2) is that the in rem provision not only covers bad faith

claims under § 1125(d)(1), but also covers infringement claims under

§ 1114 and § 1125(a) and dilution claims under § 1125(c).

In light of this conclusion, we reverse the district court's dismissal

of Harrods UK's claims for infringement and dilution and remand for

further proceedings on those claims. However, the district court need

not consider Harrods UK's infringement and dilution claims as

against the 54 Domain Names because we affirm the court's order

requiring the transfer of the 54 Names to Harrods UK. Transfer or

cancellation of the defendant domain names is the only remedy avail-

able under § 1125(d)(2)'s in rem provision, so Harrods UK could gain

no additional relief if the court considered and ruled on its infringe-

ment and dilution claims against the 54 Names. Thus, on remand the

district court need only consider Harrods UK's infringement and dilu-

tion claims against the six Argentina Names.

III.

With the preliminary issues out of the way, we turn at last to Har-

rods UK's claim alleging bad faith on the part Harrods BA in register-

ing the 60 defendant Domain Names. As explained above, the district

court granted summary judgment to the six Argentina Names prior to

any meaningful discovery. Then, after discovery and a bench trial, the

district court found that Harrods BA had registered the remaining 54

Names with a bad faith intent to profit in violation of § 1125(d)(1).

We first consider the district court's finding of bad faith with respect

to the 54 Names, and after that we consider the court's award of sum-

mary judgment to the six Argentina Names.

A.

We begin with the district court's determination that the 54

Domain Names were registered by Harrods BA with a bad faith intent

to profit. The central provision of the ACPA is § 1125(d)(1), which

allows the owner of a protected mark to bring an action against any

person who:

(i) has a bad faith intent to profit from that mark . . .; and

(ii) registers, traffics in, or uses a domain name that [is iden-

tical or confusingly similar to that mark].

15 U.S.C. § 1125(d)(1)(A). The Domain Names do not contest the

district court's conclusion that they are identical or confusingly simi-

lar to Harrods UK's mark. Rather, the Names argue that the district

court erred in concluding that Harrods BA registered the Names with

"a bad faith intent to profit from that mark." Section 1125(d)(1)(B)(i)

explains that to determine bad faith "a court may consider factors

such as, but not limited to," the nine factors listed in

§ 1125(d)(1)(B)(i)(I)-(IX). After reviewing the district court's thor-

ough consideration of these nine factors, we conclude that the evi-

dence supports the court's finding that Harrods BA had a bad faith

intent to profit with regard to the 54 Domain Names. Specifically, the

evidence supports the conclusion that Harrods BA intended to use the

54 Domain Names to market its goods and services to non-South

American consumers in a manner calculated to divert and deceive

consumers seeking to do business with Harrods UK. For the reasons

set out in more detail below, we affirm the district court's judgment

against the 54 Domain Names.

Before we look at the nine bad faith factors, we stop for a moment

to note that this case presents the unusual situation of two companies

named "Harrods," both with legitimate rights to use the "Harrods"

name in different geographical regions. The use of an identical mark

by two different companies is sometimes allowed in trademark law

under the concept of "concurrent use." For example, the Patent and

Trademark Office may register the exact same mark for two different

users, provided that the use of the mark by both users "is not likely

to result" in "confusion, mistake, or deception." 15 U.S.C. § 1052(d).

"Even where there is precise identity of a . . . mark [used by two per-

sons], there may be no consumer confusion - and thus no trademark

infringement - if the alleged infringer is in a different geographic

area or in a wholly different industry." Brookfield Communications,

Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1054 (9th

Cir. 1999). As we explain below, a concurrent user of a mark that reg-

isters a domain name incorporating that mark will always trigger a

number of the nine bad faith factors listed in the ACPA. However, the

legislative history of the ACPA demonstrates that Congress recog-

nized the legitimacy of concurrent use when it enacted the ACPA and

did not intend to disrupt the rights of legitimate concurrent users of

a mark. See, e.g., 145 Cong. Rec. S14,713 (daily ed. Nov. 17, 1999)

("there may be concurring uses of the same name that are noninfring-

ing, such as the use of the `Delta' mark for both air travel and sink

faucets. Similarly, the registration of the domain name `delta-

force.com' by a movie studio would not tend to indicate a bad faith

intent on the part of the registrant to trade on Delta Airlines or Delta

Faucets' trademarks."); id. at S14,714 ("[S]omeone who has a legiti-

mate registration of a domain name that mirrors someone else's

domain name, such as a trademark owner that is a lawful concurrent

user of that name with another trademark owner, may, in fact, wish

to sell that name to the other trademark owner."). Accordingly, we

should apply the bad faith factors in a manner that will not lead to a

finding of bad faith registration every time a concurrent user registers

a mark. Of course, even recognizing the rights of concurrent users of

a mark, a legitimate concurrent user still violates the other user's

trademark rights if it uses the shared mark in a manner that would

cause consumer confusion, such as by using the mark in the other's

geographic area. See 3 McCarthy § 20:82, at 20-140 to 20-141 ("the

most important [factor in registering concurrent marks] . . . is that

such concurrent registration cannot be likely to cause confusion of

buyers or others."). Thus, if a concurrent user registers a domain

name with the intent of expanding its use of the shared mark beyond

its geographically restricted area, then the domain name is registered

in bad faith as outlined in the ACPA.⁹ With these points noted, we are

finally ready to review the district court's evaluation of the 54

Domain Names in light of the nine bad faith factors listed in

§ 1125(d)(1)(B)(i). There is no simple formula for evaluating and

weighing these factors. For example, courts do not simply count up

which party has more factors in its favor after the evidence is in. As

explained in the legislative history of the ACPA, "the presence or

absence of any of these [nine] factors may not be determinative." Sen.

Rep. No. 106-140, at 9 (1999). Even so, "these factors reflect indica-

____________________________________________________________

⁹ A more difficult problem, one not presented in this case, is created

when a concurrent mark user registers a domain name incorporating the

shared mark with the intent only to use the domain name within its lim-

ited geographic area, but the registrant's site is nonetheless accessed by

users outside the permissible geographic area. If the registrant in this sit-

uation is deemed to violate the other user's trademark, then it is unclear

how (territorial) concurrent users of a mark can maintain an Internet

presence using their mark. This is one of the difficulties that courts and

legislatures will eventually have to face as they work to harmonize the

geographically limited nature of trademark law with the global nature of

the Internet as a medium. See generally Graeme B. Dinwoodie,

(National) Trademark Laws and the (Non-National) Domain Name Sys-

tem, 21 U. Pa. J. Int'l Econ. L. 495 (2000).

tors that, in practice, commonly suggest bad-faith intent or a lack

thereof in cybersquatting cases." Id. Thus, guided by the nine bad

faith factors, "[c]ourts must ultimately weigh the facts of each case

and make a determination based on those facts whether or not the

defendant registered, trafficked in, or used the domain name with a

bad-faith intent to profit from the goodwill of the mark of another."

Id. at 10.

1.

Factor (I): "the trademark or other intellectual property rights of

[the defendant], if any, in the domain name." 15 U.S.C.

§ 1125(d)(1)(B)(i)(I). The district court found that this factor favored

the Domain Names because while Harrods BA does not own any

United States trademarks, it does own trademarks for the name "Har-

rods" (and various permutations thereof, such as "Harrods Magazine")

throughout South America. We agree. The language of Factor (I) does

not speak in terms of United States trademark rights, but refers gener-

ally to "intellectual property rights." This encompasses intellectual

property rights irrespective of their territorial origin.¹⁰ Thus, Factor (I)

favors the Domain Names.

2.

Factor (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." 15 U.S.C. § 1125(d)(1)(B)(i)(II). The district

court found that this factor also favored the Domain Names because

Harrods BA is commonly known throughout Argentina and South

America as "Harrods." We agree that Factor (II) favors the Domain

Names.

____________________________________________________________

¹⁰ Harrods UK raises the specter of cybersquatters registering trade-

marks identical to American marks in obscure locales - registering the

name Nike in Burma, for example - and then using those foreign trade-

mark rights as a shield against legal action by the American trademark

holder. This case, however, does not involve a newly minted foreign

trademark registered solely with the aim to defend against cybersquatting

claims. That is a problem for another day.

3.

Factor (III): "the person's prior use, if any, of the domain name in

connection with the bona fide offering of any goods or services." 15

U.S.C. § 1125(d)(1)(B)(i)(III). The district court found that this factor

favored Harrods UK, correctly noting that Harrods BA has never

offered goods or services online through these domain names.

Instead, the sites accessible at these domain names simply displayed

a picture of Harrods BA's department store in Buenos Aires and a

form for requesting information. We agree that Factor (III), by its

terms, favors Harrods UK. However, in this case Factor (III) does not

sufficiently take into account the legitimacy of Harrods BA's use of

Harrods-related names. As noted above, the nine factors from subsec-

tion (d)(1)(B)(i) are not exclusive, so we may consider other factors

that are relevant given the particular facts of this case. See Virtual

Works, 238 F.3d at 268.

In this case, Harrods BA has a long history of providing goods and

services under the "Harrods" mark, so it is not surprising that it would

want to register Harrods-related domain names to provide such goods

and services online. Whenever a decades-old company seeks to

launch an online retail store, there will likely be a startup period after

domain name registration during which the company does not use the

domain name to offer goods and services online. During this time, the

company will not be able to show any "prior use . . . of the domain

name in connection with the bona fide offering of any goods or ser-

vices," and thus it will not get the benefit of Factor (III). Here, for

example, Harrods UK registered "harrods.com" in early 1999, but by

October of that year it still had not offered goods or services through

that domain name. In the circumstance where a domain name regis-

trant has a longstanding history of using a trademark to provide goods

and services (as Harrods BA has here), legitimate plans to offer such

goods and services online in the future should be considered as a fac-

tor that mitigates against a finding of bad faith. Congress did not list

the proposed future use of a domain name as a factor, presumably

because it would be too easy for cybersquatters to claim an intent to

use a disputed name to provide goods or services in the future.

Indeed, the use of another's trademark as a domain name to sell goods

or services is precisely one of the evils that the ACPA is aimed at

combating. Sen. Rep. No. 106-140, at 6-7. But because Harrods BA's

registration of the domain names is backed up with longstanding use

of the "Harrods" mark, Harrods BA's failure to offer goods and ser-

vices previously through those domain names should not be consid-

ered an indication of bad faith. See, e.g., 145 Cong. Rec. S14,714

(daily ed. Nov. 17, 1999) ("[T]here are cases in which a person regis-

ters a name in anticipation of a business venture that simply never

pans out."). Thus, Factor (III) does not reliably indicate bad faith on

the part of Harrods BA. Instead, Harrods BA's long history of using

the "Harrods" name to offer goods and services is a factor that favors

the Domain Names.

4.

Factor (IV): "the person's bona fide noncommercial or fair use of

the mark in a site accessible under the domain name." 15 U.S.C.

§ 1125(d)(1)(B)(i)(IV). As the district court noted, Harrods BA regis-

tered these Domain Names for a commercial purpose, so this factor

is not relevant here.

5.

Factor (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 com-

mercial gain or with the intent to tarnish or disparage the mark, by

creating a likelihood of confusion as to the source, sponsorship, affili-

ation, or endorsement of the site." 15 U.S.C. § 1125(d)(1)(B)(i)(V).

The district court found that this factor weighed very heavily in favor

of Harrods UK. According to the court, the evidence established that

Harrods BA's online business plan was to use these Domain Names

to profit by deliberately confusing and diverting non-South American

customers seeking to shop at Harrods UK. First, the district court

noted that Harrods BA had registered almost 300 Harrods-related

domain names (most of which are not defendants here) covering a

wide variety of good and services offered by Harrods UK but not by

Harrods BA, such as: harrodsinsurance, harrodstravel, hotelharrods,

harrodscasino, harrodstelephone, harrodsairplanes, harrodswines, har-

rodscamping, and harrodsrealestate.¹¹ While the registration of multi-

____________________________________________________________

¹¹ Some of these goods and services were never offered by Harrods BA,

and others have not been offered by Harrods BA for many years.

ple Domain Names is a separate factor (Factor (VIII)) and will be

considered below, it is relevant to Factor (V) that a great number of

the names described goods and services offered by Harrods UK but

not by Harrods BA. This fact supports the district court's conclusion

that the "Domain Names closely and deliberately replicate goods and

services offered by [Harrods UK] or its affiliates." We agree that this

indicates a bad faith intent to profit by diverting Harrods UK custom-

ers.

Second, the district court found it "highly suspect" that Harrods

BA's domain name registrations almost always used English words

rather than Spanish words, noting that Harrods BA was not authorized

to conduct business outside of South America. However, the use of

English language terms in domain names by non-English speakers,

standing alone, does not constitute much evidence of an intent to mar-

ket to American or British consumers. English is by far the most com-

mon language of the Internet. See Sharon K. Hom & Eric K.

Yamamoto, Collective Memory, History, and Social Justice, 47

U.C.L.A. L. Rev. 1747, 1750 (2000) (noting that"[a]lthough only 10

percent of people worldwide speak English, 80 percent of internet

websites appear in English."). And of course Spanish is not the

national language in every South American country.¹² Nonetheless, in

this case Harrods BA registered domain names containing large num-

bers of English words but not their Spanish counterparts, and those

English words describe many of the goods and services offered by

Harrods UK but not by Harrods BA. These facts, taken together, do

offer support for the district court's finding that Harrods BA was

intending to target non-South American consumers.

Finally, the court discussed the incriminating business proposal

____________________________________________________________

¹² Moreover, English words, particularly Internet-related terms, have

rapidly entered foreign vocabularies. See Andrew Downie, "War"

Doesn't Mix Words: Congressman Works to Protect Native Language,

Sun-Sentinel (Ft. Lauderdale), September 21, 2000, at 16A (noting that

English "words like `e-mail,' `mouse' and`delete' have entered Por-

tugese almost overnight"); A Firm Handshake Seals the Deal in the

Czech Republic, Nat'l Post, January 9, 2001, at C09 ("Terms like `IPO,'

`mobile telephone,' and `start-up,' as well as`Internet' and `e-mail,'

have already entered the [Czech] language.").

prepared for Harrods BA by Capuro. As described above, this report

contains an illustration of a proposed transaction over the Harrods BA

website involving a "UK citizen" purchasing a Burberry sweater with

funds from Barclays Bank. See Harrods Ltd. v. Sixty Internet Domain

Names, 157 F. Supp.2d 658, 676 n.51 (E.D. Va. 2001) (reproduction

of webpage illustration). We agree with the district court that this

illustration transparently demonstrates an intent to profit from the

Harrods-related domain names by confusing and diverting non-South

American customers seeking to do business with Harrods UK. Har-

rods BA does not claim that it has any right to do business in Great

Britain or that it has ever done business there. Thus, it cannot plausi-

bly claim that British consumers would be aware of its identity as a

separate entity from Harrods UK and not confuse the two. Finally, the

"Harrods" logo on the proposed webpage is not the logo used by Har-

rods BA, but rather is identical to the script logo used for many years

by Harrods UK. Compare id. at 675 n.50 with id. at 661 n.5 & 662

n.6. The business opportunity represented by the Capuro report illus-

tration is the opportunity to profit from Harrods UK's well-known

"Harrods" trademark by improperly using that mark to sell to non-

South American consumers who would think they were doing busi-

ness with Harrods UK.

Harrods BA argues that we cannot rely on the Capuro report as an

accurate gauge of its own intentions because the proposal was created

by an outside consultant, not by Harrods BA executives themselves,

and because the proposal was rejected by Harrods BA (apparently

before the initiation of this lawsuit). Harrods BA also claims to have

contacted Ernst & Young "in the first days of January" 2000 about

preparing a new report. If we had only these facts, we would be hesi-

tant to rely on the Capuro report as an indicator of Harrods BA's

intent. Here, however, Harrods BA executives also testified that they

used the report to solicit potential partners and investors, not only in

Argentina but also in the United States and Europe. None of the solic-

ited parties agreed to invest based on the Capuro report, and Harrods

BA decided to seek a new business plan from another consultant.

Nevertheless, the fact that Harrods BA shared the report with poten-

tial partners and investors demonstrates that the report, including the

webpage illustration inside, fairly represents Harrods BA's own inten-

tions. This fact suggests that Harrods BA did not ultimately reject the

report because it proposed an improper use of the domain names, but

rather because the report generated no interest from potential inves-

tors. All in all, it is fair to draw the inference that the report reflects

Harrods BA's intent with regard to the domain names.

Because the Capuro report's scheme can be imputed to Harrods

BA, the report constitutes very strong evidence that Harrods BA's

intent was to use at least some of the domain names to sell to non-

South American consumers who were seeking Harrods UK's website

and who would think they were buying from Harrods UK. The report,

combined with Harrods BA's registration of hundreds of Harrods-

related domain names with terms closely mirroring products tradition-

ally sold by Harrods UK but not by Harrods BA, is strong evidence

of bad faith intent on the part of Harrods BA to divert non-South

American consumers from Harrods UK's website to its own website.

Because this evidence is so convincing, Factor (V) standing alone

supports the district court's finding of bad faith intent on the part of

Harrods BA.

6.

Factor (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 the intent to use, the domain

name in the bona fide offering of any goods or services, or the per-

son's prior conduct indicating a pattern of such conduct." 15 U.S.C.

§ 1125(d)(1)(B)(i)(VI). The district court found that this factor

favored Harrods UK. The court noted that while there is no evidence

that Harrods BA offered to sell or transfer the domain names to Har-

rods UK, "[t]he history of [Harrods BA's] efforts to sell its business

supports plaintiff's argument that [Harrods BA's] registration of the

Domain Names was intended to `drive up the price [Harrods BA] can

command from [Harrods UK] for the sale of [the "Harrods"] name.'"

However, while Harrods BA clearly had some interest in selling out

its South American trademarks and store to Harrods UK, this is nei-

ther inappropriate nor all that incriminating. Harrods BA has a legiti-

mate right to use the Harrods name, albeit in a limited geographic

area. The Congressional Record's section-by-section analysis of the

ACPA states that Factor (VI) "does not suggest that a court should

consider the mere offer to sell a domain name to a mark owner . . .

as sufficient to indicate bad faith. . . . [S]omeone who has a legitimate

registration of a domain name that mirrors someone else's domain

name, such as a trademark owner that is a lawful concurrent user of

that name with another trademark owner, may, in fact, wish to sell

that name to the other trademark owner." 145 Cong. Rec. S14,714

(daily ed. Nov. 17, 1999).

To the extent that Harrods BA had planned to use these Domain

Names in a legitimate attempt to offer goods and services in South

America (an assumption undermined by the evidence recounted in our

discussion of Factor (V)), Harrods BA's registration of these names

would be no more indicative of bad faith than its registration of a

number of Harrods-related trademarks throughout South America,

such as "Harrods Magazine," "Harrods Department Store," and "Har-

rodscard." There is nothing wrong with acquiring property, such as

legitimate domain names or additional trademarks, for the express

purpose of increasing the value (and therefore the potential sales

price) of a business. Cybersquatting is considered wrong because a

person can reap windfall profits by laying claim to a domain name

that he has no legitimate interest in or relationship to. Sen. Rep. No.

106-140, at 5 ("Some [cybersquatters] register well-known brand

names as Internet domain names in order to extract payment from the

rightful owners of the marks."). It is not wrong, however, for a busi-

ness to seek to profit from the sale of its legitimate assets.

Still, to the extent that Harrods BA intended to improperly divert

non-South American Harrods UK customers, see Factor (V), and to

the extent that the sale of the Domain Names would be based on the

value to Harrods UK of preventing this practice, then Factor (VI) does

demonstrate bad faith intent to profit and weighs in favor of Harrods

UK. Because ample evidence supports the district court's determina-

tion under Factor (V) that Harrods BA intended to use the "Harrods"

name to divert Harrods UK's customers, the evidence also supports

the court's conclusion that Harrods BA intended to use these Domain

Names to improperly leverage a higher price from Harrods UK. Fac-

tor (VI) therefore weighs in favor of Harrods UK.

7.

Factor (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." 15 U.S.C. § 1125(d)(1)(B)(i)(VII). The district

court properly found this factor favored the Domain Names because

Harrods BA never provided false or misleading contact information.

8.

Factor (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 registra-

tion 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." 15 U.S.C.

§ 1125(d)(1)(B)(i)(VIII). This factor was intended by Congress to tar-

get the "practice known as `warehousing,' in which a cyberpirate reg-

isters multiple domain names - sometimes hundreds, even thousands

- that mirror the trademarks of others." H.R. Rep. No. 106-412, at

13. See also Sen. Rep. No. 106-140, at 16. While the registration of

multiple domain names is a factor that a court may consider in deter-

mining bad faith, Congress warned that the ACPA "does not suggest

that the mere registration of multiple domain names is an indication

of bad faith." H.R. Rep. No. 106-412, at 13. See also Sen. Rep. No.

106 140, at 16. This is presumably because many companies legiti-

mately register many, even hundreds, of domain names consisting of

various permutations of their own trademarks in combination with

other words. "Just as they can have several telephone numbers, com-

panies can register multiple domain names in order to maximize the

chances that customers will find their web site." Porsche Cars North

Am., Inc. v. Porsche.com, 51 F. Supp. 2d 707, 709 (E.D. Va. 1999),

vacated on other grounds, 215 F.3d 1320 (4th Cir. 2000) (unpub-

lished per curiam).

Factor (VIII) nominally favors Harrods UK because Harrods BA

did register multiple domain names that it knew were identical or con-

fusingly similar to the mark of another, Harrods UK. We say "nomi-

nally favors" because Factor (VIII) will be triggered whenever there

are concurrent users of a trademark. For example, Delta Airline's reg-

istration of delta.com constitutes the registration of a mark that it

knows is identical to the mark of another, namely, Delta Faucets. But

the legislative history of the ACPA shows that Congress recognized

the legitimacy of concurrent uses of trademarks. See 145 Cong. Rec.

S14,714 (daily ed. Nov. 17, 1999) (recognizing the rights of a lawful

concurrent user of a name shared with another trademark owner). In

the case of legitimate concurrent users, Factor (VIII) does not reliably

indicate anything about the bad faith (or lack thereof) of the domain

name registrant. Thus, standing alone, the fact that a company named

Harrods of Buenos Aires with trademark rights in the name "Harrods"

registers hundreds of Harrods-related domain names does not indicate

bad faith.¹³

Nonetheless, the district court found that this factor "heavily

favored" Harrods UK. The court reasoned that because Harrods BA

intended to use the names outside of South America and because it

"[had] trademark rights only in South America, [Harrods BA's] regis-

trations of these Domain Names in the United States amount to regis-

trations of `others' marks.'" We disagree with the suggestion that

either the registrant's planned future use of a domain name or the

physical location of the domain name registry influences whether that

name incorporates "marks of others." Factor (VIII) simply asks a

court to compare the domain name in question with the marks of the

ACPA plaintiff.¹⁴

____________________________________________________________

¹³ As the district court noted, Harrods BA is not generally in the busi-

ness of cybersquatting, that is, it has not registered hundreds of non-

Harrods-related domain names, such as names incorporating marks like

"Bloomingdale's" or "Saks Fifth Avenue." The domain names it has reg-

istered only incorporate its own name.

¹⁴ Harrods UK places great weight on the fact that Harrods BA regis-

tered these domain names in the United States. This demonstrates, it

argues, that Harrods BA intended to use the names to market to Ameri-

can consumers. We seriously doubt that the registration of a domain

name in a registry located in the United States says anything about the

intended audience for the registrant's website. In 1999, when these

names were registered, NIS in Herndon, Virginia, was the exclusive

worldwide registry for .com, .net, and .org domain names. Thus, Harrods

UK would have us believe that anyone, anywhere in the world, who reg-

isters a .com, .net, or .org domain name is presumptively trying to reach

an American market. The evidence presented at trial does not come close

to establishing this proposition, and a presumption to that effect is not

supported by either the text or legislative history of the ACPA.

In sum, because Harrods BA is a concurrent user of the mark "Har-

rods," its registration of Harrods-related domain names nominally sat-

isfies Factor (VIII) because Harrods BA registered multiple names

identical or confusingly similar to the marks of others. This is true,

however, for all concurrent users of marks who register domain

names incorporating their marks. Factor (VIII) therefore cannot be

weighed against the Domain Names in the bad faith calculus.

9.

Factor (IX): "the extent to which the mark incorporated in the per-

son's domain name registration is or is not distinctive and famous

within the meaning of subsection (c)(1) of this section." 15 U.S.C.

§ 1125(d)(1)(B)(i)(IX). As the district court noted, "Harrods" is both

distinctive and famous as it relates to Harrods UK. Thus, this factor

nominally favors Harrods UK. Like Factor (VIII), however, this fac-

tor is triggered in many instances involving concurrent users of a

mark. Because Harrods BA also has trademark rights in "Harrods,"

this factor cannot be given much weight.

* * *

As noted at the outset, this case presents us with the unusual situa-

tion of two companies named "Harrods," both with legitimate rights

to use the "Harrods" name in different geographic regions. It is not

surprising that concurrent users of a shared mark would resort to liti-

gation under the recently enacted ACPA in an attempt to gain through

the courts what they failed to obtain by speedy registration. In situa-

tions like these, many of the bad faith factors under the ACPA will

have been triggered; for example, the first registrant may have offered

to sell the disputed names to its competitor (Factor (VI)), and one or

both of the companies may have registered many, perhaps even hun-

dreds, of domain names incorporating the shared mark of the compet-

itor (Factors (VIII) and (IX)). For two concurrent users of a mark,

however, this sort of behavior is not cybersquatting; it is simply part

of legitimate competition. The ACPA was not designed to provide a

battlefield for legitimate concurrent trademark users. See 145 Cong.

Rec. S14,713 ("[T]here may be concurring uses of the same name that

are noninfringing . . . [and that] would not tend to indicate a bad faith

intent on the part of the registrant."). Nonetheless, while trademark

law permits concurrent use of the same mark under certain conditions,

a concurrent user of a mark may still violate the other user's trade-

mark rights in certain cases. For example, if Delta Airlines wished to

expand its business into the kitchen faucet market, it would have to

do so under a name other than "Delta."

We have reviewed the facts of this case under the nine bad faith

factors listed in § 1125(d)(1)(B)(i). Factor (IV) is not relevant because

these names were registered for a commercial purpose. Factors (I),

(II), and (VII) favor the Domain Names because Harrods BA is com-

monly known as Harrods in South America, has registered Harrods

trademarks, and did not provide false contact information when regis-

tering these names. In addition, as noted in our discussion of Factor

(III), Harrods BA's history of offering goods and services under the

"Harrods" mark is another factor that favors the Domain Names. And

given these circumstances, Harrods BA's failure to offer goods and

services online through these domain names (Factor (III)) does not

indicate bad faith on its part. Likewise, while Factors (VIII) and (IX),

by their terms, suggest bad faith in this case, we have explained that

given the facts, these factors are not entitled to much, if any, weight.

Harrods BA did register multiple names incorporating a distinctive

and famous mark of another (Factors (VIII) and (IX)), but this is true

of all concurrent users who register domain names incorporating the

shared mark. Finally, Factors (V) and (VI) heavily favor Harrods UK.

The evidence supports the district court's conclusion that Harrods BA

registered these names with the intent to divert and confuse non-South

American customers seeking to do business with Harrods UK, and

that Harrods BA sought to extract a higher price for the sale of the

Domain Names from Harrods UK as a result. Harrods BA may be

presumptively entitled to register Harrods-related domain names

because it is commonly known as Harrods and has trademark protec-

tion for that name. But these facts do not give Harrods BA an absolute

right to use Harrods-related domain names. Here, the evidence dem-

onstrates that Harrods BA registered the 54 Domain Names with the

intent to use those names in a manner calculated to confuse and

deceive non-South American consumers seeking to do business with

Harrods UK. This crosses the line from a permissible intent to use

Harrods BA's own South American "Harrods" trademark on the Inter-

net to an impermissible intent to profit online from the protected mark

of Harrods UK. Thus, the evidence as a whole supports the district

court's finding of a bad faith intent to profit from the goodwill of Har-

rods UK's mark on the part of Harrods BA with regard to the 54

Domain Names that went to trial. Accordingly, we affirm the judg-

ment of the district court as to the 54 Domain Names.¹⁵

B.

Finally, we turn to consider the district court's grant of summary

judgment to the six Argentina Names.¹⁶ We have just affirmed the

district court's determination after trial that Harrods BA registered the

54 Domain Names with a bad faith intent to profit, so it might seem

that we must necessarily reverse the court's earlier grant of summary

judgment to the Argentina Names on the bad faith claim. Ultimately,

we do reverse the district court's grant of summary judgment to the

six Argentina Names and remand for further proceedings. This deci-

sion, however, does not follow as a matter of course from our affir-

mance of the bad faith finding at trial. Instead, as explained below,

the district court's grant of summary judgment must be examined

independently of the evidence presented at trial.

In September of 2000 the six Argentina Names filed a separate

motion for summary judgment. The Argentina Names argued that at

least with respect to these six names, no reasonable factfinder could

find bad faith on the part of Harrods BA. Harrods UK responded that

even if, for example, Harrods BA had some sort of presumptive right

____________________________________________________________

¹⁵ The Domain Names seek refuge in the safe harbor provision of the

ACPA, which provides that "[b]ad faith intent. . . shall not be found in

any case in which . . . the person believed and had reasonable grounds

to believe that the use of the domain name was a fair use or otherwise

lawful." 15 U.S.C. § 1125(d)(1)(B)(ii). This provision might be signifi-

cant in some cases, such as when the site of a registrant with pure intent

is accessed by a user beyond the registrant's geographically permissible

area. See supra, footnote 9. But when the evidence demonstrates an

express intent to use a shared mark in another's territory, as here, the reg-

istrant cannot claim a reasonable ground to believe that the intended use

of the domain name was lawful.

¹⁶ Again, the Argentina Names are harrodsbuenosaires.com, harrods-

buenosaires.net, harrodsbuenosaires.org, harrodsargentina.com, harrods-

argentina.net, and harrodsargentina.org.

to register and use harrodsbuenosaires, it could not intentionally use

that name to try to deceive non-South American customers searching

for Harrods UK. The Argentina Names pointed out that Harrods BA

has intellectual property rights in the name "Harrods" in Argentina

and that harrodsbuenosaires simply reflected the legal name of Har-

rods BA. On October 6, 2000, the district court awarded summary

judgment to the six Argentina Names, even though discovery was just

beginning. On appeal, as it did in its opposition to the Argentina

Names' motion for summary judgment, Harrods UK argues on the

one hand that the evidence before the district court created a genuine

issue of material fact, precluding summary judgment, and on the other

hand that further discovery was needed in order to unearth more evi-

dence that would demonstrate a genuine issue of material fact. We

consider these arguments in turn.

1.

In reviewing a district court's grant of summary judgment, we con-

sider only those matters that were before the district court when it

entered the judgment. "Our review is confined to an examination of

the materials before the court at the time the rulings were made. Nei-

ther the evidence offered subsequently at the trial nor the verdict is

relevant." Voutour v. Vitale, 761 F.2d 812, 817 (1st Cir. 1985), cert.

denied, 474 U.S. 1100 (1986). See also Lippi v. City Bank, 955 F.2d

599, 604 (9th Cir. 1992); Nissho-Iwai Am. Corp. v. Kline, 845 F.2d

1300, 1307 (5th Cir. 1988); 10A Charles A. Wright, Arthur R. Miller

& Mary Kay Kane, Federal Practice & Procedure § 2716, at 282 (3d

ed. 1998). That is to say, we do not consider later-discovered evi-

dence of bad faith intent, such as, for example, the Capuro business

report, to determine whether a genuine issue of material fact existed

at the time the district court granted summary judgment. Harrods UK

presented the following evidence of bad faith to the district court in

its opposition to the Domain Names' motion for summary judgment:

Harrods BA had no right to use the "Harrods" name in the United

States, had registered multiple Harrods-related domain names, had

registered them in the United States, and had indicated in press

releases that its use of the Harrods-related names would preclude Har-

rods UK from using these names. On the basis of this evidence, we

conclude that no reasonable factfinder could have found bad faith

intent on the part of Harrods BA.

As explained in part III.A, Harrods BA's use of a United States-

based domain name registry is not, standing alone, indicative of an

intent on the part of Harrods BA to market to U.S. consumers. Like-

wise, as also explained in part III.A, the registration of multiple

Harrods-related domain names by a company long known by the

name Harrods (Buenos Aires) Limited is not indicative of bad faith.

Harrods UK relies heavily on a news article from the Reuters news

service as evidence of bad faith intent. In the article, a Harrods BA

manager states that Harrods BA had registered more than 100

Harrods-related domain names "which the British Harrods will now

be unable to use." Harrods UK claims that this statement indicates

that Harrods BA's purpose in registering these domain names was to

prevent Harrods UK from registering them. According to Harrods

UK, this purpose indicates bad faith. Harrods UK relies on Sporty's

Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 499 (2d Cir.

2000), a case where the court found bad faith based on, among other

things, the fact that the defendant "registered sportys.com for the pri-

mary purpose of keeping [the plaintiff] from using that domain

name." The court in Sporty's Farm, however, noted that the case

involved "unique circumstances . . . which do not fit neatly into the

specific factors enumerated by Congress." Id. The defendant had cre-

ated a corporation named "Sporty's Farm" only after it had registered

sportys.com for the purpose of depriving the company it wished to

compete with, Sportman's Market, of use of the name. Here, both

Harrods BA and Harrods UK had used the "Harrods" mark for dec-

ades. The fact that the two would race to register Harrods-related

domain names is not surprising, nor does it indicate bad faith.¹⁷ More-

over, the Reuters article goes on to report that Harrods BA "is only

able to use the Harrods logo for delivery within South America."

Thus, when the Argentina Names moved for summary judgment, Har-

rods UK had simply presented evidence that a company named Har-

rods (Buenos Aires) Limited with trademark rights in the name

"Harrods" throughout much of South America had registered a num-

ber of Harrods-related domain names in the United States, had said

that Harrods UK would be unable to use those names, and had

announced its intent to use those names to sell goods and services in

____________________________________________________________

¹⁷ Indeed, Harrods UK won the most critical leg of the race, registering

the most desirable Harrods-related domain name, "harrods.com," before

Harrods BA registered any names.

South America. Based on this evidence, no reasonable factfinder

could determine that Harrods BA had registered harrodsbuenosaires

and harrodsargentina in bad faith. This evidence failed to create a

genuine issue of material fact on the question of bad faith intent suffi-

cient to withstand summary judgment for the six Argentina Names.

2.

The remaining question is whether the district court granted sum-

mary judgment to the Argentina Names prematurely, before Harrods

UK had an adequate opportunity through discovery to find evidence

in the sole possession of Harrods BA that might indicate bad faith.

One item not discovered at the time of summary judgment is the

Capuro report, which we have relied on heavily in part III.A to affirm

the district court's conclusion that the 54 Domain Names were regis-

tered with the bad faith intent to divert Harrods UK customers. As

explained above, we do not consider items not before the district

court, such as the Capuro report, in reviewing the court's grant of

summary judgment. Still, we must consider whether the district court

granted summary judgment before Harrods UK had an adequate

opportunity to discover potentially incriminating evidence such as the

Capuro report.

We review for abuse of discretion the district court's refusal to

allow Harrods UK the opportunity to engage in discovery prior to the

entry of summary judgment. Mid Atlantic Telecom, Inc. v. Long Dis-

tance Servs., Inc., 18 F.3d 260, 262 (4th Cir. 1994). Generally speak-

ing, "summary judgment [must] be refused where the nonmoving

party has not had the opportunity to discover information that is

essential to his opposition." Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 250 n.5 (1986). At the same time, the party opposing summary

judgment "cannot complain that summary judgment was granted

without discovery unless that party had made an attempt to oppose the

motion on the grounds that more time was needed for discovery."

Evans v. Technologies Applications & Service Co., 80 F.3d 954, 961

(4th Cir. 1996). If a party believes that more discovery is necessary

for it to demonstrate a genuine issue of material fact, the proper

course is to file a Rule 56(f) affidavit stating "that it could not prop-

erly oppose a motion for summary judgment without a chance to con-

duct discovery." Id. In this case, although Harrods UK did advise the

district court that it needed discovery, it did not file a Rule 56(f) affi-

davit. Thus, we must reconcile the "general rule [that] summary judg-

ment is appropriate only after `adequate time for discovery,'" id.

(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)), with

Rule 56(f), which requires a party opposing summary judgment on

the grounds that more discovery is needed to file an affidavit making

that point. We have warned litigants that we "place great weight on

the Rule 56(f) affidavit" and that "`[a] reference to Rule 56(f) and the

need for additional discovery in a memorandum of law in opposition

to a motion for summary judgment is not an adequate substitute for

a Rule 56(f) affidavit.'" Evans, 80 F.3d at 961 (quoting Paddington

Partners v. Bouchard, 34 F.3d 1132, 1137 (2d Cir. 1994)). Indeed,

"`the failure to file an affidavit under Rule 56(f) is itself sufficient

grounds to reject a claim that the opportunity for discovery was inade-

quate.'" Id. Nevertheless, in some cases courts have held that sum-

mary judgment was premature even when the opposing party failed

to file a Rule 56(f) affidavit. See, e.g., Hellstrom v. U.S. Dep't of Vet-

erans Affairs, 201 F.3d 94 (2d Cir. 2000); Farmer v. Brennan, 81

F.3d 1444, 1449-50 (7th Cir. 1996); Dean v. Barber, 951 F.2d 1210,

1214 n.3 (11th Cir. 1992); First Chicago Int'l v. United Exchange

Co., 836 F.2d 1375, 1380-81 (D.C. Cir. 1988). "The purpose of the

affidavit is to ensure that the nonmoving party is invoking the protec-

tions of Rule 56(f) in good faith and to afford the trial court the show-

ing necessary to assess the merit of a party's opposition." First

Chicago, 836 F.2d at 1380. When the nonmoving party, through no

fault of its own, has had little or no opportunity to conduct discovery,

and when fact-intensive issues, such as intent, are involved, courts

have not always insisted on a Rule 56(f) affidavit if the nonmoving

party has adequately informed the district court that the motion is pre-

mature and that more discovery is necessary. See id. at 1380-81; Hell-

strom, 201 F.3d at 97-98; Farmer, 81 F.3d at 1449-50; Dean, 951

F.2d at 1214 n.3. Specifically, if the nonmoving party's objections

before the district court "served as the functional equivalent of an affi-

davit," First Chicago, 836 F.2d at 1380, and if the nonmoving party

was not lax in pursuing discovery, then we may consider whether the

district court granted summary judgment prematurely, even though

the nonmovant did not record its concerns in the form of a Rule 56(f)

affidavit.¹⁸

____________________________________________________________

¹⁸ This approach is also supported by commentary. See, e.g., Edward

Brunet, The Timing of Summary Judgment, 198 F.R.D. 679, 689-95

At the time the district court granted summary judgment to the six

Argentina Names, the court noted that "there's been almost no discov-

ery conducted in this case" and that "summary judgment isn't usually

granted or even considered this early in the proceedings . . . ." More-

over, in its order after trial awarding judgment to Harrods UK against

the 54 Names, the district court added that "the facts revealed at trial

have changed our view as to even [the] six [Argentina] Domain

Names." Thus, the district court itself later expressed doubt that its

summary judgment ruling as to the six Names was made with all of

the material facts on the table. Harrods UK's amended complaint was

filed on August 23, 2000, and the Argentina Names moved for sum-

mary judgment just 15 days later, on September 7, 2000. The district

court granted summary judgment to the Argentina Names at the

motion hearing on October 6, 2000, just over six weeks after the

amended complaint was filed. According to the initial scheduling

order, entered September 11, 2000, discovery was to be completed by

December 29, 2000. The docket sheet indicates that the Domain

Names did not respond to Harrods UK's first set of interrogatories

until November 2, 2000, and we can find no evidence of depositions

before December of 2000. Thus, summary judgment was granted to

the Argentina Names when little or no discovery had been completed,

and there is nothing to suggest that this was due to inactivity or delay

on the part of Harrods UK.

Moreover, Harrods UK adequately fulfilled the purpose of Rule

56(f) by putting the district court on notice of the reasons why sum-

mary judgment was premature. In its memorandum opposing Harrods

BA's motion for summary judgment, Harrods UK argued that

____________________________________________________________

(2001) (reviewing cases applying Rule 56(f) liberally and concluding

that "[t]hese cases exhibit sound reasoning"); John F. Lapham, Note,

Summary Judgment Before the Completion of Discovery: A Proposed

Revision of Federal Rule of Civil Procedure 56(f), 24 U. Mich. J.L. Ref.

253, 269 (1990) ("Courts that allow some deviation from the strict letter

of rule 56(f) have the stronger argument. The intent of the drafters to

infuse the Federal Rules with a spirit of procedural liberality is evident

throughout the rules themselves as well as the advisory committee's

notes."); 10B Charles A. Wright, Arthur R. Miller, & Mary Kay Kane,

Federal Practice & Procedure § 2740, at 402-406 & n.14 (3d ed. 1998).

"[f]urther evidence of bad faith is uniquely in the possession of defen-

dants, and Harrods [UK] will need to seek and obtain discovery,

which is only beginning, before it can present further evidence on bad

faith and other issues. See, e.g., Fed. R. Civ. P. 56(f)." One of the

headings in Harrods UK's memorandum in opposition stated that

Harrods BA's "bad faith is a material issue of fact that precludes entry

of summary judgment absent further discovery." (emphasis added).

Several times during the hearing on Harrods BA's motion for sum-

mary judgment, Harrods UK repeated its concern about the need for

more discovery. At one point, Harrods UK stated, "The question is

still: Would those marks . . . tend to confuse the consumer, the con-

sumer in the United States? . . . [W]e're entitled to develop factual

evidence that, yes, they do have a tendency to confuse." Later, the

district court asked Harrods UK, "[I]s there any evidence in this

record [that] they've asked your client to pay them a fee in exchange

for those names?" Harrods UK responded that there had been negotia-

tions, "but another part of that factor is whether they've offered to sell

the name to somebody else. And we would want discovery on that."

In First Chicago the court concluded that "the combination of [the

nonmovant's] opposition to dismissal on the merits, the accompany-

ing Statement of Material Issues, and the outstanding discovery

requests served as an adequate substitute for a Rule 56(f) affidavit."

First Chicago, 836 F.2d at 1380-81. As we have indicated, Harrods

UK, both in its opposition papers and at the motion hearing, informed

the district court that more discovery was needed. It is not clear from

this record whether Harrods UK had outstanding discovery requests

pending when summary judgment was granted, as was the case in

First Chicago. But if it did not, the only reason is that summary judg-

ment was granted so early in the proceedings: the district court

granted the Argentina Names' motion for summary judgment with

over eleven of the fifteen weeks of scheduled discovery still remain-

ing. Moreover, the district court clearly understood that Harrods UK

would be pursuing discovery in the coming weeks and months. The

court thus opened the summary judgment hearing by noting that

"there's been almost no discovery conducted in this case," to which

the Domain Names' lawyer responded, "It's beginning. It's in pro-

cess." Even though it recognized that discovery was just getting under

way, the district court decided to grant summary judgment to the six

Argentina Names because it concluded that no discovery was needed

to resolve the case as to those Names. The court did not use Harrods

UK's failure to submit a Rule 56(f) affidavit as a basis for granting

early summary judgment to the six Names.

In sum, the district court granted summary judgment to the six

Argentina Names soon after the complaint was filed (about six weeks)

and prior to almost any discovery, and Harrods UK was not dilatory

in pursuing discovery. Moreover, Harrods UK made it clear to the

district court in the summary judgment proceedings that its case

hinged on its ability to establish Harrods BA's bad faith, which is a

fact-specific issue. Harrods UK repeatedly explained to the district

court both in writing and orally that more discovery was needed and

that it was too early to decide the motion for summary judgment. The

district court was thus fully informed about why Harrods UK was

requesting the normal time to conduct discovery, and the absence of

a Rule 56(f) affidavit did not figure in the court's decision to grant

early summary judgment to the six Argentina Names. In these cir-

cumstances, the purposes of Rule 56(f) were served. As a result, it

would be unfair to penalize Harrods UK for failing to file the formal

affidavit called for by the rule.¹⁹

We now consider whether the district court granted summary judg-

ment to the six Argentina Names before Harrods UK had adequate

time to pursue discovery. Generally speaking, "[s]ufficient time for

discovery is considered especially important when the relevant facts

are exclusively in the control of the opposing party." 10B Charles A.

Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice &

Procedure § 2741, at 419 (3d ed. 1998). And summary judgment

prior to discovery can be particularly inappropriate when a case

involves complex factual questions about intent and motive. See Illi-

nois State Employees Union v. Lewis, 473 F.2d 561, 565-66 (7th Cir.

____________________________________________________________

¹⁹ Although the particular circumstances of this case mean that Harrods

UK will not be penalized for failing to state its case for more discovery

in an affidavit, we hasten to add that parties who ignore Rule 56(f)'s affi-

davit requirement do so at their peril. We reiterate that our court expects

full compliance with Rule 56(f) and that the "failure to file an affidavit

under Rule 56(f) is itself sufficient grounds to reject a claim that the

opportunity for discovery was inadequate." Evans, 80 F.3d at 961 (quota-

tions omitted).

1972) (motive); Int'l Raw Materials, Ltd. v. Stauffer Chem. Co., 898

F.2d 946, 949-50 (3d Cir. 1990) (complex questions). Both of these

circumstances were present in this case. First, relevant facts about

Harrods BA's intent were in the exclusive possession of Harrods BA.

Second, the issue of Harrods BA's intent - whether it registered the

Argentina Names in bad faith - was a complex one that required

development of the facts bearing on the nine factors listed in

§ 1125(d)(1)(B)(i). For example, as Harrods UK made clear in the

summary judgment proceedings, further discovery was necessary to

shed light on Harrods BA's motive in registering the Argentina

Names. See 15 U.S.C. § 1125(d)(1)(B)(i)(V). We therefore conclude

that the district court's grant of summary judgment to the six Argen-

tina Names was premature, and we reverse the summary judgment

and remand for further proceedings, including any other discovery

that is necessary.

We noted above that the district court itself later questioned its

decision to grant summary judgment to the six Argentina Names.

Indeed, the district court went so far as to say that if we were to

reverse the summary judgment and remand, the court "would enter

judgment against the six domain names . . . for the reasons stated in

th[e] Memorandum Opinion [ruling against the 54 Domain Names]."

We believe, however, that it is still an open question whether the six

Argentina Names warrant the same treatment as the 54 Names. As the

district court noted when it granted summary judgment to the Argen-

tina Names, there are important differences between the two sets of

names. For example, the district court explained that "anyone looking

at [the six Argentina Names] is going to understand that they are

linked with South America." This observation may have bearing on,

among other things, whether the Argentina Names are "identical or

confusingly similar" to Harrods UK's mark. In making these observa-

tions, we do not prejudge the case. We are simply emphasizing how

important it is for the district court on remand to take a fresh look at

the Argentina Names in light of the provisions of the ACPA and

whatever evidence may be relevant to those Names.

IV.

To sum up, we hold that 15 U.S.C. § 1125(d)(2) authorizes an in

rem action against domain names based on claims of infringement

and dilution as well as bad faith registration. Accordingly, we reverse

the district court's dismissal of the infringement and dilution claims

and remand for further proceedings. (As noted above, because we

affirm the judgment as to the 54 Names, the district court on remand

need only consider Harrods UK's infringement and dilution claims

with respect to the six Argentina Names.) We also hold that the dis-

trict court did not err in concluding that Harrods BA registered the 54

Domain Names in bad faith, specifically, that Harrods BA registered

the 54 Names with the intent to use those names to sell goods and ser-

vices to non-South American consumers seeking to do business with

Harrods UK. Accordingly, we affirm the district court's judgment and

order requiring the transfer of the 54 Names to Harrods UK. Finally,

we hold that the district court's grant of summary judgment to the six

Argentina Names was premature, so we reverse the summary judg-

ment and remand for further proceedings.

AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED

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