Retaliatory Cybersquatter Used Domain Name To “Get Leverage”

By February 14, 2014Internet Law


In Atigeo v. Offshore Limited, a former employee of Atigeo launched a business and sought new investors. He solicited funding from Atigeo’s CEO who declined to invest in the new venture. After his former employer turned him down, he ”left [Atigeo’s CEO] with the warning that others who had crossed him had “learned the hard way.” Following up on his threat promise, he registered a domain name in and posted there allegations of fraud and other wrongdoings concerning Atigeo. The court held that the former employee, who is the defendant in the case, could not escape the lawsuit for cybersquatting and libel and thus refused to dismiss the suit.

DSPT International Found Analogous

The Defendant argued that the cybersquatting case against him should be dismissed because is an “investigative news site”, that he never intended to sell the domain name to Atigeo, or to divert consumers from Atigeo’s website in order to derive commercial gain from those consumers.

The Atigeo court rejected these arguments, finding support from a Ninth Circuit Court of Appeals decision, which it labeled as “analogous” to the case at hand. “[T]he court in DSPT International found that a defendant had a “bad faith intent to profit” when he used a domain name as leverage against the plaintiff, his former employer, to force payment of commissions allegedly withheld by the employer,” the Atigeo court noted.

Accordingly, the court held that the Atigeo Defendant is “allegedly using the website in order to obtain business leverage over plaintiffs.”

DSPT International Was About Direct Profit Motive, Not So in Atigeo

The Atigeo case is not as close to DSPT International as the court analysis implies. In DSPT International, the defendant had a clear profit motive. The defendant, who had control over the Plaintiff’s main website, redirected the website toward a contact page listing Defendant’s email address, inviting viewers to make inquiries about Plaintiff’s branded-goods. This was used as leverage to receive payment of commissions that had been withheld. In the process, the plaintiff accumulated significant loss of sale because they were deprived of their e-commerce website.

Unlike the DSPT International case, it is unclear what profit motive the Atigeo Defendant had, if any. And, it is significant that no loss of sale is the subject of this case.

Sure, the defendant could have registered the domain name and publicized unsavory information about the plaintiff for the purpose of extortion – “if you pay me X amount of dollars, I’ll make it all stop.” But there is nothing on the record to indicate that or other indicia of a profit motive.

Some Similarities with Cybergripe Sites

The Atigeo case bears some interesting similarities with the cybergripe type case where defendants have no profit motive. Generally, all these websites do is express discontent with a certain brand, disparaging or tarnishing the companies’ trademarks as they complain away. These cases tend to focus on the non-commercial nature of the alleged cybersquatters. For instance in Aviva USA Corp. v Vazirani, 902 F Supp 2d 1246 (D. Ariz. 2012), the court noted, “there is no evidence here that Defendants offered for sale any goods or services on the Website. Nor did the Website contain any links to other sites that offered goods or services for sale. Additionally, there is no evidence that any of Defendants ever attempted to sell the Website or domain name to [the Plaintiff] or any other party for profit.” A description that would equally describe the facts of the Atigeo case.

However, The Atigeo Defendant does not fit perfectly within the cybergripe line of cases either because he clearly created the website in retaliation to Plaintiff’s refusal to invest in his company. Indeed, after Atigeo declined to provide investment capital, the Defendant “threatened, “if you’re not with me, you’re against me” and left [Atigeo’s CEO] with the warning that others who had crossed him had “learned the hard way.”

Importantly, the Defendant might look more like a cybergripe defendant if the disparaging information posted on the site is true; an issue the court has yet to rule on.

Uncertainties as to the bound of ACPA (Anticybersquatting Consumer Protection Act)

This case is not over. The Defendant’s motion to dismiss has been denied so the case continues its course. This will be an important case to watch because it might broaden the scope of what “bad faith intent to profit” means. Importantly, there are splits among the districts as to the proper bound of ACPA.

Some court have limited the application of ACPA to only circumstances very close to the classic extortion and customer diversions scenarios. For instance in S. Grouts & Mortars, Inc. v 3M Co, the 11th Circuit found that the defendant had no “intention to profit” where the defendant indicated no intention to sell or utilize the domain to divert plaintiff’s customers. The Eleven Circuit further noted, “[a] defendant is liable only where a plaintiff can establish that the defendant had a “bad faith intent to profit.” 15 U.S.C. § 1125(d) (emphasis added). We cannot read the words “intent to profit” out of the statute.”

Another notable opinion, this time from the Southern District of New York held that “[t]he ACPA is not an all-purpose tool designed to allow the holders of distinctive marks the opportunity to acquire any domain name confusingly similar to their marks. […] The requirement of bad faith intent to profit imposes an important limit that cabins the statute’s scope and ensures that the ACPA targets only the specific evils that Congress sought to prevent. This third element thus leaves untouched conduct that might annoy or frustrate mark holders, but that Congress shielded from liability by enumerating indicia of the sort of bad faith it had in mind.” Gioconda Law Group PLLC v Kenzie, 941 F Supp 2d 424, 428 (S.D.N.Y. 2013).

In Atigeo, the Defendant was also sued for libel and might well lose on that count, if as Plaintiff asserts, all the information publicized on were false.

I will update on this case as it moves forward.

Atigeo LLC v Offshore Ltd., , 2014 WL 239096 (WD Wash Jan. 22, 2014)

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