4th Circuit Rules for Jerry Falwell's Cyber Squatter

August 24, 2005. The U.S. Court of Appeals (4thCir) issued its opinion [20 pages in PDF] in Lamparello v. Falwell, a cyber squatting case in which the Court of Appeals reversed the District Court's injunction against the cyber squatter.

This opinion contains a detailed analysis of the law, in the 4th Circuit, of trademark infringement, false designation of origin, initial interest confusion, and cyber squatting under the ACPA, as applied to the use of domain names that are very similar to protected marks, where the purpose of the infringing web site is to criticize (rather than compete with, or divert sales and customers from) the holder of the protected mark.

In this case, the critic (Christopher Lamparello) prevailed over the holder of the mark (Jerry Falwell) on all issues.

Background. Jerry Falwell is a Baptist minister based in Lynchburg, Virginia. He is also widely known nationally through his Jerry Falwell Ministries, the Liberty Channel's television programming, Liberty University, his leadership of the Moral Majority Coalition, and his other past and present activities. Falwell holds the common law trademarks "Jerry Falwell" and "Falwell," and has registered the trademark "Listen America with Jerry Falwell." Jerry Falwell Ministries also has a web site with the URL of www.falwell.com.

Christopher Lamparello is an individual who disagrees with Falwell's interpretation of several Biblical passages in the context of homosexuality. Lamparello published his criticisms of Falwell in a web site that he created. This dispute arose because he used a variation of Falwell's name in his URL. His web site is located at www.fallwell.com.

Lamparello's web site is not commercial in nature, to the extent that he sells nothing through his web site, he carries no advertising, and it is a free access web site. He also attracts few visitors to his web site. Also, he writes in the web site that it is not affiliated with Jerry Falwell.

Falwell wrote to Lamparello demanding that he stop using that domain name. Lamparello did not. A Uniform Domain-Name Dispute Resolution Policy panel ruled in Falwell's favor.

District Court. Lamparello filed a complaint in U.S. District Court (EDVa) against Falwell seeking a declaratory judgment of non-infringement.

Lamparello is represented by a broad team of lawyers from the Public Citizen Litigation Group, the Berkman Center for Internet and Society at Harvard Law School, and the Georgetown University Law Center. The American Civil Liberties Union (ACLU) has also supported him as an amicus curiae.

Falwell filed a counterclaim against Lamparello alleging trademark infringement under 15 U.S.C. § 1114 (2000), false designation of origin under 15 U.S.C. § 1125(a), unfair competition under 15 U.S.C. § 1126 and the common law of the state of Virginia, and cybersquatting under 15 U.S.C. § 1125(d). See, 15 U.S.C. § 1125.

The District Court granted summary judgment for Falwell, enjoined Lamparello from using the domain name, and ordered him to transfer it to Falwell. Lamparello appealed.

Court of Appeals. The Court of Appeals reversed.

First, the Court rejected Falwell's trademark infringement and false designation of origin claims. The elements of both of these claims include the elements of use of the mark in commerce, and likelihood of confusion. The Court concluded that likelihood of confusion was absent. The Court also addressed, but did not base its decision upon, the commerce issue.

Noncommercial Activity. The Court commented that "Trademark law serves the important functions of protecting product identification, providing consumer information, and encouraging the production of quality goods and services". In contrast, trademark law does not protect against the use of language in criticism or expression of opinion.

The Court noted that while some of the provisions in the Lanham Act limit applicability to commercial activity, neither the trademark infringement nor the false designation of origin provisions use the term "noncommercial". The infringement provision references "in connection with the sale, offering for sale, distribution, or advertising of any goods or services", while the false designation of origin provision references "in connection with any goods or services".

The Court wrote that courts have interpreted these clauses to include a wide range of activity, including activity that does not involve sales. However, it left undecided the questions of whether the trademark infringement and false designation of origin are limited to "commercial speech", and just what is "commercial speech".

Likelihood of Confusion. Nevertheless, the Court reversed on the trademark infringement and false designation of origin counts because there was not a likelihood of confusion.

The Court reiterated the 4th Circuit's seven part test: "(a) the strength or distinctiveness of the mark; (b) the similarity of the two marks; (c) the similarity of the goods/services the marks identify; (d) the similarity of the facilities the two parties use in their businesses; (e) the similarity of the advertising used by the two parties; (f) the defendant’s intent; (g) actual confusion."

The Court then applied this test to the present case. "Lamparello’s website looks nothing like Reverend Falwell’s; indeed, Lamparello has made no attempt to imitate Reverend Falwell’s website. Moreover, Reverend Falwell does not even argue that Lamparello's website constitutes advertising or a facility for business, let alone a facility or advertising similar to that of Reverend Falwell. Furthermore, Lamparello clearly created his website intending only to provide a forum to criticize ideas, not to steal customers. Most importantly, Reverend Falwell and Lamparello do not offer similar goods or services. Rather they offer opposing ideas and commentary."

Initial Interest Confusion. On the likelihood of confusion issue, Falwell also argued the initial interest confusion doctrine. The Court of Appeals described this doctrine as new and sporadically applied, and summarized it as follows: "the Lanham Act forbids a competitor from luring potential customers away from a producer by initially passing off its goods as those of the producer’s, even if confusion as to the source of the goods is dispelled by the time any sales are consummated".

The Court of Appeals rejected this argument for two reasons. First, the 4th Circuit has not adopted this doctrine. (The 6th, 7th and 9th Circuits have.) Second, even if the Court were to "endorse the initial interest confusion theory, that theory would not assist Reverend Falwell here because it provides no basis for liability in circumstances such as these. The few appellate courts that have followed the Ninth Circuit and imposed liability under this theory for using marks on the Internet have done so only in cases involving a factor utterly absent here -- one business's use of another’s mark for its own financial gain."

"Profiting financially from initial interest confusion is thus a key element for imposition of liability under this theory." The Court of Appeals added that "This critical element -- use of another firm's mark to capture the markholder’s customers and profits -- simply does not exist when the alleged infringer establishes a gripe site that criticizes the markholder."

Cyber Squatting. The Court of Appeals also rejected Falwell's claim under the Anticybersquatting Consumer Protection Act (ACPA). The ACPA prohibits use of a domain name where the holder registers a domain name that "is identical or confusingly similar to, or dilutive of" a protected mark, and has a "faith intent to profit" from its use. The ACPA provides nine factors, now codified at 15 U.S.C. § 1125(d)(1)(B)(i), that courts should consider in determining whether the holder of the allegedly infringing domain name has acted in bad faith.

The Court of Appeals applied these nine factors, and concluded that Lamparello lacked a bad faith intent to profit.

The Court of Appeals held that, generally, "the use of a mark in a domain name for a gripe site criticizing the markholder does not constitute cybersquatting."

The Court of Appeals relied upon several other cases. See, for example, March 5, 2004 opinion of the U.S. Court of Appeals (6thCir) in Lucas Nursery v. Grosse, which is reported at 359 F.3d 806, and story titled "6th Circuit Rules for Domain Name Registrant Who Published Complaint Web Site" in TLJ Daily E-Mail Alert No. 852, March 9, 2004. See also, the April 21, 2004 opinion of the U.S. Court of Appeals (5thCir) in TMI, Inc. v. Maxwell, which is reported at 368 F.3d 433, and story titled "5th Circuit Rules in Cyber Squatting and Trademark Dilution Case" in TLJ Daily E-Mail Alert No. 883, April 23, 2004.

PETA v. Doughney Distinguished. The Court of Appeals also cited and relied upon its 2001 opinion in People for the Ethical Treatment of Animals v. Doughney, which is reported at 263 F.3d 359. In that case the Court of Appeals affirmed a District Court judgment against a cyber squatter.

Doughney registered the domain name www.peta.org, and operated a web site that parodied a group titled "People for the Ethical Treatment of Animals". He named his web site "People Eating Tasty Animals". See, story titled "4th Circuit Affirms Judgment Against Parody Web Site Operator" in TLJ Daily E-Mail Alert No. 256, August 24, 2001.

In both the present case, and in PETA, individuals registered domain names similar to protected marks, operated web sites that criticized or mocked some other person or viewpoint, but created no confusion as to origin, sold no goods through the web site, and attempted to steal no customers or sales. Yet, the Court of Appeals ruled for one griping cyber squatter (Lamparello), and against the other griping cyber squatter (Doughney).

The Court of Appeals distinguished the two cases by pointing out that Doughney also registered other domain names, and that he had stated that the PETA should try to settle with him.

Perhaps the Court of Appeals has created a lesson here for counsel representing parties who might assert cyber squatting claims. Before filing suit, initiate bad faith settlement negotiations, for the purpose of obtaining a statement from the cyber squatter that he might be willing to settle. Then, file suit under the ACPA, asserting that your opponent's willingness to engage in your bad faith settlement negotiations demonstrates a bad faith intent to profit on his part.

Paul Alan Levy, of the Public Citizen Litigation Group, argued the case for Lamparello. He stated in a release that the 4th Circuit's opinion "is a victory for First Amendment rights on the Internet". However, the Court of Appeals interpreted and applied various statutes codified in Title 15, not the First Amendment.

This case is Christopher Lamparello v. Jerry Falwell, et al., App. Ct. Nos. 04-2011 and 04-2122, appeals from the U.S. District Court for the Eastern District of Virginia, at Alexandria, Judge Claude Hilton, D.C. No. CA-03-1503-A. Judge Motz wrote the opinion of the Court of Appeals, in which Judges King and Michael joined.