United States: Failure to Conduct Reasonable Investigation to Ensure Domain Name Is Not Infringing Is Evidence of Bad Faith

A domain name registrant’s failure to conduct a reasonable investigation to ensure that its domain name does not infringe another’s trademarks rights constitutes evidence of bad faith under the Anticybersquatting Consumer Protection Act (ACPA). Eurotech, Inc. v. Cosmos European Travels Aktiengesellschaft, Civ. No. 01-1689-A, 2002 U.S. Dist. LEXIS 13615 (E.D. Va. July 24, 2002).

The defendant, Cosmos, owns numerous incontestable trademark registrations in several countries for the mark COSMOS for use in connection with travel services. The plaintiff, Eurotech, registered the domain name cosmos.com and began using the domain name in connection with a travel information website. Eurotech did not conduct a trademark search to determine whether the mark COSMOS already was registered or in use as a trademark or trade name. Cosmos filed a complaint pursuant to the Internet Corporation for Assigned Names and Numbers (ICANN) procedures with the World Intellectual Property Organization (WIPO), which ordered Eurotech to transfer the domain name to Cosmos. Eurotech appealed the holding by filing a declaratory judgment action in the U.S. District Court for the Eastern District of Virginia. Cosmos counterclaimed alleging trademark infringement, unfair competition and violation of the ACPA.

The U.S. District Court for the Eastern District of Virginia granted summary judgment to Cosmos and ordered Eurotech to transfer the domain name. In addition to finding the balance of the enumerated ACPA "bad faith" factors weighed in favor of its holding, the court also stressed the importance of examining whether the "larger picture" is consistent with a finding of bad faith. In this regard, the court held that Eurotech’s failure to conduct a reasonable investigation to ensure that the domain name was non-infringing further supported a finding of bad faith. Had Eurotech performed a simple trademark search, it easily would have ascertained that Cosmos had registered the mark COSMOS for use in connection with the travel industry and had spent millions of dollars promoting that mark.