This case raises an important issue of first impression, namely, whether a domain name registrant who lost in a World Intellectual Property Organization (WIPO) proceeding pursuant to its Uniform Domain Name Dispute Resolution Policy (UDRP) may challenge this result in federal court. Under 15 U.S.C.

Section 1114(2)(D)(v) of the U. S.'s Anticybersquatting Consumer Protection Act (ACPA), it is provided in part that "A domain name registrant ... may ... file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful ...". Obtaining a judicial declaration that plaintiff did not violate the ACPA and getting an injunction forcing a transfer of the disputed domain name back to him, would seemingly overturn the result of the earlier WIPO proceeding.

[Editorial Note: "Cybersquatting" or "cyberpiracy" or "domain name hijacking" denotes a practice whereby someone buys a particular domain name with the intention of selling it to the trademark holder for profit.]

In August of 1998, one Jay Sallen registered a primary Internet domain name with Network Solutions, Inc. ("NSI") under the name "corinthians.com." In addition to being having a New Testament context, "Corinthiao" happens to be the name of a popular and successful soccer franchise in Brazil. One year later, Sallen contacted agents of Corinthians Licenciamentos LTDA ("CL") of Brazil, the exclusive licensee of Corinthians' intellectual property. According to Sallen, a number of Brazilians had gotten in touch with him more than once about buying corinthians.com. He had decided, however, that it would be in CL's best interest to own the domain name. CL responded with a "cease and desist" letter. At some point, Sallen posted biblical material on the corinthians.com website. CL alleges that Sallen had posted this material after he had gotten the "cease and desist" letter. On the other hand, Sallen claims that he had posted this material before any dispute arose over the domain name.

By default, Sallen's registration agreement is subject to the UDRP. Moreover, the UDRP only applies to allegations advanced by a third-party trademark holder that the registrant of the domain name in question has engaged in "cybersquatting" activity. To decide this controversy, the registrant and the third party submit to an administrative dispute resolution service provider which the Internet Corporation for Assigned Names and Numbers ("ICANN") has authorized to decide such matters. In order to prevail, the complainant has to establish three elements: (1) that the registrant's domain name is "identical or confusingly similar to a trademark or service mark in which the complainant has rights;" (2) that the registrant lacks any rights or legitimate interests in the trademarked name; and (3) that the registrant has registered and used the domain name in bad faith.

On May 18, 2000, CL filed a complaint with the WIPO, alleging the above three elements. The WIPO concluded (1) that "Corinthians" and "Corinthiao" are phonetically nearly identical, (2) that Sallen did not use or prepare to use the domain name in connection with a genuine and authentic offering of goods or services before he received the "cease and desist" letter, and (3) that Sallen was not "making a legitimate noncommercial or fair use of the domain name without intent for commercial gain or to misleadingly divert customers." Finally, the panel declared that Sallen had bought the domain name in bad faith. It thus ordered the transfer of the ownership of corinthians.com to CL.

Sallen next filed a complaint in federal court, seeking a judicial declaration that his registration and use of corinthians.com was not impermissible under the ACPA. Sallen further tried to show that he was entitled to retain ownership of the disputed domain name. CL moved to dismiss Sallen's claim, arguing that the district court lacked subject matter jurisdiction because Sallen requested a declaration of his rights under the ACPA despite the absence of CL's intent to sue. The district court agreed that, without the threat of suit, there was no "case or controversy," and thus no federal jurisdiction. Sallen appealed.

The U.S. Court of Appeals for the First Circuit reverses. The Court finds that there clearly is federal jurisdiction over these claims. CL argued that, although Sallen had notified CL of his claims, "Corinthians" is registered only with the Brazilian Institute of Industrial Property, and not as a trademark with the U.S. Patent and Trademark Office (PTO). Since CL is not a "mark holder", Sallen subsequently failed to satisfy his obligation under 1114(2)(D)(v) to notify the "mark holder." The Court rejects CL's argument. CL appears to have engaged in the very practice of "reverse domain name hijacking" that subsection (D)(iv) seeks to discourage. The purpose of subsection (D)(iv) is to ensure that trademark holders do not abuse anti-cybersquatting provisions to take domain names from non-infringing, rightful registrants.

In the ACPA, Congress has in fact provided a cause of action to override UDRP decisions. Under Section 1114(2)(D)(v), registrants such as Sallen have an affirmative cause of action to recover domain names lost in UDRP proceedings. The statute clearly states that a registrant whose domain name has been "suspended, disabled, or transferred" may bring an action for a declaration that the registrant is not in violation of the Act, and for an injunction returning the domain name. Therefore, the Court reverses and remands the case for a determination according to ACPA.

Citation: Sallen v. Corinthians Licenciamentos Ltda., 273 F.3d 14 (1st Cir. 2001).