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Mattel loses cybersquatting challenge

A federal appeals court rejects a legal shortcut that may have dramatically slashed the costs of battling trademark infringement on the Net.

A federal appeals court has rejected a legal shortcut aimed at slashing the costs of battling trademark infringement on the Net.

In a ruling Thursday, the 2nd Circuit U.S. Court of Appeals in New York found that the Anti-cybersquatting Protection Act (ACPA) does not allow plaintiffs to consolidate in a single venue cases affecting domain names registered with services operating in different states.

The decision for now ends a bid by toy maker Mattel to file a consolidated suit in New York federal court to invalidate in one fell swoop dozens of domain names that allegedly infringe its Barbie and Mattel marks, among others.

At stake was a provision in the ACPA that allows plaintiffs to file suit "in rem" (literally "against the thing") in cases where they are unable to track down the registrant of an allegedly infringing domain name. The measure is aimed at offering companies redress against defendants who file fraudulent information with domain registrars, making them hard or impossible to find.

Mattel had sought to have registrars located in several states assign ownership of the disputed domains to a New York court to satisfy the jurisdictional requirement of the law. In its decision, however, a three-judge panel rejected the technique.

We "hold that the ACPA's basic in rem jurisdictional grant...contemplates exclusively a judicial district within which the registrar or other domain-name authority is located," the court found.

Trademark disputes have exploded with the advent of the Internet, where corporations have bumped heads with a large range of rivals for the pool of available domain names. Amid competing legitimate claims has come an opportunistic land rush from so-called cybersquatters, unscrupulous individuals who register domains using variations on trademarked terms in the hopes of selling them back to deep-pocketed corporations for a profit.

The practice has led lawmakers to step in with new rules to simplify procedures for aggrieved trademark holders. At the same time, corporate critics have emerged who argue that companies have used the rules to expand the reach of Internet trademarks to squelch legitimate uses that they don't like, such as parody sites.

Mattel filed suit in New York federal court in November 2000 against a long list of domain names, including mattle.net, masteroftheuniverse.com and captainbarbie.com. The bulk of the domains were registered with registrars in Maryland, Virginia and California. After a federal judge dismissed the case, Mattel appealed, drawing a sole brief in defense from captainbarbie.com, which was registered through Baltimore, Md.-based Bulkregister.com.

Lawyers for the two sides could not immediately be reached for comment.

Joseph Dreitler, a trademark attorney at the law firm Jones Day Reavis & Pogue who is not involved in the case, called Mattel's bid to wrap all of its complaints into one consolidated suit "a nice try."

"Mattel tried to take advantage of a provision in the law that lets plaintiffs go after people they can't find," he said. "But the court said that's not what this is about. You need to go to the state where the registrar is located and sue them as a group there."