U.S. District Judge Claude Hilton last Tuesday concluded that Volkswagen made "no showing of any irreparable harm" and denied its request for a preliminary injunction against Virtual Works, located in Reston, Va.
"This demonstrates that the mere fact that a company holds a trademarked name [does not mean it can] necessarily preclude others from using that mark as an Internet domain name," said William Bode, a Washington, D.C., attorney who represented Virtual Works.
Attorneys for Volkswagen could not be reached for comment.
The automaker's loss comes as courts have issued a string of decisions refusing to recognize expansive trademark rights on the Net. But it's a trend that could come to a halt with new legislation aimed at curtailing so-called cybersquatting.
In September, a federal judge in Boston ruled that a registered trademark, even when held by a well-known company, does not automatically entitle the holder to the corresponding domain name. That decision was a victory for a single-employee consulting firm called Clue Computing, which owns the domain name Clue.com. Hasbro, the toy maker and manufacturer of the mystery board game Clue, had claimed rights to the Net address.
The Clue decision followed a similar ruling in a case in which a federal appeals court concluded that the use of the names Avery.net and Dennison.net by a pair of small companies did not infringe on trademarks held by Avery Dennison, a large office supply company.
But recently passed cybersquatting legislation, which ostensibly targets domain name registrants who hijack well-known marks to sell them back to trademark holders, could put a damper on such victories. The measure protects businesses from those who register company trademarks as Internet addresses in "bad faith" and later try to sell them for profit.
"It could potentially give trademark holders expanded rights under the law," Bode said. "Certainly the case law will be altered."
To protect its well-known name, Volkswagen wrote to Virtual Works demanding it to stop using "VW" in its domain name. The automaker also sought relief from Network Solutions, which has a dispute resolution policy allowing trademark holders to request suspension of an Internet domain name. The action sparked Virtual Works to file a lawsuit in federal court seeking a declaration that it is entitled to use the name.