The complaint, brought by an adventure sports Web site called Quokka.com, which has a license to use the America's Cup trademark, sought damages against two men from New Zealand who had registered an Internet address using the well-known mark.
As part of the settlement, the men agreed to transfer the domain names back to America's Cup Properties. A statement released this afternoon said that the parties "will not in anyway state or imply that any money was part of the settlement."
U.S. District Judge Lowell Jensen had previously issued a temporary restraining order against the defendants along with a 21-page opinion explaining his decision, much of which dealt with the jurisdictional problem of holding a foreign defendant accountable for U.S. laws.
Jensen cited California's "long arm statute," which states that a defendant can be held liable under trademark infringement laws if doing business in the United States. He reasoned that because the two men, Arron John Brett and Justin Nicholas, had registered the domain in the United States, struck business relationships with U.S. companies, and were targeting American Internet users on their Web site, then a court in this country was the proper venue for the case.
An attorney for the defendants could not be reached for comment.
"This case extends the reach of the U.S. court system, in part because of the new cybersquatting law, but also because of some of the specific things that happened here," said Quokka attorney Adam Belsky of the San Francisco firm Gross & Belsky, which specializes in Internet litigation. Until recently, Belsky said it was difficult to initiate legal recourse over an Internet domain name dispute with offenders living in other countries.
Quokka filed the action Nov. 29, the same day President Clinton signed the Anti-Cybersquatting Consumer Protection Act. The law was designed to protect businesses from those who register company trademarks as Internet addresses in "bad faith" and later try to sell them for profit.
Barely three weeks old, the law has already been put to use, with a number of organizations filing claims seeking relief under the statute.
Yesterday, a coalition of national sports league members sued a Canadian Web operator in a New York federal court under the new law accusing him of unlawfully selling email addresses with the names of professional sports team.
The National Football League a week earlier charged that a Clearlake Park, Calif., Web site operator used the NFL brand to lure Internet users to three gambling sites--NFLtoday.com, NFLtoday.net and NFLtoday.org--that have no affiliation with the league.
Despite this recent flurry of lawsuit filings, a judge has not yet had the opportunity to rule on the new law.
America's Cup first learned of the defendants' Web site when one of the men sent an email to the sailing club's headquarters alerting them of the possibility to make big bucks using the address they had acquired.
America's Cup had established Web sites for the sailing race but had registered them in New Zealand; they therefore carried the ".nz" extension in their addresses. The defendants registered similar domain names with Network Solutions using the more common ".com."
When America's Cup Properties and Quokka demanded that that the cup domain name be relinquished, the two defendants filed a lawsuit in New Zealand.
In the meantime, Quokka sued in the U.S. First District Court in Oakland, Calif. The New Zealand case was eventually dismissed, lawyers involved in the matter said.
"It was a touch-and-go case that had a lot of trans-border questions," Belsky said.