Chapter 5. Intellectual Property

Case Problem with Sample Answer

Case 5-5

In 1999, Steve and Pierce Thumann and their father, Fred, created Spider Webs, Ltd., a partnership, to, according to Steve, “develop Internet address names.” Spider Webs registered nearly two thousand Internet domain names for an average of $70 each, including the names of cities, the names of buildings, names related to a business or trade (such as air conditioning or plumbing), and the names of famous companies. It offered many of the names for sale on its Web site and through Spider Webs registered the domain name “ERNESTANDJULIOGALLO.COM” in Spider Webs’ name. E. and J. Gallo Winery filed a suit against Spider Webs, alleging, in part, violations of the Anticybersquatting Consumer Protection Act (ACPA). Gallo asked the court for, among other things, statutory damages. Gallo also sought to have the domain name at issue transferred to Gallo. During the suit, Spider Webs published anticorporate articles and opinions, and discussions of the suit, at the URL “ERNESTANDJULIOGALLO.COM.” Should the court rule in Gallo’s favor? Why or why not? [E. & J. Gallo Winery v. Spider Webs, Ltd., 129 F.Supp.2d 1033 (S.D.Tex. 2001)]

Case 5-5: Answer

The court granted Gallo a summary judgment and awarded $25,000 in statutory damages. The court enjoined the Thumanns from using the domain name “ERNESTANDJULIOGALLO.COM” and from registering any name that contains the word “Gallo” or the words “Ernest” and “Julio” in combination. Finally, the court ordered the Thumanns to transfer to Gallo “ERNESTANDJULIOGALLO.COM.” The court explained that Spider Webs’ domain name “is confusingly similar to Gallo’s registered trademark.” The Anticybersquatting Consumer Protection Act (ACPA) lists nine factors as to whether a domain name was registered in bad faith Concluding that Spider Webs had acted in bad faith, the court pointed out that “Gallo has a registered trademark in the name ‘ERNEST & JULIO GALLO,’ while Spider Webs has no intellectual property interest in the name .* * * Furthermore, the domain name * * * does not include the legal name of Spider Webs * * * or of its partners .* * * Spider Webs has never used the domain name in connection with the bona fide offering of any goods or services. It has, however, used the name to develop a web site on which it has made derogatory comments about the instant litigation and about alcohol.” This use “served only to disparage Gallo and diminish its goodwill.” Also, Thumann’s failure to “seek advice from counsel prior to acquiring the domain name at issue as to whether it might be engaging in infringing conduct * * *supports a finding of bad faith.”

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