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Bruce Watts v. Network Solutions, Inc.

Claiming a common law trademark in the phrase "Birthday Balloons," plaintiff brought suit against defendant Network Solutions Inc. ("NSI") because it registered the domain name "birthdayballons.com" to a third party, one Steven Schwab. NSI took such action pursuant to its first come, first serve registration policy, because Schwab sought the domain name before plaintiff. Plaintiff claimed that by its conduct, NSI violated both the Sherman Antitrust Act and the Lanham Act, as well as Indiana's common law prohibitions against unfair competition. The district court disagreed, and dismissed plaintiff's claims. This determination was affirmed by the Seventh Circuit on appeal.

Plaintiff argued that NSI was guilty of contributory infringement, which occurs when "a manufacturer or distributor (1) intentionally induces another to infringe a trademark or (2) continues to supply a product to one whom it knows or has reason to know is engaging in trademark infringement." The court rejected this claim because plaintiff failed to establish that NSI "knew or had reason to know" that Schwab's use of the birthdayballons.com domain name infringed plaintiff's alleged mark. Indeed, held the court, plaintiff "Watts failed to demonstrate that Schwab even used the domain name "birthdayballoons.com" in connection with the sale of any goods or services in interstate commerce."

Plaintiff's contributory unfair competition claim failed because such a claim is not recognized under Indiana law. Lastly, plaintiff's Sherman Act claim failed because plaintiff did not establish that he had sustained an "antitrust injury," an essential prerequisite to such a claim. Any injury plaintiff sustained did not result from the monopolistic behavior of which he complained -- NSI's domination of the domain name registration business. Rather, it resulted simply from the fact that NSI had a first come, first serve registration policy.