Designer Skin LLC v. S & L Vitamins, Inc., et al.
Register.com, Inc. v. Verio, Inc.
356 F.3d 393 (2d Cir. 2004)
Browse-Wrap Contract Likely Created By Use Of Website With Knowledge That Such Use Creates Binding Agreement
The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.
As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.
Register.com operates a domain name registration service. It also provides a variety of related services, including web site hosting and electronic mail. To be authorized to provide domain name registration services, Register.com was required to and did enter into a Registrar Accreditation Agreement with ICANN. Pursuant to this agreement, Register.com is required to provide the public with access to a Whois database containing, inter alia, contact information by which one can reach those individuals who utilize Register.com's services to register their domain names. This agreement with ICANN sets forth the restrictions Register.com can place on the uses made by the public of data they obtain from the Whois database. More particularly, this agreement provides:
Verio, Inc. is a company that provides a variety of internet services, including web site hosting and development. To assist it in developing its business, Verio decided to market its services to individuals who recently registered domain names. Verio obtained information concerning the identity and whereabouts of these individuals, in part, by using a robot to search Register.com's Whois database. Verio then utilized this information to solicit business from these individuals via telemarketing and e-mail.
Violation Of ICANN Agreement
The Court rejected this argument, holding that Verio did not have standing to assert such a claim because the ICANN Registrar Accreditation Agreement expressly disclaimed any intention to vest rights in third party beneficiaries such as Verio. Instead, the ICANN Agreement allowed third parties to seek to enforce a registrar's obligations thereunder via a grievance process under ICANN's auspices, a procedure of which Verio did not avail itself.
It should be noted that ICANN subsequently amended the Registrar Agreement so as to permit domain registrars to prohibit use of Whois data in unsolicited advertisements sent via either telephone or fax, in addition to those sent by e-mail.
Accordingly, the Second Circuit found that plaintiff was likely to succeed on its breach of contract claim. The Second Circuit affirmed the issuance of injunctive relief preventing such a breach because it believed the damage Register.com would sustain therefrom, which included injury to its "relationship with customers and co-brand partners," would be difficult to measure in damages.
Use Of Robot To Obtain Data From Database Likely Trespass To Chattels
The Second Circuit also found that Register.com was likely to prevail on its trespass to chattel claim as a result of Verio's use of a search robot to obtain data from Register.com's Whois database. As stated by the Court:
The Second Circuit held that once Register.com objected thereto, for example, by filing this suit, Verio knew that its use of a search robot exceeded the scope authorized by Register.com, and thus constructed a trespass.
The Second Circuit further held that the use by Verio of a search robot, combined with the threat of use by others if Verio's use was not prohibited, constituted sufficient injury -- in the form of consuming the Whois system's computer capacity - - to sustain the trespass claim. Said the Court:
Verio's Marketing Activities Likely Violate Lanham Act
Lastly, the Second Circuit found that Verio's marketing activities would likely violate the Lanham Act. Many individuals, shortly after they register a domain name with Register.com, received a solicitation which indicated the caller was calling from Verio "regarding a recently registered domain name" or "regarding the registration of your domain name." This second solicitation further asked the registrant to "Please contact me at your earliest convenience ... If I don't hear from you in a couple of days I will call back." The Court was of the opinion that such solicitations, even though they did not use the Register.com mark or name, would likely create confusion as to their source. This conclusion was supported by evidence of actual registrant confusion submitted by Register.com. The Court accordingly held that such conduct was likely to constitute a violation of §43(a) of the Lanham Act, and accordingly affirmed the District Court's award of injunctive relief, enjoining Verio from continuing such practices.
Judge Parker's Views
Included along with the Second Circuit's decision as an Appendix was a draft opinion prepared by Judge Parker who sat on the Panel that heard this appeal, but unfortunately died before its resolution. Judge Parker would have voted to affirm so much of the District Court's decision that held that Register.com was likely to prevail on its trespass to chattel claim. Judge Parker accordingly would have voted to affirm the relief granted by the District Court to remedy that wrong, an injunction enjoining Verio from continuing to use a search robot to harvest data from the Whois database.