Lahoti v. Vericheck, Ninth Circuit Affirms District Court on Second Appeal
Second time was the charm for this case.
Vericheck, Inc. provides electronic financial transaction processing services including check verification and related services. It obtained a Georgia state registration for its VERICHECK service mark but was unable to obtain federal registration because of a prior registration by an Arizona company. Vericheck also unsuccessfully attempted to obtain the domain name vericheck.com in 1999.
David Lahoti acquired the vericheck.com domain name in 2003, claiming he contemplated beginning a business of transaction verification and security. But the vericheck.com website only redirected visitors to a website containing search results, including links to Vericheck's competitors. Lahoti earned income when users clicked links on the website to which they were redirected.
Vericheck contacted Lahoti in 2004 and offered to purchase the vericheck.com domain name but negotiations ended. Vericheck filed an arbitration complaint under the Uniform Domain Name Dispute Resolution Policy and the arbitrator ordered the transfer of the vericheck.com domain name to Vericheck.
Instead of doing so, Lahoti filed a declaratory judgment action seeking a declaration that he did not violate the Lanham Act's cybersquatting or trademark infringement provisions. Vericheck then counterclaimed alleging violations of, in part, the Lanham Act and the Anti-Cybersquatting Consumer Protection Act ("ACPA").
On cross motions for summary judgment, the District Court concluded that Lahoti had acted in a bad faith attempt to profit from use of the vericheck.com domain name.
In a subsequent bench trial, the District Court found for Vericheck on all claims, concluding in relevant part that the VERICHECK mark was inherently distinctive. On the first appeal, the Ninth Circuit vacated the District Court's opinion and remanded for further proceedings, concluding that the District Court's reasoning with respect to the question of whether the mark was distinctive was contrary to federal trademark law. The Ninth Circuit's opinion in the first appeal can be found here.
On remand, the District Court again concluded that the VERICHECK mark was suggestive and again found in favor of Vericheck.
In the second appeal, the Ninth Circuit concluded that the District Court had followed its instructions on remand and properly discussed the principles on the issue of distinctiveness that the Ninth Circuit had articulated. The Ninth Circuit further held that the District Court's conclusion based on its analysis was not clearly erroneous and therefore affirmed the District Court's finding that the VERICHECK mark is distinctive.
The Ninth Circuit further affirmed the District Court's finding of a likelihood of confusion, its finding of violations of the ACPA and the Washington Consumer Protection Act, and its award of attorneys' fees to Vericheck.
The case cite is Lahoti v. Vericheck, Inc., No. 10-35388 (9th Cir. Feb. 16, 2011).
