United States District Court, C.D. California
February 5, 2014
Del Monte International GmbH, Plaintiff,
Del Monte Corporation, Defendant
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
For Del Monte International GmbH, Plaintiff: Jason D Russell, Winston Ping Hsiao, LEAD ATTORNEYS, Skadden Arps Slate Meagher and Flom LLP, Los Angeles, CA; Anthony J Dreyer, Jamie Stockton, PRO HAC VICE, Skadden Arps Slate Meagher and Flom LLP, New York, NY.
For Del Monte Corporation, Defendant: Thomas Harold Zellerbach, Orrick Herrington and Sutcliffe LLP, Menlo Park, CA.
HONORABLE RONALD S.W. LEW, Senior United States District Judge.
Order re: Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) 
Currently before the Court is Defendant Del Monte Corporation's (" Defendant" ) Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) . Plaintiff Del Monte International GmbH (" Plaintiff" ) filed its Opposition on November 6, 2013 . Defendant filed its Reply on November 20, 2013 . This matter was taken under submission on November 26, 2013 . Having reviewed all papers submitted pertaining to the Motion, and having considered all arguments presented to the Court, the Court NOW FINDS AND RULES AS FOLLOWS:
Defendant's Motion to Dismiss is hereby GRANTED.
Plaintiff is a limited liability company organized under the laws of Switzerland, with its principal place of business in Monaco. Compl. ¶ 2. Plaintiff is a wholly owned subsidiary of Fresh Del Monte Produce Inc. (" Fresh Del Monte" ), the holding company for the Del Monte Fresh Produce group of companies. Id. at ¶ 3. Defendant is a Delaware corporation with its principal executive offices in California. Id. at ¶ 4.
Before August 1989, Defendant was a wholly owned subsidiary of RJR Nabisco, Inc. and was divided into two major operations. Id. at ¶ 12. One operation was dedicated to selling canned fruits and vegetables and dried fruits; the other operation principally sold fresh fruits, fresh vegetables, fresh produce, and certain preserved products. Id. In late 1989, the second operation was sold to Polly Peck International and ultimately became part of Fresh Del Monte. Id.
Fresh Del Monte is a leading producer and seller of high-quality fresh fruit and vegetables, as well as a leading producer and distributor of prepared fruit and vegetables, juices, beverages, snacks, and desserts in Europe, the Middle East, Africa, and former Soviet Union countries. Id. at ¶ 13. Fresh Del Monte provides its services and products to customers in over 80 countries worldwide. Id. Fresh Del Monte has leading market positions in many product categories, all of which are sold under the DEL MONTE trademark. Id. at ¶ 14. Fresh Del Monte generated approximately $2,664,166,000 in net sales from its DEL MONTE branded products in fiscal year 2012. Id.
Plaintiff owns the trademark DEL MONTE in South Africa and has owned the Mark there since 1990. Id. at ¶ 16. Plaintiff also holds: (1) an exclusive, perpetual,
royalty-free worldwide license to use the DEL MONTE Mark on or in connection with the production, manufacture, sale, and distribution of fresh fruit, vegetables, and produce, and certain preserved fruit products; and (2) an exclusive, royalty-free license to use the DEL MONTE Mark on or in connection with production, manufacture, sale, and distribution of all food products in Europe, the Middle East, Africa, and former Soviet Union countries. Id. at ¶ 17.
Plaintiff and its affiliates have owned and operated over a dozen " delmonte" domain names for over a decade without seeking or receiving authorization from Defendant. Id. at ¶ 19. Defendant has never objected to any of these domain names. Id.
In June 2011, the Internet Corporation for Assigned Names and Numbers (" ICANN" ) introduced its New Generic Top Level Domain Program, which allows parties to apply for new generic top level domains (" gTLD" ), unique top level domains (" TLD" ), to be used in lieu of traditional TLDs, such as < .com> or < .net> . Id. at ¶ 20. The application window opened on January 12, 2012, and closed on May 30, 2012. Id. at ¶ 21.
ICANN also provided for a New gTLD Dispute Resolution Procedure and authority for administering this procedure was delegated to the World Intellectual Property Organization (" WIPO" ). Id. at ¶ 22. WIPO subsequently adopted the WIPO Rules for New gTLD Dispute Resolution for Legal Rights Objections. Id. Under these policies and rules, third parties were allowed to challenge a gTLD application by filing a Legal Rights Objection (" LRO" ) during a specified period. Id. at ¶ 23. The principal inquiries pertaining to applications for gTLDs that are also trademarks are (1) whether the applicant has bona fide rights in the trademark that corresponds to the applied-for gTLD and (2) whether registration of the gTLD by the applicant would create an impermissible likelihood of consumer confusion. Id. at ¶ 24.
Plaintiff submitted its Application for the gTLD < .delmonte> during the specified period. Id. at ¶ 25. On March 1, 2013, Defendant filed an LRO objecting to Plaintiff's Application. Id. at ¶ 31. On June 14, 2013, WIPO appointed a three-member panel to decide, based on its determination as to the principal inquiries pertaining to gTLDs, whether to uphold or reject Defendant's LRO. Id. at ¶ 35. On August 6, 2013, a majority of the WIPO panel decided in favor of sustaining Defendant's LRO. Id. at ¶ 36.
On August 13, 2013, Plaintiff filed this Action in this Court, requesting a declaration that: (1) Plaintiff has bona fide rights in the DEL MONTE Mark; (2) that Plaintiff is not in violation of the Anti-Cybersquatting Consumer Protection Act (" ACPA" ), 15 U.S.C. § 1125(d); and (3) Plaintiff's registration of the gTLD < .delmonte> will not create an impermissible likelihood of confusion. Plaintiff also requests that this Court order Defendant to withdraw its LRO. Id. at ¶ 42.
II. Legal Standard
A. Motion to Dismiss Pursuant to Rule 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) authorizes a court to dismiss claims over which it lacks proper subject matter jurisdiction. A court is free to determine jurisdiction on a motion to dismiss for lack of jurisdiction under Rule 12(b)(1) " unless the jurisdictional issue is inextricable from the merits of a case." Kingman Reef Atoll Invs., L.L.C. v. United States, 541 F.3d 1189, 1195 (9th Cir. 2008) (citing Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987)).
" [U]nlike a Rule 12(b)(6) motion, in a Rule 12(b)(1) motion, the district court
is not confined to the four corners of the complaint -- it may consider facts and need not assume the truthfulness of the complaint[,]" and the existence of disputed material facts will not preclude the court from evaluating the existence of subject matter jurisdiction. Americopters, LLC v. Fed. Aviation Admin., 441 F.3d 726, 732 n.4 (9th Cir. 2006); see also Ass'n of Am. Med. Colls. v. United States, 217 F.3d 770, 778 (9th Cir. 2000). The moving party " should prevail [on a motion to dismiss] only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Casumpang v. Int'l Longshoremen's & Warehousemen's Union, 269 F.3d 1042, 1060-61 (9th Cir. 2001) (internal citations omitted); Tosco Corp. v. Cmtys. for a Better Env't, 236 F.3d 495, 499 (9th Cir. 2001), overruled on other grounds by, Hertz Corp. v. Friend, 559 U.S. 77, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010).
B. Motion to Dismiss Pursuant to Rule 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Dismissal can be based on a lack of cognizable legal theory or lack of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). However, a party is not required to state the legal basis for its claim, only the facts underlying it. McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 1223 (9th Cir. 1990). In a Rule 12(b)(6) motion to dismiss, a court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir. 1991).
The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of its claim. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). " While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citation omitted). Although specific facts are not necessary if the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless " contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).
If dismissed, a court must then decide whether to grant leave to amend. The Ninth Circuit has repeatedly held that a district court should grant leave to amend even if no request to amend the pleadings was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000).
A. Subject Matter Jurisdiction
Plaintiff asserts a claim for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. § § 2201 and 2202. Compl. ¶ 42. The Declaratory Judgment Act creates a remedy in federal court " [i]n a case of actual controversy within its jurisdiction," and provides that a federal court " may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a).
" [T]he phrase 'case of actual controversy' in the [Declaratory Judgment Act] refers to the type of 'Cases' and 'Controversies' that are justiciable under Article III." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937)).
Moreover, it is axiomatic that " [t]he Declaratory Judgment Act does not provide an independent jurisdictional basis for suits in federal court." Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir. 1983) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-74, 70 S.Ct. 876, 94 L.Ed. 1194 (1950)); see also California Shock Trauma Air Rescue v. State Comp. Ins. Fund, 636 F.3d 538, 543 (9th Cir. 2011). Indeed " [t]he Declaratory Judgment Act merely creates a remedy in cases otherwise within the court's jurisdiction." Morongo Band of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376, 1382-83 (9th Cir. 1988).
" Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Accordingly, " the burden of establishing" that a cause lies within the Court's jurisdiction " rests upon the party asserting jurisdiction." Id. (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)).
1. Request for a Declaration that Plaintiff has Bona Fide Rights in the Mark
" The Ninth Circuit has stated that trademark disputes have sufficiently ripened into an actual controversy under the [Declaratory Judgment Act] when 'the plaintiff has a real and reasonable apprehension that he will be subject to liability.'" Neilmed Prods. v. Med-Systems, 472 F.Supp.2d 1178, 1180 (N.D. Cal. 2007) (quoting Chesebrough-Pond's v. Faberge, 666 F.2d 393, 396 (9th Cir. 1982)); see also Rhoades v. Avon Prods., 504 F.3d 1151, 1157 (9th Cir. 2007) (quoting Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555-56 (9th Cir. 1990)) (" [A]n action for a declaratory judgment that a patent [or trademark] is invalid, or that the plaintiff is not infringing, [presents] a case or controversy if the plaintiff has a real and reasonable apprehension that he will be subject to liability if he continues to manufacture his product" ).
The reasonable apprehension of litigation test need not necessarily be met for an actual controversy to exist. Amazon.com, Inc. v. Nat'l Ass'n of Coll. Stores, Inc., 826 F.Supp.2d 1242, 1249 (W.D. Wash. 2011) (citing MedImmune, 549 U.S. at 132 n.11). Instead, to satisfy the case or controversy requirement, " the dispute [must] be 'definite and concrete, touching the legal relations of parties having adverse legal interests'" and it must " be 'real and substantial' and 'admi[t] of specific relief of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'" MedImmune, 549 U.S. at 127 (quoting Aetna, 300 U.S. at 240-41). Indeed, the " triad of injury in fact, causation, and redressability comprises the core of Article III's case-or-controversy requirement, and the party invoking federal jurisdiction bears the burden of establishing its existence." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990)); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
Plaintiff and Defendant vigorously disagree over whether there is a case or
controversy over Plaintiff's bona fide rights in the DEL MONTE Mark. Defendant, for example, argues that it has never contested the validity or scope of Plaintiff's South African trademark rights. Mot. 10:2-11; Reply 13:8-14:21. Defendant further asserts that any such ruling on Plaintiff's rights would be an improper advisory opinion. Mot. 9:8-17. Plaintiff, on the other hand, attempts to narrow the issue. Plaintiff contends that there is a case or controversy over Plaintiff's bona fide rights in the DEL MONTE Mark sufficient to allow it to register the gTLD. Opp'n 14:12-15:15. Plaintiff's asserted rights in the DEL MONTE Mark appear to stem from either Plaintiff's licenses to use the Mark, or its South African trademark registration. Id. at 10:7-26; 14:5-9.
To the extent that Plaintiff requests this Court to determine the validity of its actions - namely applying to ICANN for the gTLD < .delmonte> - under its licenses with Defendant, it is clear that there exists a case or controversy between the Parties. There is a case or controversy if Plaintiff is requesting that this Court determine its bona fide rights under the DEL MONTE Mark to apply for the < .delmonte> gTLD. This is so because Defendant challenged Plaintiff's gTLD registration on the ground that Plaintiff's licenses do not confer upon Plaintiff the right to use the DEL MONTE Mark as a gTLD. See Stockton Decl. Ex. E ¶ ¶ 17-22. Defendant's act of filing the LRO caused Plaintiff's injury of not being awarded < .delmonte> . A determination as to the validity of Plaintiff's actions would certainly touch upon the legal rights of both Parties. Such a declaration issued by this Court would settle, at least to a certain degree, the disputes of the two Parties with respect to < .delmonte> . Thus, Plaintiff is correct to focus on the transaction at hand, not the fact that Defendant has not challenged Plaintiff's other uses of the DEL MONTE Mark in its other domain names. Opp'n 12:9-13:14.
It appears, then, that there is a case or controversy within the meaning of Article III. However, a crucial question remains: whether federal subject matter jurisdiction lies in this Action.
As a preliminary matter, it is clear that a dispute over the terms or the scope of the license agreements would not arise under the Lanham Act. See Everest & Jennings, Inc. v. E & J Mfg. Co., 263 F.2d 254, 262 (9th Cir. 1958) (" It has been long the law that actions brought to enforce contracts of which a patent is the subject matter must, in the absence of diversity of citizenship, be brought in the state court . . . The same rule applies to the construction of this section when trade-marks are involved" ); see also Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1194 (7th Cir. 1987) (" a dispute over the terms of a copyright license is not deemed to arise under the Copyright Act" ); Geneva Intern. Corp. v. Petrof, Spol, S.R.O., 608 F.Supp.2d 993, 998 (N.D.Ill. 2009) (" A license to use a trademark is a contract, and disputes over the language of a trademark license are governed by the rules of contract interpretation" ). Federal jurisdiction, then, must
derive from somewhere else in Plaintiff's Complaint. In other words, the Court rejects Plaintiff's argument that this Court has jurisdiction arising from Plaintiff's request that this Court interpret its license rights. See Opp'n 10:8-10.
2. Request for Declaration of Compliance With the ACPA - 15 U.S.C. § 1114(2)(D)(v)
Plaintiff's alternative basis for jurisdiction is through its request for a declaration that it is not in violation of the ACPA. Opp'n 3:4-7; 11:9-11. Plaintiff requests relief in the form of a declaration that it has not violated 15 U.S.C. § 1125(d). See Compl. ¶ 42; Opp'n 11:9-20, 15:23-19:3. While Plaintiff styles this particular claim for relief as rising under the Declaratory Judgment Act, functionally it is indistinguishable from a claim under 15 U.S.C. § 1114(2)(D)(v).
Federal courts have jurisdiction to adjudicate actions arising under the Lanham Act. See 15 U.S.C. § 1121; 28 U.S.C. § 1338. Such disputes include actions involving the ACPA. See Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1195, 1202 (9th Cir. 2012).
Unless Plaintiff's claims are " so attenuated and unsubstantial as to be absolutely devoid of merit," Plaintiff has successfully invoked federal jurisdiction by pleading claims under the ACPA. Hagans v. Lavine, 415 U.S. 528, 536-37, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974) (quoting Newburyport Water Co. v. Newburyport, 193 U.S. 561, 579, 24 S.Ct. 553, 48 L.Ed. 795 (1904));
see also Sallen v. Corinthians Licenciamentos LTDA, 273 F.3d 14, 23-24 (2d Cir. 2001). In other words, unless Plaintiff's ACPA claims are obviously frivolous or plainly insubstantial, this Court has federal jurisdiction. A claim meets this standard only if it is clearly contradicted by prior decisions so " as to foreclose the subject and leave no room for inference that the questions sought to be raised can be the subject of controversy." Id. at 538 (quoting
Ex parte Poresky, 290 U.S. 30, 32, 54 S.Ct. 3, 78 L.Ed. 152 (1933)).
Neither party cites to any case law applying the ACPA's provisions to gTLDs, such as the one at issue in this case. Nor could this Court find any. Rather, Plaintiff argues for an extension of the ACPA to encompass gTLDs assigned via ICANN's new gTLD program. Such an argument is not manifestly frivolous.
Defendant avers, however, that no case or controversy exists with respect to the ACPA. See Mot. 7:14-15, 7:17-24. It is insufficient, however, for Defendant merely to represent that it does not intend to sue Plaintiff under the ACPA with respect to its current domain names.
See Sallen, 273 F.3d at 18. The focus is on whether there is a " definite and concrete" dispute between the parties that is not only " real and substantial," but also " [admits] of specific relief through a decree of a conclusive character."
MedImmune, 549 U.S. at 127 (quoting Aetna 300 U.S. at 240-41).
Assuming that Plaintiff's reading of 15 U.S.C. § 1114 is correct, a decree by this Court that Plaintiff's application for < .delmonte> is in compliance with the ACPA would allow this Court to issue injunctive relief, such as by ordering Defendant to withdraw its LRO. See 15 U.S.C. § 1114(2)(D)(v). Plaintiff surely would be afforded " specific relief . . . of a conclusive character" were this Action to be decided in its favor. MedImmune, 549 U.S. at 127.
Thus, in Sallen v. Corinthians Licenciamentos LTDA, the First Circuit found in a case where the plaintiff invoked 15 U.S.C. § 1114(2)(D)(v) that there was a live controversy where: (1) both parties were still claiming exclusive rights to the same domain
name, (2) the domain name had been transferred to the defendant, and (3) the defendant was using the domain name. 273 F.3d at 25-26. The court also reasoned that there was an actual dispute because a declaration of plaintiff's compliance with the ACPA was relevant not only to defend against a lawsuit under the ACPA, but also to redress plaintiff's loss of his domain name in the prior Uniform Domain-Name Dispute Resolution Policy (" UDRP" ) proceedings. Id.
The Court holds that Plaintiff is correct in arguing that a case or controversy exists here. Just as in Sallen, a dispute arose with respect to the Parties' respective rights to a mutually excludable internet domain. Here, after Plaintiff applied for the gTLD < .delmonte>, Defendant filed an LRO objecting to Plaintiff's gTLD application. Compl. ¶ ¶ 25, 31. And, here, just as in Sallen, a determination was made as to the domain's ownership pursuant to a policy " prohibiting the registration of a domain name that is identical to, confusingly similar to, or dilutive of another's mark." 15 U.S.C. § 1114(2)(D)(ii)(II). In particular, the WIPO panel sustained Defendant's LRO, thereby denying Plaintiff's registration of < .delmonte> . Compl. ¶ 36. Therefore, just as in Sallen, a " certain controversy" exists. Sallen, 273 F.3d at 26.
Because an actual controversy exists between the Parties and because Plaintiff has pleaded a nonfrivolous claim under the ACPA, this Court holds that it has subject matter jurisdiction over this Action.
4. Discretion to Decline to Exercise Jurisdiction Under the Declaratory Judgment Act
Even if a district court determines that it has jurisdiction under the Declaratory Judgment Act, it is still not required to exercise its authority to hear the case. Wilton v. Seven Falls Co., 515 U.S. 277, 283, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995); Huth v. Hartford Ins. Co., 298 F.3d 800, 802 (9th Cir. 2002). Several factors are relevant in determining whether to exercise jurisdiction. For example, " [a] district court should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means of forum shopping; and it should avoid duplicative litigation." Huth, 298 F.3d at 803 (citing Gov't Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998)). Defendant proposes at least two other factors: " whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue, [and] whether the declaratory action is being sought to obtain a res judicata advantage." Mot. 13:14-15 (quoting Williams v. Azoogleads.com, Inc., No. CV 08-807 AHS (ANx), 2008 WL 4383875, at *1 (C.D. Cal. Sept. 4, 2008) (citations omitted)).
The Court finds that although exercising jurisdiction would require it to determine state law issues with respect to the scope of Plaintiff's licenses, such issues are necessary to the proper adjudication of this case. As such, the Court finds that the first factor is neutral in determining whether to exercise jurisdiction.
The Court finds that the second factor, discouraging litigants from using declaratory actions as a means of forum shopping, weighs against exercising jurisdiction. In particular, Plaintiffs already have a means of review available to them: the ICANN request for reconsideration process. See Bylaws for Internet Corporation for Assigned Names and Numbers, Art. IV, ICANN (Nov. 27, 2013), https://www.icann.org/en/about/governance/bylaws. Notwithstanding Plaintiff's assertions that ICANN's reconsideration process fails to provide adequate due process (Opp'n 16:23-18:3), Plaintiff still bypassed the procedures
available to it to file this Action. As such, the Court finds that this factor weighs against exercising jurisdiction.
The next factor, avoiding duplicative litigation, is neutral. Neither Plaintiff nor Defendant have identified any parallel litigation. Additionally, because no litigation beyond this Action is anticipated, the Court finds that this Action does not appear to be brought to obtain a res judicata advantage. Accordingly, the Court finds that this factor weighs toward exercising jurisdiction.
The Court finds that the next factor, whether the declaratory action will help clarify the legal relations between the parties, weighs toward exercising jurisdiction. In particular, the Action will clarify the legal relationship regarding gTLDs between the Parties with respect to the DEL MONTE Mark.
Because most of the factors either weigh toward or are neutral with respect to exercising jurisdiction over this Action, this Court does not decline to exercise jurisdiction.
B. Failure to State a Claim
Having found that it has jurisdiction over this Action, the Court next must determine whether Plaintiff has stated a claim sufficient to survive Defendant's Rule 12(b)(6) Motion to Dismiss. Beyond arguing that there is no cognizable case or controversy, Defendant argues that Plaintiff has not stated a claim for relief under the ACPA. Mot. 8:14-15.
Under Rule 12(b)(6), a party may move to dismiss claims based on a lack of a cognizable legal theory or lack of sufficient facts alleged under a cognizable legal theory. Balistreri, 901 F.2d at 699.
Under 15 U.S.C. § 1125(d), " a party can be held liable if it registers, traffics in, or uses a 'domain name' that is 'identical or confusingly similar' to a distinctive mark . . . with bad faith intent to profit from the mark." 15 U.S.C. § 1125(d)(1)(A). Under 15 U.S.C. § 1114(2)(D)(v), " [a] domain name registrant whose domain name has been suspended, disabled, or transferred under a policy described under clause (ii)(II) may . . . file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful under this Act." 15 U.S.C. § 1114(2)(D)(v). A policy described under clause (ii)(II) is a " reasonable policy . . . prohibiting the registration of a domain name that is identical to, confusingly similar to, or dilutive of another's mark." 15 U.S.C. § 1114(2)(D)(ii).
1. Definition of " Domain Name"
In order for Plaintiff to state a claim under either 15 U.S.C. § 1125(d) or § 1114(2)(D)(v), it must first show that a " domain name" is at issue in this case. Plaintiff must therefore show that the gTLD < .delmonte> is a " domain name" and, therefore, subject to these provisions of the ACPA.
This appears to be a matter of first impression, and the Court keeps in mind that " [n]ot once has any court imputed trademark rights to a gTLD. In fact, rather than look at a gTLD to determine trademark rights, the Ninth Circuit and others ignore the TLD as though it were invisible next to the second level domain name in an infringement action." Image Online Design, Inc. v. Core Ass'n, 120 F.Supp.2d 870, 878 (C.D. Cal. 2000).
Plaintiff asserts that the ACPA " makes no distinction between top, second, or even third-level domain names." Opp'n 16:7-8. Defendant, on the other hand, notes that a TLD has never been found to be a " domain name" for ACPA purposes. Mot. 8:17-18. The parties, however, go no further in their arguments. The Court must itself determine if the < .delmonte> gTLD constitutes a " domain name" under the ACPA.
Since Congress passed the ACPA, numerous courts have defined a " domain name" as consisting of " at least two parts: the top level domain and the second level domain." Sallen, 273 F.3d at 19; Rearden LLC, 683 F.3d at 1196 n.1 (9th Cir. 2012) (quoting Office Depot Inc. v. Zuccarini, 596 F.3d 696, 698-99 (9th Cir. 2010)); Coca-Cola Co. v. Purdy, 382 F.3d 774, 783 (8th Cir. 2004); Interactive Prods. Corp. v. A2z Mobile Office Solutions, Inc., 326 F.3d 687, 691 (6th Cir. 2003); Virtual Works, Inc. v. Volkswagen of Am., Inc., 238 F.3d 264, 266 (4th Cir. 2001); Sporty's Farm L.L.C. v. Sportsman's Mkt., Inc., 202 F.3d 489, 492-93 (2d Cir. 2000); Brookfield Commc'ns v. W. Coast Entm't Corp., 174 F.3d 1036, 1044 (9th Cir. 1999); see also GoForit Entm't, LLC v. DigiMedia.com L.P., 750 F.Supp.2d 712, 725 (N.D. Tex. 2010) (holding that a third-level domain was not a domain name under the ACPA, reasoning that it was never assigned or registered with a registrar, and that only second and top level domain combinations were domain names).
It follows, then, that under this definition of " domain name," a TLD is merely a necessary, but not sufficient, part of a " domain name." But these holdings are not directly on point and, accordingly, are not conclusive. If they were, this Court's inquiry would end here.
The plain language of the ACPA is equivocal: " any alphanumeric designation" on the Internet that is " part of an electronic address" may be a domain name so long as it " is registered" with " a domain name registrar, domain name registry, or other domain name registration authority." 15 U.S.C. § 1127 (emphasis added). A plain reading of this definition suggests that the < .delmonte> gTLD, as an alphanumeric designation, can be a domain name so long as it is registered with " a domain name registrar, domain name registry, or other domain name registration authority." Id.
It follows, then, that answering the question of whether ICANN is a " domain name registrar, domain name registry, or domain name registration authority" is critical to determining whether a TLD is a domain name because applicants apply directly to ICANN for a new gTLD. See Compl. ¶ 20.
" ICANN is a nonprofit corporation that was created in 1998, in response to a policy directive of the Department of Commerce, to administer the domain name system on the Department's behalf."  Coalition for ICANN Transparency, Inc. v. Verisign, Inc., 567 F.3d 1084, 1088 (9th Cir. 2009).
As part of its coordination of the domain name systems, ICANN maintains a relationship with the key actors in the system, including registries, which operate top-level domains ('TLDs') such as '.com' or '.org' and maintain information on all domain names registered within a particular top-level domain, and registrars, which make domain names available to customers and register domain names with a registry. The customer and owner of the domain name is the 'registrant.'
Vizer v. VIZERNEWS.COM, 869 F.Supp.2d 75, 78 (D.D.C. 2012) (citing Office Depot, 596 F.3d at 699; Dotster, Inc. v. Internet Corp. for Assigned Names and Numbers, 296 F.Supp.2d 1159, 1160 (C.D. Cal. 2003)); see also Name.Space, Inc. v. Internet Corp. for Assigned Names &
Nos., CV 12-8676 PA (PLAx), 2013 WL 2151478, at *1-4 (C.D. Cal. Mar. 4, 2013) (providing an overview of ICANN's history and its role in administering the Domain Name System).
At least with respect to its normal functions, ICANN does not provide the typical services domain name registries or domain name registrars provide and ICANN has not been recognized as a domain name registrar or registry in the past. See Vizer, 869 F.Supp.2d at 82. This makes sense, as ICANN's role has been to administer and coordinate these entities, not to act at the individual domain name level. Accordingly, the Court finds that ICANN is neither a " domain name registrar" nor a " domain name registry" for purposes of the ACPA.
However, this leaves open the question of whether ICANN is an " other domain name registration authority" for the purposes of the ACPA. 15 U.S.C. § 1127. If ICANN is, then a gTLD could be a domain name.
In Vizer, the court found that the " plain language" of the ACPA " makes clear that the phrase 'other domain name authority that registered or assigned the domain name,' covers only entities that perform the functions of the registrar and registry by registering or assigning domain names." Vizer, 869 F.Supp.2d at 82. The court held that ICANN was not a " domain name authority" - or a domain name registrar or registry - in the context of § 1125(d)(2)(A). Id. The court reasoned that " ICANN's role within the domain name system [does] not give it the 'hands-on' role in 'register[ing]' or 'assign[ing]' the defendant domain name sufficient to confer in rem jurisdiction in this Court" under the ACPA. Id. at 83.
ACPA co-sponsor Senator Patrick Leahy's comments on the bill are illuminating: " Since registrars only register second level domain names," the definition of domain name " under current registration practice, applies only to second level domain names. " 145 Cong. Rec. 14986, 15025 (1999) (emphasis added). The Senate Judiciary Committee Report on the ACPA similarly opines that the definition of " domain name" " essentially covers the second-level domain names assigned by domain name registration authorities." S. Rep. No. 106-140, at *10 (1999). Senator Leahy further clarified that " [o]nly these entities that actually offer the challenged name, placed it in a registry, or operate the relevant registry" were intended to be covered by the terms " domain name registrar, domain name registry, or other domain name authority." 145 Cong. Rec. 14986, 15025 (1999).
In short, both the plain language of the statute and its legislative history suggest that ICANN is not a " domain name registration authority" within the meaning of the ACPA. Such an inference implies, of course, that a gTLD such as < .delmonte> is not a domain name within the meaning of the ACPA. If this were the case, then Plaintiff's request under 15 U.S.C. § 1114(2)(D)(v) for a declaration that it is in compliance with the ACPA must fail as the ACPA would be inapplicable to this Action.
The difficulty, of course, is that ICANN does act in a " hands-on" role with respect to the new gTLD program. The application process for the new gTLD program is extensive, encompassing many steps before ICANN finally delegates a new gTLD into the root zone.  See gTLD Applicant Guidebook Version 2012-06-04, ICANN, (June 4, 2012), http://newgtlds.icann.org/en/applicants/agb/guidebook-full-04jun12-en.pdf.
ICANN's extensive involvement in the new gTLD program is quite different from its role in administering the Domain Name System. By receiving and reviewing applications for new gTLDs and by ultimately delegating new gTLDs into the root zone, ICANN acts much like a traditional domain name registrar. And by performing regular audits and in delegating new gTLDs into the root zone, ICANN acts much like a traditional domain name registry. Even so, given the limited and circumscribed nature of the new gTLD program, construing ICANN as a " domain name registration authority" seems akin to cramming a square peg into a round hole.
It appears, then, that the Court must turn to the other elements of Plaintiff's claim under the ACPA. For this purpose, this Court assumes, without deciding, that the < .delmonte> gTLD is a " domain name."
2. 15 U.S.C. § § 1114(2)(D)(v) and 1125(d)
In order to show liability for cybersquatting under § 1125(d), a plaintiff
must show that " (1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted 'with bad faith intent to profit from that mark.'"
Rearden LLC, 683 F.3d at 1219 (emphasis added) (quoting DSPT Intern., Inc. v. Nahum, 624 F.3d 1213, 1218-19 (9th Cir. 2010));
see also GoPets Ltd. v. Hise, 657 F.3d 1024, 1030 (9th Cir. 2011).
15 U.S.C. § 1114(2)(D)(v), on the other hand, provides a cause of action for reverse domain name hijacking. See Hawes v. Network Solutions, Inc., 337 F.3d 377, 383 (4th Cir. 2003); Barcelona.com, Inc.,
330 F.3d at 625; Ricks v. BMEzine.com, LLC, 727 F.Supp.2d 936, 959 (D. Nev. 2010). To prevail on such a claim, Plaintiff must show
(1) that it is a domain name registrant; (2) that its domain name was suspended, disabled, or transferred under a policy established by a registrar as described in 15 U.S.C. § 1114(2)(D)(ii)(II); (3) that the owner of the mark that prompted the domain name to be suspended, disabled, or transferred has notice of the action by service or otherwise; and (4) that the plaintiff's registration or use of the domain name is not unlawful under [this chapter].
Barcelona, Inc., 330 F.3d at 626 (emphasis added); see also Ricks, 727 F.Supp.2d at 960 (holding that the words " this chapter" in § 1114(2)(D)(v) refers only to the ACPA, not the whole Lanham Act). In other words, § 1114(2)(D)(v) covers situations in which a domain name registrant has been found to be a cybersquatter by an administrative panel of a registrar, registry, or other domain name authority.
See Sallen, 273 F.3d at 28. Furthermore, because § 1114(2)(D)(v) requires a court to determine whether a party is in compliance with § 1125(d), (see Sallen, 273 F.3d at 18; Ricks, 727 F.Supp.2d at 960), it follows that § 1114(2)(D)(v) can apply only if the Plaintiff's actions could also be subject to § 1125(d) liability. See AIRFX.com v. AIRFX LLC, No. 11-01064-PHX-FJM, 2012 WL 3638721, at *6 (D. Ariz. Aug. 24, 2012) (" Because we have concluded that plaintiffs cannot be liable under the ACPA for cybersquatting as a matter of law . . . we conclude that there is no genuine issue of fact as to whether plaintiffs' use of the domain name is lawful" ).
The ACPA does not provide a definition of " register." See GoPets, 657 F.3d at 1030. Faced with this issue, the Vizer court found that registering a " domain name" under the ACPA includes entering into a contractual relationship with a registrar to " make a record" of the requested domain name. See Vizer, 869 F.Supp.2d at 81-82. In other words, " registration" under the ACPA at least requires the registrant to enter into a contract to have its proposed domain name entered into the appropriate registry.
See also GoPets, 657 F.3d at 1030 (" It is obvious that, under any reasonable definition, the initial contract with the registrar constitutes a 'registration' under ACPA" ). A typical domain name registration is essentially automatic: " [r]egistrars accept registrations for new or expiring domain names, connect to the appropriate registry operator's TLD servers to determine whether the name is available, and register available domain names on behalf of registrants." Coalition for ICANN Transparency Inc. v. Verisign, Inc., 464 F.Supp.2d 948, 952 (N.D. Cal. 2006).
The Court finds that Plaintiff has not " registered" the < .delmonte> gTLD. Plaintiff alleges that it entered into a contract with ICANN by submitting its application for the < .delmonte> gTLD. Compl.
¶ 25. But even so, ICANN never " made a record of" the < .delmonte> gTLD in the root zone because it sustained Defendant's LRO. Id. at ¶ 36. " [R]egistration" in the gTLD context requires ICANN to actually delegate < .delmonte> into the root zone and thereby make a record of the domain into the Domain Name System. Cf. GoForIt Entm't, 750 F.Supp.2d at 723 (holding that third level domain names are not covered by the ACPA because they are not registered or assigned by a domain name registrar). No such event occurred here as Defendant's LRO successfully prevented ICANN from delegating < .delmonte> . Compl. ¶ 36. Unlike the mechanical second level registration system, the gTLD application process does not immediately and automatically delegate a gTLD into the root zone upon application. See gTLD Applicant Guidebook, at 1-48, 1-49. Instead, an application must survive several discrete steps, including any filed objections, in order to reach the delegation stage. Id.
Plaintiff avers, however, that " [i]t is of no moment that the application and registration occur simultaneously for a second-level domain name, and separately for a TLD" because " [i]n both cases a WIPO Panel is called upon to determine whether the registration is, or was, appropriate." Opp'n 16:11-15.
Plaintiff's argument misses a crucial point. It is precisely because application and registration occur simultaneously for second level domains that the ACPA is necessary. Once an available domain name is applied for and registered, all other potential applicants are barred from using that domain. No advance notice is given. Thus, the UDRP and 15 U.S.C. § 1125(d) exist to dissuade the unscrupulous use of another's mark. That trademark owners may be excessively vigilant in protecting their marks is an outgrowth of such a system of instantaneous registration and mutual exclusion. 15 U.S.C. § 1114(2)(D)(v), meant to counteract " reverse domain name hijacking," exists to prevent overreaching by overzealous trademark owners.
In contrast, the gTLD application process deliberately separates application from registration. By doing so, the process is designed to stymie cybersquatting activity. In order to do so, the gTLD process introduces high entry costs in the form of its hefty evaluation fee and extensive initial review process. Moreover, the extensive evaluation process, with its provision for transparency for interested stakeholders, further protects against the potentiality of successful cybersquatting behavior. Such barriers present serious challenges to typical cybersquatting activity. As a result, the protections of the ACPA are much less relevant to the gTLD application process than for the current second level domain name registration process.
The Court also finds that Plaintiff has not " trafficked in" or " used" the < .delmonte> gTLD to give rise to ACPA liability. A party may be liable for cybersquatting if he " traffics in" an offending domain name. 15 U.S.C. § 1125(d)(1)(A)(ii). To " traffic" is to engage in " transactions that include . . . sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration." 15 U.S.C. § 1125(d)(1)(E). It follows that Plaintiff could not have " trafficked in" the < .delmonte> gTLD without a " registration" as without ICANN's delegation of the < .delmonte> gTLD, Plaintiff had nothing to transfer for consideration. Simply put, Plaintiff cannot transfer something that does not exist. The same holds true for whether Plaintiff " used" the < .delmonte> gTLD. While the definition of " use" under the ACPA may be broad,
(see DSPT Int'l, 624 F.3d at 1219 (holding that a defendant used a domain name by changing its contents to obtain leverage in his claim for commissions)), the Court finds that there must still be a registered domain name in order for there to be liability for " use" of that domain name. Because the < .delmonte> gTLD was never delegated, it follows that Plaintiff could not have " used" < .delmonte> in any manner.
Accordingly, because Plaintiff has not pleaded sufficient facts to show that it " registered, trafficked in, or used a domain name," the Court finds that Plaintiff has failed to make out a prima facie case for cybersquatting under 15 U.S.C. § 1125(d). Rearden LLC, 683 F.3d at 1219. Because the Court finds that Plaintiff cannot be liable under the ACPA as a matter of law, the Court finds that § 1114(2)(D)(v) similarly is inapplicable to this Action. As such, the Court finds that Plaintiff has failed to state a claim upon which relief may be granted.
The Court recognizes the paradoxical nature of this result - second level domain disputes adjudicated under the UDRP could be subject to review under the ACPA but disputes over top level domains may not. However, this Court believes that extending the ACPA to cover such disputes would upset the balance reached by ICANN in formulating its new gTLD program. This Court is convinced that dismissal is warranted given the precautions set forth within ICANN's new gTLD application process and the stark contrast between that application process and the second level domain registration system. Moreover, the Court cautions that this holding does not necessarily foreclose application of the ACPA in the context of successful gTLD registrations. The Court agrees with Defendant that owning a gTLD " carries with it a far stronger public association of brand ownership than any domain name registration." Reply 7:15-17. The need for judicial review in the context of a successful gTLD application therefore is much more significant than in the context of an unsuccessful application.
Finally, this Court agrees with Defendant that accepting Plaintiff's construction of § 1114(2)(D)(v) would render an attempt to register a domain name actionable under the ACPA. See Mot. 8:20-24. Reading " registration" to encompass the gTLD application process would make actionable instances where individuals entered into contracts with registrars to register an infringing domain name but were ultimately unsuccessful in obtaining that domain name. Such a reading of the ACPA is incongruent with the rest of the statute. Furthermore, the Court believes that such a reading would broaden the scope of the ACPA beyond that contemplated by Congress or supported by the case law.
3. Requests for Declaratory Relief
It is well established that the Declaratory Judgment Act " does not create an independent cause of action." Chevron Corp. v. Camacho Naranjo, 667 F.3d 232, 244-45 (2d Cir. 2012) (quoting Davis v. United States, 499 F.3d 590, 594 (6th Cir. 2007)). As such, this Court need not separately determine if Plaintiff has adequately pleaded a claim under the Declaratory Judgment Act.
The Court finds that the ACPA is inapplicable to this Action because even if the Court had found that < .delmonte> was a domain name, Plaintiff has still failed to plead a cognizable theory under the ACPA because < .delmonte> was never registered, transferred, or used. The Court notes that Plaintiff has not pleaded any other claims because the Declaratory
Judgment Act does not create an independent cause of action. Accordingly, the Court hereby GRANTS Defendant's Motion to Dismiss Plaintiff's Complaint . Furthermore, because the facts of this Action ultimately revolve around Plaintiff's application for the gTLD < .delmonte>, the Court hereby dismisses without leave to amend as Plaintiff cannot allege any facts sufficient to cure its cause of action. See Lopez v. Smith, 203 F.3d at 1130.
For the foregoing reasons, the Court hereby GRANTS Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) . The Court hereby dismisses this case without leave to amend. The Clerk shall close this action.
IT IS SO ORDERED.