Harrods, Ltd. v. Sixty Internet Domain Names; et al.

This case involves a dispute over Internet domain names between
two companies named "Harrods," both with legitimate rights to the
"Harrods" name in different parts of the world. The plaintiff, Harrods
Limited ("Harrods UK"), is the owner of the well-known Harrods of
London department store. The defendants are 60 Internet domain
names ("Domain Names" or "Names") registered in Herndon, Vir-ginia,
by Harrods (Buenos Aires) Limited ("Harrods BA"). Harrods
BA, once affiliated with Harrods UK, is now a completely separate
corporate entity that until recently operated a "Harrods" department
store in Buenos Aires, Argentina. Harrods UK sued the 60 Domain
Names under 15 U.S.C. § 1125(d)(2), the in rem provision of the
recently enacted Anticybersquatting Consumer Protection Act
(ACPA), Pub. L. No. 106-113, 113 Stat. 1501A-545 (codified in scat-tered
sections of 15 U.S.C.) (1999). Harrods UK alleged that the
Domain Names infringed and diluted its American "Harrods" trade-mark
and that Harrods BA registered the Names in bad faith as pro-hibited
by 15 U.S.C. § 1125(d)(1).
1
The district court dismissed the
infringement and dilution claims, holding that in rem actions could
only be maintained for bad faith registration claims under
§ 1125(d)(1). As discovery was just beginning, the district court
granted summary judgment to six of the Domain Names on Harrods
UK’s bad faith registration claim. After full discovery and a bench
trial, the court awarded judgment to Harrods UK against the remain-ing
54 Domain Names and ordered those names to be transferred to
Harrods UK. Both sides now appeal. For the reasons that follow, we affirm the judgment as to the 54 Domain Names, reverse the dismissal
of Harrods UK’s infringement and dilution claims, reverse the grant
of summary judgment to the six Domain Names, and remand for fur-ther
proceedings.

I.

Harrods UK and its predecessors have operated a department store
named "Harrods" in the Knightsbridge section of London, England,
since 1849. In 1912 Harrods UK created a wholly owned subsidiary,
Harrods South America Limited, to carry on business in South Amer-ica.
Harrods South America Limited created Harrods BA as an inde-pendent
company, and in 1914 Harrods BA opened a department
store under the name "Harrods" in a new building in downtown Bue-nos
Aires designed to look like Harrods UK’s historic London build-ing.
Over the following decades Harrods BA registered "Harrods" as
a trademark in Argentina, Brazil, Paraguay, Venezuela, and a number
of other South American countries. Harrods UK and Harrods BA
quickly drifted apart: by the 1920s Harrods BA was operating largely
independently of Harrods UK, and the last remaining legal ties
between the two companies were severed in 1963.

In the early 1990s Harrods UK and Harrods BA entered into nego-tiations
for Harrods UK to buy Harrods BA’s South American trade-mark
rights in the name "Harrods." At one point Harrods UK offered
$10 million for the rights, but the parties never reached agreement.
Later, in 1995, Harrods UK sued Harrods BA in British court, alleg-ing
breach of contract, breach of fiduciary duty, and passing off, all
arising from Harrods BA’s use of the name "Harrods" in South Amer-ica.
2
The British High Court of Justice, Chancery Division, dismissed
the contract and fiduciary duty claims against Harrods BA, and this
decision was affirmed in 1998 by the Court of Appeal, Civil Division.
Harrods Ltd. v. Harrods (Buenos Aires) Ltd., [1997] F.S.R. 420 (Ch.),
aff’d, [1999] F.S.R. 187 (C.A.). The Court of Appeal held that Har-rods
BA had an implied contractual right to carry on business under
the name "Harrods" anywhere in South America. Neither British court ruled on the passing off claim because that claim was withdrawn by
Harrods UK on the condition that Harrods BA limit its business to
South America. Here, we have not been asked to conclusively deter-mine
the legitimacy and scope of Harrods BA’s rights in the name
"Harrods" throughout South America. It appears, however, that Har-rods
BA has the right to use the name "Harrods" in Argentina and
much of South America, and for the limited purposes of this litigation
Harrods UK does not attempt to prove otherwise.

Harrods UK, for its part, has exclusive trademark rights in the
name "Harrods" in much of the rest of the world, including the United
States, where retail catalog and Internet sales generate millions of dol-lars
in revenue each year. Harrods UK’s retail business has thrived in
recent years, but Harrods BA’s business has been in decline since the
early 1960s. Over the years, Harrods BA occupied less and less of its
large Buenos Aires department store building and leased more and
more of the space to other vendors. Some time around 1998 Harrods
BA ended its department store operation entirely, and the building
now sits vacant. Harrods BA’s only current revenue is about $300,000
annually from the continued operation of the building’s parking
garage.

In February of 1999 Harrods UK launched a website at the domain
name harrods.com, and the website became a functioning online retail
store in November of 1999. Harrods BA executives testified that
sometime in 1999 they also began planning to launch a Harrods store
on the Internet. Toward that end, Harrods BA hired a consultant, a
Mr. Capuro, to prepare a proposal for an online business. In the fall
of 1999, around the same time that Harrods UK was launching its
Internet business (and announcing this in the press), Harrods BA
began registering the first of what eventually became around 300
Harrods-related domain names. The 60 Domain Names that are defen-dants
in this case were registered with Network Solutions, Inc. (NSI),
a domain name registry located in Herndon, Virginia. At that time
NSI served as the exclusive worldwide registry for domain names
using .com, .net, and .org.
3

A brief explanation of the nature and terminology of Internet
domain names is warranted before we continue with the details of
Harrods BA’s domain name registrations. A domain name is the "ad-dress"
at which a computer user accesses a website on the Internet.
4
A typical domain name is www.ca4.uscourts.gov, which is the
domain name for the website of the United States Court of Appeals
for the Fourth Circuit. Domain names consist of sections of alpha-numeric
characters separated by periods, called "dots." These sections
are referred to, working from right to left, as the top-level domain, the
second-level domain, and so on. The top-level domain is the ending
suffix, such as .gov (as in ca4.uscourts.gov) or .com (as in vw.com).
The second-level domain is the section just to the left of the top-level
domain (in the above examples, uscourts and vw serve as the second-level
domains). For obvious reasons, most companies want their pri-mary
trademark to serve as their second-level domain, as in vw.com
for Volkswagen of America. See Virtual Works, Inc. v. Volkswagen
of Am., Inc., 238 F.3d 264 (4th Cir. 2001).

Harrods BA registered each of its Harrods-related domain names
under the .com, .net., and .org top-level domains. For example, Har-rods
BA registered the second-level domain harrodsbuenosaires as
harrodsbuenosaires.com, harrodsbuenosaires.net, and harrodsbueno-saires.
org. This case involves 20 distinct second-level domain names,
each registered under the three top-level domains .com, .net, and .org,
for a total of 60 defendant Domain Names.
5
All told, Harrods BA reg-istered
about 300 Harrods-related domain names in the United States.
The 20 second-level domain names at issue in this case are harrods-buenosaires,
harrodsargentina, harrodssudamerica, harrods-southamerica,
harrodsbrasil, harrodsbrazil, harrodsamerica, tiendahar-rods,
cyberharrods, ciberharrods, harrodsbank, harrodsbanking,
harrodsfinancial, harrodsservices, harrodsvirtual, harrodsstore, shoppingharrods, harrodsshopping, harrodsbashopping, and harrods-shoppingba.

We now return to the events leading up to this lawsuit. In Decem-ber
of 1999 Capuro finished his proposal for Harrods BA’s online
business. The report suggested using the Harrods-related domain
names registered by Harrods BA to set up a website portal where
users could shop at various stores within the Harrods BA website.
This suggested arrangement was much like the physical Harrods
department store in Buenos Aires, where Harrods BA had until
recently housed a number of vendors (who were lessees) in its famous
four-story building under the umbrella of the Harrods name. Under
the proposal Harrods BA would not sell any merchandise itself but
would simply earn commissions from vendors that it sponsored. The
proposal thus treated the well-known Harrods name as the primary
asset that Harrods BA could offer vendors to induce them to join the
Harrods portal site and pay commissions. The report included an
illustration of a transaction occurring through the proposed Harrods
BA website. The illustration shows an online shopper designated as
a "UK citizen" purchasing a Burberry sweater (a British brand) at the
Harrods BA website and paying for the purchase with funds from
Barclays Bank (a British bank). The "Harrods" logo on the webpage
illustration is not the distinct "Harrods" logo used by Harrods BA;
instead, it is identical to the script logo long used by Harrods UK.
Harrods BA used this proposal to solicit potential investors and part-ners
in Argentina, the United States, and Europe (mostly via the Inter-net).
No party expressed interest, and by January of 2000 Harrods BA
had rejected the Capuro proposal and had solicited Ernst & Young to
prepare a new business plan. The Ernst & Young plan was not intro-duced
or described at trial.

On February 16, 2000, Harrods UK sued 60 of the Harrods-related
domain names in the United States District Court for the Eastern Dis-trict
of Virginia. Harrods UK sued under 15 U.S.C. § 1125(d)(2),
which permits the owner of a protected mark to bring an in rem action
against domain names that violate "any right of the owner of a mark,"
subject to certain limitations. For example, the in rem action is avail-able
only when the plaintiff cannot find or cannot obtain personal
jurisdiction over the domain name registrant.
6
Harrods UK claimed that the Domain Names violated 15 U.S.C. § 1125(d)(1), which pro-hibits
bad faith registration of domain names with intent to profit, and
15 U.S.C. §§ 1114, 1125(a) & (c), which together prohibit trademark
infringement and dilution. Harrods BA was easily identified as the
registrant of the defendant Domain Names, but the mere act of regis-tering
the Domain Names in Virginia was deemed insufficient to pro-vide
personal jurisdiction over Harrods BA. See, e.g., Heathmount
A.E. Corp. v. Technodome.com, 106 F. Supp. 2d 860, 866-69 (E.D.
Va. 2000). Because Harrods UK could not obtain personal jurisdic-tion
over Harrods BA, the suit was filed in rem against the 60 Domain
Names themselves.

The initial complaint did not allege bad faith registration on the
part of Harrods BA. The Domain Names moved to dismiss, arguing
that bad faith must be pled and proven in all cases filed under the in
rem provision of the ACPA, § 1125(d)(2). The district court dis-missed
the infringement and dilution claims with prejudice, holding
that § 1125(d)(2) provided in rem jurisdiction only for bad faith
claims under § 1125(d)(1). The court also dismissed without prejudice
Harrods UK’s bad faith registration claim under § 1125(d)(1) because
the complaint failed to allege bad faith. Harrods UK promptly filed
an amended complaint, this time alleging bad faith under
§ 1125(d)(1). Before discovery got under way, the Domain Names
moved for summary judgment as to just six of the names, specifically
the .com, .net, and .org permutations of harrodsbuenosaires and har-rodsargentina
(the "Argentina Names"). The district court granted
summary judgment to the Argentina Names, reasoning that Harrods
BA had legitimate trademark rights in Argentina and that these
Names on their face were clearly identified as Buenos Aires- and
Argentina-related.

After extensive discovery and a bench trial, the district court found
bad faith intent to profit on the part of Harrods BA with respect to the
remaining 54 Domain Names and ordered that those names be trans-ferred
to Harrods UK. (Forfeiture, cancellation and transfer of domain
names are the only remedies available under the in rem provision. 15
U.S.C. § 1125(d)(2)(D)(i).) Harrods UK appeals the district court’s
order dismissing its infringement and dilution claims and the order
granting summary judgment to the six Argentina Names. The Domain
Names appeal the court’s order entering judgment after trial for Harrods
UK against the remaining 54 Domain Names.

II.

The central issue for both the six Argentina Names and the other
54 Names is whether Harrods BA registered the Domain Names in
bad faith as that term is outlined by the ACPA. Ultimately, we con-clude
that the district court did not err in holding that Harrods BA
registered the 54 Names in bad faith, but the court did err in granting
summary judgment to the six Argentina Names before Harrods UK
had an adequate opportunity for discovery. Before we deal with the
issue of bad faith registration, we must consider several other issues
raised by the parties. First, the Domain Names assert a due process
challenge to the district court’s in rem jurisdiction on the ground that
the Names lack sufficient minimum contacts with the forum. Second,
the Domain Names argue that claims of bad faith under § 1125(d)(1)
must be proven by clear and convincing evidence, not by a preponder-ance
of the evidence, which is the usual standard. For its part, Harrods
UK argues that § 1125(d)(2) provides in rem jurisdiction not only for
violations of § 1125(d)(1) but also for other trademark violations,
such as infringement and dilution. We conclude that the district court
properly exercised jurisdiction over the Domain Names and that the
normal preponderance of the evidence standard applies to bad faith
claims under § 1125(d)(1). We further conclude that a plaintiff bring-ing
an in rem action under § 1125(d)(2) may, in appropriate circum-stances,
pursue infringement and dilution claims as well as bad faith
registration claims under § 1125(d)(1). We discuss these issues here
in part II, and then in part III we discuss the question of Harrods BA’s
alleged bad faith.

A.

On appeal the Domain Names claim that the district court’s exer-cise
of in rem jurisdiction over them violates the Due Process Clause
because they lack sufficient minimum contacts with the forum. The
Due Process clause of the Fifth Amendment permits a federal court
to exercise personal jurisdiction over a defendant only if that defen-dant
has "certain minimum contacts with [the forum] such that the
maintenance of the suit does not offend ‘traditional notions of fair
play and substantial justice.’" Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463
(1940)). "[T]he minimum contacts rule of International Shoe . . .
applie[s] to actions in rem and quasi in rem, as well as to actions in
personam." Pittsburgh Terminal Corp. v. Mid Allegheny Corp., 831
F.2d 522, 526 (4th Cir. 1987) (construing Shaffer v. Heitner, 433 U.S.
186 (1977)). Accordingly, we apply the minimum contacts test to the
district court’s exercise of in rem jurisdiction over the Domain
Names. Under this test we ask whether there has been "some act by
which the defendant purposefully avail[ed] itself of the privilege of
conducting activities within the forum State, thus invoking the bene-fits
and protections of its laws." Hanson v. Denckla, 357 U.S. 235,
253 (1958). A federal district court can exercise personal and in rem
jurisdiction to the same extent as courts in the state where the district
court is located. Thus, to determine whether the Domain Names have
sufficient minimum contacts to justify the exercise of in rem jurisdic-tion
by the district court in this case, we must determine whether the
Domain Names have sufficient contacts with the Commonwealth of
Virginia to justify the exercise of in rem jurisdiction by the courts of
Virginia. See ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 622
(4th Cir. 1997).

In the case of disputes involving property, the presence of the prop-erty
in the jurisdiction does not always justify the exercise of in rem
jurisdiction, but "when claims to the property itself are the source of
the underlying controversy between the plaintiff and the defendant, it
would be unusual for the State where the property is located not to
have jurisdiction." Shaffer, 433 U.S. at 207 (internal footnote omit-ted).
See also 4A Charles A. Wright & Arthur R. Miller, Federal
Practice & Procedure § 1072 (3d ed. 2002). Specifically, the
Supreme Court said in Shaffer that in rem jurisdiction is appropriate in "suits for injury suffered on the land of an absentee owner, where
the defendant’s ownership of the property is conceded but the cause
of action is otherwise related to rights and duties growing out of that
ownership." Shaffer, 433 U.S. at 208. The dispute in this case is
roughly analogous to such a suit. Harrods UK has allegedly suffered
injury by way of property, the Domain Names, owned by Harrods
BA, an absentee owner. Harrods BA’s initial ownership of the Names
is conceded, but the cause of action is related to Harrods BA’s rights
and duties arising out of that ownership.

Likewise, Virginia’s "interests in assuring the marketability of
property within its borders and in providing a procedure for peaceful
resolution of disputes about the possession of that property" also sup-port
the exercise of in rem jurisdiction in this case. Id. (internal foot-note
omitted). Moreover, Virginia’s interest in not permitting foreign
companies to use rights emanating from, and facilities located in, its
territory to infringe U.S. trademarks also supports the exercise of in
rem jurisdiction. By registering these Domain Names in Virginia,
Harrods BA exposed those Names to the jurisdiction of the courts in
Virginia (state or federal) at least for the limited purpose of determin-ing
who properly owns the Domain Names themselves. This is not a
case where "the only role played by the property is to provide the
basis for bringing the defendant into court." Id. at 209. Rather,
because "claims to the property itself are the source of the underlying
controversy," id. at 207, and because Virginia has important interests
in exercising jurisdiction over that property (the Names), we conclude
that courts in Virginia, the state where the Domain Names are regis-tered,
may constitutionally exercise in rem jurisdiction over them.
Thus, the district court’s exercise of in rem jurisdiction over the
Domain Names was constitutional.
7

B.

The Domain Names argue that proving bad faith under
§ 1125(d)(1) requires proof by clear and convincing evidence rather
than by a preponderance of the evidence, the usual standard. The dis-trict
court concluded that the preponderance of the evidence standard
applies, and we agree. We can find no other cases discussing the
proper standard of proof under the ACPA, so we are the first to take
a direct crack at the question. We note, however, that none of the
courts applying the ACPA have mentioned a heightened burden of
proof. See, e.g., People for the Ethical Treatment of Animals v.
Doughney, 263 F.3d 359 (4th Cir. 2001); Virtual Works, 238 F.3d
264; Sporty’s Farm L.L.C. v. Sportsman’s Market, Inc., 202 F.3d 489
(2d Cir. 2000). This suggests, at the very least, that courts have
assumed that the usual preponderance of the evidence standard
applies to bad faith claims under the ACPA.

The Supreme Court has explained that under "[c]onventional rules
of civil litigation . . . parties . . . need only prove their case by a pre-ponderance
of the evidence" and that "[e]xceptions to this standard
are uncommon." Price Waterhouse v. Hopkins, 490 U.S. 228, 253
(1989) (plurality opinion). "Because the preponderance-of-the-evidence
standard results in a roughly equal allocation of the risk of
error between litigants, we presume that this standard is applicable in
civil actions between private litigants unless ‘particularly important
individual interests or rights are at stake.’" Grogan v. Garner, 498
U.S. 279, 286 (1991) (quoting Herman & McLean v. Huddleston, 459
U.S. 375, 389 (1983)). The Supreme Court has applied a heightened
standard of proof in proceedings to terminate parental rights, involun-tary
commitment proceedings, and deportation proceedings. See Her-man,
459 U.S. at 389 (listing cases). The interests implicated by the
cybersquatting provision of the ACPA are important, but they are not
in the same category as those listed in Herman.

The Domain Names argue that even if this case does not involve
"particularly important individual interests" of the type referred to in
Herman, the clear and convincing standard still applies because
§ 1125(d)(1) requires proof of bad faith. Indeed, in Addington v.
Texas, 441 U.S. 418, 424 (1979), the Supreme Court acknowledged
that "[o]ne typical use of the [clear and convincing] standard is in civil cases involving allegations of fraud or some other quasi-criminal
wrongdoing by the defendant." A leading treatise adds that "[n]ot all
instances of requirements of proof more than [by a preponderance of
the evidence] concern cases involving individual liberty." 2 McCor-mick
on Evidence § 340, at 426 (John W. Strong et al. eds., 5th ed.
1999). In addition to cases involving the important interests of indi-vidual
liberty, "this special standard of persuasion commonly has
been applied [to, among other things,] . . . charges of fraud." Id. The
Domain Names argue that the clear and convincing standard of proof
should apply because the bad faith element of § 1125(d)(1) is equiva-lent
to an element of fraud.

We acknowledge that the clear and convincing evidence standard
has been applied in certain cases involving fraudulent or bad faith
conduct. See, e.g., Grossman v. Comm’r of Internal Revenue, 182
F.3d 275, 277 (4th Cir. 1999) (clear and convincing evidence required
to prove intent to defraud in civil tax fraud case under the Internal
Revenue Code); Shepherd v. ABC, 62 F.3d 1469, 1477-78 (D.C. Cir.
1995) (litigation misconduct must be proven by clear and convincing
evidence in order for the district court to enter default judgment as a
sanction for such misconduct). Indeed, courts have required clear and
convincing evidence for the proof of certain fraud-based claims under
the Lanham Act, such as a claim of fraudulent registration or a claim
for attorneys’ fees when the infringer’s conduct was fraudulent or in
bad faith. See Resorts of Pinehurst, Inc. v. Pinehurst Nat’l Corp., 148
F.3d 417, 420 (4th Cir. 1998) (fraudulent registration); Pebble Beach
Co. v. Tour 18 I Ltd., 155 F.3d 526, 555 (5th Cir. 1998) (attorneys’
fees). The heightened burden of proof was imposed in these instances
by the courts and not by the text of the Lanham Act. But while clear
and convincing evidence is required for some fraud-based claims, in
many instances a heightened burden of proof is not required. See, e.g.,
Grogan, 498 U.S. at 288-89 (listing federal fraud-related statutes to
which the preponderance standard applies); United States v. Trues-dale,
211 F.3d 898, 908 (5th Cir. 2000) (criminal defendants whose
convictions were reversed must show by a preponderance of the evi-dence
that the government’s position was in bad faith in order to
recover attorneys’ fees under the Hyde Amendment); Donald v. Lib-erty
Mut. Ins. Co., 18 F.3d 474, 484 (7th Cir. 1994) (under Indiana
law, tort of bad faith dealing by an insurer is proved by a preponder-ance
of the evidence). Moreover, the Supreme Court has applied the presumption that the preponderance standard applies even in civil
cases that involve fraud. For example, in Grogan the Court held that
a claim that a debt was incurred through actual fraud, which would
exempt the debt from general discharge under the Bankruptcy Act,
need only be proven by a preponderance of the evidence. Grogan,
498 U.S. at 290-91.

We can see no clear, overarching principle that separates the fraud
or bad faith claims requiring proof by clear and convincing evidence
from those fraud or bad faith claims requiring proof by a preponder-ance
of the evidence. Even so, the Supreme Court’s analysis of the
relevant standard of proof in Herman does provide some guidance.
The Court explained that the heightened burden of proof requirement
arose out of a concern by courts of equity that charges of fraud could
be fabricated too easily. Herman, 459 U.S. at 388 n.27. This concern,
the Court reasoned, is not necessarily valid when modern statutes are
involved. In this case, for example, guidelines for establishing the ele-ment
of bad faith under the ACPA are set forth and explained in detail
both in the statute and in the legislative history. As we discuss fully
in part III, infra, § 1125(d)(1)(B)(i) contains nine factors to guide
courts in determining whether bad faith exists in a given case. These
factors include, among other things, any trademark rights of either
party in the domain name, any bona fide prior use of the domain
name, and any offer by the registrant to sell the domain name to the
owner of the mark in question. 15 U.S.C. §§ 1125(d)(1)(B)(i)(I), (III),
(VI) & (IX). The nine factors are also explained at length in the legis-lative
history to the ACPA. See, e.g., Sen. Rep. No. 106-140, at 13-
16 (1999); H.R. Rep. No. 106-412, at 10-13 (1999). The detailed
guidelines for proving a claim of bad faith registration under the
ACPA relieve the worry that claims can be easily fabricated, the
worry that motivated courts of equity to impose a higher burden of
proof in routine fraud cases. Because Congress spelled out the bad
faith factors so thoroughly, we expect that Congress would have
explicitly imposed a heightened burden of proof had it intended for
one to apply. In Grogan the Supreme Court explained that "silence [in
the text and the legislative history of the bankruptcy code] is inconsis-tent
with the view that Congress intended to require a special, height-ened
standard of proof." Grogan, 498 U.S. at 286. Faced with a
similar silence in the ACPA’s text and legislative history, both of
which explain the bad faith requirement in detail, we conclude that the usual preponderance of the evidence standard applies to claims of
bad faith registration of domain names under § 1125(d)(1).

C.

The final issue we must consider before reaching the question of
bad faith is the scope of the in rem provision of the ACPA, 15 U.S.C.
§ 1125(d)(2). Harrods UK argues that § 1125(d)(2) provides for in
rem jurisdiction against domain names for traditional infringement
and dilution claims under §§ 1114, 1125(a) & (c) as well as for claims
of bad faith registration with the intent to profit under § 1125(d)(1).
The Domain Names argue that the district court correctly limited the
scope of the in rem provision to claims under § 1125(d)(1) for bad
faith registration of a domain name with the intent to profit. This
argument has not yet been settled by any federal circuit court. Only
a handful of district courts have considered the issue, and most of
them agree with the district court here that § 1125(d)(2) applies only
to violations of § 1125(d)(1), bad faith registration with intent to
profit. See Cable News Network L.P. v. Cnnews.com, 177 F. Supp. 2d
506, 522-23 (E.D. Va. 2001); Hartog & Co. v. Swix.com, 136 F.
Supp. 2d 531, 539-40 (E.D. Va. 2001); Broadbridge Media, L.L.C. v.
Hypercd.com, 106 F. Supp. 2d 505, 511 (S.D.N.Y. 2000). At least one
district court and two commentators have endorsed the contrary view
that § 1125(d)(2) authorizes an in rem action for the violation of sev-eral
substantive provisions of federal trademark law. See Jack in the
Box, Inc. v. Jackinthebox.org, 143 F. Supp. 2d 590, 591 (E.D. Va.
2001); 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 25:79, at 25-290 (4th ed. 2002); Jonathan S. Jennings,
Significant Trademark/Domain Name Issues in Cyberspace, 663
PLI/Pat 649, 664 (2001). While we consider this to be a close ques-tion
of statutory interpretation, we ultimately conclude that
§ 1125(d)(2) is not limited to violations of § 1125(d)(1); it also autho-rizes
in rem actions for certain federal infringement and dilution
claims.

We begin our analysis with the text of the statute. Section
1125(d)(2)(A) provides that the "owner of a mark" may file an in rem
action against a domain name if:

(i) the domain name violates any right of the owner of a
mark registered in the Patent and Trademark Office, or protected under subsection (a) [infringement] or (c) [dilution];
and

(ii) . . . the owner —

(I) is not able to obtain in personam jurisdiction
over a person who would have been a defendant in
a civil action under paragraph (1) [§ 1125(d)(1)];
or

(II) through due diligence was not able to find a
person who would have been a defendant in a civil
action under paragraph (1) . . . .

15 U.S.C. § 1125(d)(2)(A). We start with the first clause, subsection
(d)(2)(A)(i), which provides that an in rem action is available if "(i)
the domain name violates any right of the owner of a mark registered
in the Patent and Trademark Office, or protected under subsection (a)
or (c)." 15 U.S.C. § 1125(d)(2)(A)(i) (emphasis added). The broad
language "any right of the owner of a mark" does not look like it is
limited to the rights guaranteed by subsection (d)(1), but appears to
include any right a trademark owner has with respect to the mark.
This language, by itself, would include rights under § 1125(d)(1), and
it would also include, for example, rights under § 1125(a) against
trademark infringement and rights under § 1125(c) against trademark
dilution. If Congress had intended for subsection (d)(2) to provide in
rem jurisdiction only for subsection (d)(1) claims, it could easily have
said so directly. For example, Congress could have said that an in rem
action is available if "the domain name violates subsection (d)(1)."
Again, if the first key phrase Congress gave us — "any right of the
owner of a mark" — is considered in isolation, it would authorize the
in rem pursuit of any of the actions that could be brought in personam
under U.S. trademark law, including infringement (subsection (a)),
dilution (subsection (c)), and cybersquatting (subsection (d)(1)). See
4 McCarthy § 25:79, at 25-290; Jennings, supra, at 664.

Of course, subsection (d)(2)(A)(i) does not create a claim for the
owner of any mark, but rather for the owner of "a mark registered in
the Patent and Trademark Office [PTO], or protected under subsec-tion
(a) or (c)." Thus, to understand the scope of subsection (d)(2)(A)(i), we must also consider the implications of this additional
language. Generally speaking, trademark protection is a common law
right that arises from the use of a mark to identify the source of cer-tain
goods or services. Brittingham v. Jenkins, 914 F.2d 447, 452 (4th
Cir. 1990); 3 McCarthy § 19:3. By its terms, subsection (d)(2)(A)(i)
does not provide an in rem action for the owner of any type of mark
protected under trademark law, but only for the owner of a mark that
is either (1) registered in the PTO or (2) protected under §§ 1125(a)
or (c).

First, we consider the protection offered a mark registered in the
PTO. The owner of a mark may register that mark with the PTO. 15
U.S.C. § 1051. While it is the use of a mark, not its registration, that
confers trademark protection, Brittingham, 914 F.2d at 452, registra-tion
does confer certain benefits on the owner; for example, it serves
as prima facie evidence of the mark’s validity. Id.; 15 U.S.C.
§ 1057(b). Subsection (d)(2)(A)(i) provides an additional benefit for
registration of a mark: registration now entitles the owner of the mark
to proceed on an in rem basis under § 1125(d)(2). The rights of an
owner whose mark is registered in the PTO are not limited to rights
under § 1125(d)(1), however. They also include, for example, rights
against infringement of a registered mark under § 1114.

Second, subsection (d)(2)(A)(i) ends with the provision that even
if a mark is not registered, the mark’s owner may proceed on an in
rem basis under § 1125(d)(2) if the mark is "protected under subsec-tion
(a) or (c)." Subsections (a) and (c) are the infringement and dilu-tion
provisions of § 1125. Because subsection (d)(2) provides for an
in rem action for the violation of "any right . . . of a mark . . . pro-tected
under subsection (a) or (c)," it seems to provide in rem jurisdic-tion
over a domain name that infringes a mark under § 1125(a) or
dilutes a famous mark under § 1125(c). See Jennings, supra, at 664
("The explicit language of the in rem provision . . . suggests a broader
application [than just subsection (d)(1) claims], by stating that it pro-tects
against domain names violating the rights of owners of marks
registered in the PTO, or protected under Section 43(a) or Section
43(c) of the Lanham Act."). The Domain Names do not offer a com-peting
interpretation of this last provision of subsection (d)(2)(A)(i)
that reconciles this provision with their argument that subsection
(d)(2) applies only to bad faith claims under subsection (d)(1). If in rem jurisdiction is only available for subsection (d)(1) bad faith
claims, we cannot understand why Congress described the types of
marks covered under subsection (d)(2) as those "registered in the
[PTO], or protected under subsection (a) or (c)." Subsection
(d)(2)(A)(i)’s reference to a mark "registered in the [PTO], or pro-tected
under subsection (a) or (c)" reinforces our sense that the phrase
"any right" includes more than just subsection (d)(1) rights.

According to the Domain Names, the problem with interpreting
subsection (d)(2) as covering more than just bad faith claims under
subsection (d)(1) is that subsection (d)(2)(A)(ii) conditions the avail-ability
of in rem jurisdiction on proof that the plaintiff is unable to
find or obtain personal jurisdiction over the "person who would have
been a defendant in a civil action [for bad faith registration] under
paragraph (1)," that is, § 1125(d)(1). As the district court explained,
"because Congress chose to include in the in rem action the definition
of potential defendants used in paragraph (1), we must therefore con-clude
that Congress intended for the ‘bad faith intent to profit’ ele-ment
to be part of any in rem action." Harrods Ltd. v. Sixty Internet
Domain Names, 110 F. Supp. 2d 420, 426 (E.D. Va. 2000). We real-ize
that it is possible to get the impression from reading subsection
(d)(2)(A)(ii) that the in rem action is available only for subsection
(d)(1) violations. But it is important to distinguish between the lan-guage
discussing the subject matter covered by the in rem provision
and the language discussing the proper defendant in a cybersquatting
case. Subsection (d)(2)(A)(i) deals with the former, and subsection
(d)(2)(A)(ii) deals with the latter. Subsection (d)(2)(A)(i) identifies
the substantive rights actionable under the in rem provision, stating
in broad terms that the in rem provision protects "any right of the
owner of a mark" that is registered in the PTO or "protected under
subsection (a) or (c)." Subsection (d)(2)(A)(ii) deals with the proper
defendant to a cybersquatting claim, stating that in rem jurisdiction is
available only when personal jurisdiction over the registrant is lack-ing.
It would be odd for Congress to have placed a significant limita-tion
on the scope of the substantive rights identified in subsection
(d)(2)(A)(i), which deals with the subject matter of in rem actions, by
indirectly tacking something on to subsection (d)(2)(A)(ii), which
deals with the proper defendant in cybersquatting actions.

If the only way to understand the phrase "a person who would have
been a defendant in a civil action under paragraph (1)" was as a reference to subsection (d)(1)’s bad faith requirement, we would be forced
to confront the tension between this language and subsection
(d)(2)(A)(i)’s broad language of "any right of the owner of a mark."
However, the phrase "a person who would have been a defendant in
a civil action under paragraph (1)" can fairly be understood as a short-hand
reference to the current registrant of the domain name. See 4
McCarthy § 25:79, at 25-290 (This reference to paragraph (1) "does
not add an extra element" to subsection (d)(2), but simply "defines the
proper defendant in an in rem proceeding as the present domain name
registrant."). This reading avoids tension with subsection
(d)(2)(A)(i)’s reference to "any right of the owner of a mark," which
does not appear to be limited to rights protected by subsection (d)(1).

Nonetheless, it is possible to disagree about the meaning of the
phrase "a person who would have been a defendant in a civil action
under paragraph (1)." As noted above, the district court understood
this language not as a shorthand reference to the current domain name
registrant, but as limiting in rem jurisdiction to subsection (d)(1) bad
faith claims. Harrods Ltd., 110 F. Supp. 2d at 426. Because the mean-ing
of this phrase in conjunction with the phrase "any right of the
owner of a mark" is not altogether clear, it is appropriate to "look to
the legislative history for guidance in interpreting the statute." United
States v. Childress, 104 F.3d 47, 53 (4th Cir. 1996). The legislative
history confirms that the phrase "a person who would have been a
defendant in a civil action under paragraph (1)" should be read as a
shorthand reference to the domain name registrant, not as requiring
a bad faith element in all in rem actions. The House Report says that
"in rem jurisdiction is . . . appropriate in instances where personal
jurisdiction cannot be established over the domain name registrant."
H.R. Rep. No. 106-412, at 14 (1999). The registrant is the person who
would be the defendant both in a subsection (d)(1) bad faith registra-tion
action and in a traditional infringement or dilution action involv-ing
the improper use of a domain name.

The Domain Names do not give up easily. They point to other leg-islative
history that describes the general purpose of the ACPA in
terms of outlawing "cybersquatting," which is always discussed as
bad faith registration with intent to profit. For example, the Senate
Judiciary Committee report on the ACPA opens by explaining that
"the purpose of the bill" is to protect consumers and businesses by "prohibiting the bad-faith and abusive registration of distinctive
marks as Internet domain names with the intent to profit from the
goodwill associated with such marks — a practice commonly referred
to as ‘cybersquatting.’" Sen. Rep. No. 106-140, at 4 (1999). See also
H.R. Rep. No. 106-412, at 6. As the district court explained, this
might suggest that the entire bill, including both subsection (d)(1) and
subsection (d)(2), is aimed solely at bad faith registration with the
intent to profit. See Harrods, 110 F. Supp. 2d at 426; see also CNN,
177 F. Supp. 2d at 523 ("The ACPA’s purpose is . . . to deter, prohibit
and remedy ‘cyberpiracy,’ which is defined in the legislative history
as the bad faith registration or use of a domain name . . . [and] [t]his
purpose is given proper effect by resolving the ambiguity in favor of
requiring bad faith in ACPA in rem actions.").

This reading of the language describing the general purpose of the
ACPA is trumped, however, by the language Congress used when it
discussed the purpose of subsection (d)(2) specifically. The Senate
Report states that the in rem jurisdiction provision "allows a mark
owner to seek the forfeiture, cancellation, or transfer of an infringing
domain name by filing an in rem action against the name itself, pro-vided
the domain name itself violates substantive Federal trademark
law." Sen. Rep. No. 106-140, at 10 (emphasis added). See also H.R.
Rep. No. 106-412, at 14 (containing a statement that is nearly verba-tim).
Later on, the Senate Report notes that the in rem provision
allows trademark owners to "proceed against the domain names them-selves,
provided they are, in fact, infringing or diluting under the
Trademark Act." Sen. Rep. No. 106-140, at 11 (emphasis added).
Elsewhere, the in rem provision is described as authorizing an injunc-tion
against a domain name "provided the mark owner can show that
the domain name itself violates substantive federal trademark law
(i.e., that the domain name violates the rights of the registrant of a
mark registered in the Patent and Trademark Office, or section 43(a)
or (c) of the Trademark Act)." 145 Cong. Rec. S14,714 (daily ed.
Nov. 17, 1999).
8
This language from the legislative history is not
framed in terms of subsection (d)(1) or bad faith; it does not say the in rem action is available if the domain name violates the substantive
cybersquatting provision of the ACPA. Rather, it says the in rem
action is available for domain names that violate "substantive Federal
trademark law" or which are "infringing or diluting under the Trade-mark
Act." Sen. Rep. No. 106-140, at 10-11. Thus, when the legisla-tive
history addresses subsection (d)(2) specifically, it speaks in terms
of violations of trademark law generally and of subsections (a) and
(c); it does not repeat the references to bad faith registration that
appear elsewhere. Just like the text of subsection (d)(2)(A)(i), this lan-guage
in the legislative history suggests that the in rem action is avail-able
to enforce several of the substantive provisions of Federal
trademark law.

On balance, we are left with the following. On its face, subsection
(d)(2)(A)(i) provides an in rem action for the violation of "any right"
of a trademark owner, not just rights provided by subsection (d)(1).
Moreover, subsection (d)(2)(A)(i) authorizes in rem jurisdiction for
marks "protected under subsection (a) or (c)," the very subsections
underlying two of the claims that were dismissed by the district court
as outside the scope of subsection (d)(2). While subsection
(d)(2)(A)(ii) provides that the in rem action is available only if the
plaintiff is unable to find or obtain personal jurisdiction over the "per-son
who would have been a defendant in a civil action under para-graph
(1)," we believe this language is best understood as a shorthand
reference to the current registrant of the domain name, who would be
the defendant in any trademark action involving a domain name.
Finally, the legislative history of the ACPA specifically discussing the
in rem provision speaks in terms of domain names that violate "sub-stantive
Federal trademark law" or that are "infringing or diluting
under the Trademark Act." Sen. Rep. No. 106-140, at 10-11. This
reinforces the language of subsection (d)(2)(A)(i), which suggests that
the in rem provision is not limited to bad faith claims under subsec-tion
(d)(1). Thus, we conclude that the best interpretation of
§ 1125(d)(2) is that the in rem provision not only covers bad faith
claims under § 1125(d)(1), but also covers infringement claims under
§ 1114 and § 1125(a) and dilution claims under § 1125(c).

In light of this conclusion, we reverse the district court’s dismissal
of Harrods UK’s claims for infringement and dilution and remand for
further proceedings on those claims. However, the district court need not consider Harrods UK’s infringement and dilution claims as
against the 54 Domain Names because we affirm the court’s order
requiring the transfer of the 54 Names to Harrods UK. Transfer or
cancellation of the defendant domain names is the only remedy avail-able
under § 1125(d)(2)’s in rem provision, so Harrods UK could gain
no additional relief if the court considered and ruled on its infringe-ment
and dilution claims against the 54 Names. Thus, on remand the
district court need only consider Harrods UK’s infringement and dilu-tion
claims against the six Argentina Names.

III.

With the preliminary issues out of the way, we turn at last to Har-rods
UK’s claim alleging bad faith on the part Harrods BA in register-ing
the 60 defendant Domain Names. As explained above, the district
court granted summary judgment to the six Argentina Names prior to
any meaningful discovery. Then, after discovery and a bench trial, the
district court found that Harrods BA had registered the remaining 54
Names with a bad faith intent to profit in violation of § 1125(d)(1).
We first consider the district court’s finding of bad faith with respect
to the 54 Names, and after that we consider the court’s award of sum-mary
judgment to the six Argentina Names.

A.

We begin with the district court’s determination that the 54
Domain Names were registered by Harrods BA with a bad faith intent
to profit. The central provision of the ACPA is § 1125(d)(1), which
allows the owner of a protected mark to bring an action against any
person who:

(i) has a bad faith intent to profit from that mark . . .; and

(ii) registers, traffics in, or uses a domain name that [is iden-tical
or confusingly similar to that mark].

15 U.S.C. § 1125(d)(1)(A). The Domain Names do not contest the
district court’s conclusion that they are identical or confusingly simi-lar
to Harrods UK’s mark. Rather, the Names argue that the district court erred in concluding that Harrods BA registered the Names with
"a bad faith intent to profit from that mark." Section 1125(d)(1)(B)(i)
explains that to determine bad faith "a court may consider factors
such as, but not limited to," the nine factors listed in
§ 1125(d)(1)(B)(i)(I)-(IX). After reviewing the district court’s thor-ough
consideration of these nine factors, we conclude that the evi-dence
supports the court’s finding that Harrods BA had a bad faith
intent to profit with regard to the 54 Domain Names. Specifically, the
evidence supports the conclusion that Harrods BA intended to use the
54 Domain Names to market its goods and services to non-South
American consumers in a manner calculated to divert and deceive
consumers seeking to do business with Harrods UK. For the reasons
set out in more detail below, we affirm the district court’s judgment
against the 54 Domain Names.

Before we look at the nine bad faith factors, we stop for a moment
to note that this case presents the unusual situation of two companies
named "Harrods," both with legitimate rights to use the "Harrods"
name in different geographical regions. The use of an identical mark
by two different companies is sometimes allowed in trademark law
under the concept of "concurrent use." For example, the Patent and
Trademark Office may register the exact same mark for two different
users, provided that the use of the mark by both users "is not likely
to result" in "confusion, mistake, or deception." 15 U.S.C. § 1052(d).
"Even where there is precise identity of a . . . mark [used by two per-sons],
there may be no consumer confusion — and thus no trademark
infringement — if the alleged infringer is in a different geographic
area or in a wholly different industry." Brookfield Communications,
Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1054 (9th
Cir. 1999). As we explain below, a concurrent user of a mark that reg-isters
a domain name incorporating that mark will always trigger a
number of the nine bad faith factors listed in the ACPA. However, the
legislative history of the ACPA demonstrates that Congress recog-nized
the legitimacy of concurrent use when it enacted the ACPA and
did not intend to disrupt the rights of legitimate concurrent users of
a mark. See, e.g., 145 Cong. Rec. S14,713 (daily ed. Nov. 17, 1999)
("there may be concurring uses of the same name that are noninfring-ing,
such as the use of the ‘Delta’ mark for both air travel and sink
faucets. Similarly, the registration of the domain name ‘delta-force.
com’ by a movie studio would not tend to indicate a bad faith intent on the part of the registrant to trade on Delta Airlines or Delta
Faucets’ trademarks."); id. at S14,714 ("[S]omeone who has a legiti-mate
registration of a domain name that mirrors someone else’s
domain name, such as a trademark owner that is a lawful concurrent
user of that name with another trademark owner, may, in fact, wish
to sell that name to the other trademark owner."). Accordingly, we
should apply the bad faith factors in a manner that will not lead to a
finding of bad faith registration every time a concurrent user registers
a mark. Of course, even recognizing the rights of concurrent users of
a mark, a legitimate concurrent user still violates the other user’s
trademark rights if it uses the shared mark in a manner that would
cause consumer confusion, such as by using the mark in the other’s
geographic area. See 3 McCarthy § 20:82, at 20-140 to 20-141 ("the
most important [factor in registering concurrent marks] . . . is that
such concurrent registration cannot be likely to cause confusion of
buyers or others."). Thus, if a concurrent user registers a domain
name with the intent of expanding its use of the shared mark beyond
its geographically restricted area, then the domain name is registered
in bad faith as outlined in the ACPA.
9
With these points noted, we are
finally ready to review the district court’s evaluation of the 54
Domain Names in light of the nine bad faith factors listed in
§ 1125(d)(1)(B)(i). There is no simple formula for evaluating and
weighing these factors. For example, courts do not simply count up
which party has more factors in its favor after the evidence is in. As
explained in the legislative history of the ACPA, "the presence or
absence of any of these [nine] factors may not be determinative." Sen.
Rep. No. 106-140, at 9 (1999). Even so, "these factors reflect indicators that, in practice, commonly suggest bad-faith intent or a lack
thereof in cybersquatting cases." Id. Thus, guided by the nine bad
faith factors, "[c]ourts must ultimately weigh the facts of each case
and make a determination based on those facts whether or not the
defendant registered, trafficked in, or used the domain name with a
bad-faith intent to profit from the goodwill of the mark of another."
Id. at 10.

1.

Factor (I): "the trademark or other intellectual property rights of
[the defendant], if any, in the domain name." 15 U.S.C.
§ 1125(d)(1)(B)(i)(I). The district court found that this factor favored
the Domain Names because while Harrods BA does not own any
United States trademarks, it does own trademarks for the name "Har-rods"
(and various permutations thereof, such as "Harrods Magazine")
throughout South America. We agree. The language of Factor (I) does
not speak in terms of United States trademark rights, but refers gener-ally
to "intellectual property rights." This encompasses intellectual
property rights irrespective of their territorial origin.
10
Thus, Factor (I)
favors the Domain Names.

2

Factor (II): "the extent to which the domain name consists of the
legal name of the person or a name that is otherwise commonly used
to identify that person." 15 U.S.C. § 1125(d)(1)(B)(i)(II). The district
court found that this factor also favored the Domain Names because
Harrods BA is commonly known throughout Argentina and South
America as "Harrods." We agree that Factor (II) favors the Domain
Names.

3.

Factor (III): "the person’s prior use, if any, of the domain name in
connection with the bona fide offering of any goods or services." 15
U.S.C. § 1125(d)(1)(B)(i)(III). The district court found that this factor
favored Harrods UK, correctly noting that Harrods BA has never
offered goods or services online through these domain names.
Instead, the sites accessible at these domain names simply displayed
a picture of Harrods BA’s department store in Buenos Aires and a
form for requesting information. We agree that Factor (III), by its
terms, favors Harrods UK. However, in this case Factor (III) does not
sufficiently take into account the legitimacy of Harrods BA’s use of
Harrods-related names. As noted above, the nine factors from subsec-tion
(d)(1)(B)(i) are not exclusive, so we may consider other factors
that are relevant given the particular facts of this case. See Virtual
Works, 238 F.3d at 268.

In this case, Harrods BA has a long history of providing goods and
services under the "Harrods" mark, so it is not surprising that it would
want to register Harrods-related domain names to provide such goods
and services online. Whenever a decades-old company seeks to
launch an online retail store, there will likely be a startup period after
domain name registration during which the company does not use the
domain name to offer goods and services online. During this time, the
company will not be able to show any "prior use . . . of the domain
name in connection with the bona fide offering of any goods or ser-vices,"
and thus it will not get the benefit of Factor (III). Here, for
example, Harrods UK registered "harrods.com" in early 1999, but by
October of that year it still had not offered goods or services through
that domain name. In the circumstance where a domain name regis-trant
has a longstanding history of using a trademark to provide goods
and services (as Harrods BA has here), legitimate plans to offer such
goods and services online in the future should be considered as a fac-tor
that mitigates against a finding of bad faith. Congress did not list
the proposed future use of a domain name as a factor, presumably
because it would be too easy for cybersquatters to claim an intent to
use a disputed name to provide goods or services in the future.
Indeed, the use of another’s trademark as a domain name to sell goods
or services is precisely one of the evils that the ACPA is aimed at
combating. Sen. Rep. No. 106-140, at 6-7. But because Harrods BA’s registration of the domain names is backed up with longstanding use
of the "Harrods" mark, Harrods BA’s failure to offer goods and ser-vices
previously through those domain names should not be consid-ered
an indication of bad faith. See, e.g., 145 Cong. Rec. S14,714
(daily ed. Nov. 17, 1999) ("[T]here are cases in which a person regis-ters
a name in anticipation of a business venture that simply never
pans out."). Thus, Factor (III) does not reliably indicate bad faith on
the part of Harrods BA. Instead, Harrods BA’s long history of using
the "Harrods" name to offer goods and services is a factor that favors
the Domain Names.

4

Factor (IV): "the person’s bona fide noncommercial or fair use of
the mark in a site accessible under the domain name." 15 U.S.C.
§ 1125(d)(1)(B)(i)(IV). As the district court noted, Harrods BA regis-tered
these Domain Names for a commercial purpose, so this factor
is not relevant here.

5.

Factor (V): "the person’s intent to divert consumers from the mark
owner’s online location to a site accessible under the domain name
that could harm the goodwill represented by the mark, either for com-mercial
gain or with the intent to tarnish or disparage the mark, by
creating a likelihood of confusion as to the source, sponsorship, affili-ation,
or endorsement of the site." 15 U.S.C. § 1125(d)(1)(B)(i)(V).
The district court found that this factor weighed very heavily in favor
of Harrods UK. According to the court, the evidence established that
Harrods BA’s online business plan was to use these Domain Names
to profit by deliberately confusing and diverting non-South American
customers seeking to shop at Harrods UK. First, the district court
noted that Harrods BA had registered almost 300 Harrods-related
domain names (most of which are not defendants here) covering a
wide variety of good and services offered by Harrods UK but not by
Harrods BA, such as: harrodsinsurance, harrodstravel, hotelharrods,
harrodscasino, harrodstelephone, harrodsairplanes, harrodswines, har-rodscamping,
and harrodsrealestate.
11
While the registration of multiple Domain Names is a separate factor (Factor (VIII)) and will be
considered below, it is relevant to Factor (V) that a great number of
the names described goods and services offered by Harrods UK but
not by Harrods BA. This fact supports the district court’s conclusion
that the "Domain Names closely and deliberately replicate goods and
services offered by [Harrods UK] or its affiliates." We agree that this
indicates a bad faith intent to profit by diverting Harrods UK custom-ers.

Second, the district court found it "highly suspect" that Harrods
BA’s domain name registrations almost always used English words
rather than Spanish words, noting that Harrods BA was not authorized
to conduct business outside of South America. However, the use of
English language terms in domain names by non-English speakers,
standing alone, does not constitute much evidence of an intent to mar-ket
to American or British consumers. English is by far the most com-mon
language of the Internet. See Sharon K. Hom & Eric K.
Yamamoto, Collective Memory, History, and Social Justice, 47
U.C.L.A. L. Rev. 1747, 1750 (2000) (noting that "[a]lthough only 10
percent of people worldwide speak English, 80 percent of internet
websites appear in English."). And of course Spanish is not the
national language in every South American country.
12
Nonetheless, in
this case Harrods BA registered domain names containing large num-bers
of English words but not their Spanish counterparts, and those
English words describe many of the goods and services offered by
Harrods UK but not by Harrods BA. These facts, taken together, do
offer support for the district court’s finding that Harrods BA was
intending to target non-South American consumers.

Finally, the court discussed the incriminating business proposal prepared for Harrods BA by Capuro. As described above, this report
contains an illustration of a proposed transaction over the Harrods BA
website involving a "UK citizen" purchasing a Burberry sweater with
funds from Barclays Bank. See Harrods Ltd. v. Sixty Internet Domain
Names, 157 F. Supp.2d 658, 676 n.51 (E.D. Va. 2001) (reproduction
of webpage illustration). We agree with the district court that this
illustration transparently demonstrates an intent to profit from the
Harrods-related domain names by confusing and diverting non-South
American customers seeking to do business with Harrods UK. Har-rods
BA does not claim that it has any right to do business in Great
Britain or that it has ever done business there. Thus, it cannot plausi-bly
claim that British consumers would be aware of its identity as a
separate entity from Harrods UK and not confuse the two. Finally, the
"Harrods" logo on the proposed webpage is not the logo used by Har-rods
BA, but rather is identical to the script logo used for many years
by Harrods UK. Compare id. at 675 n.50 with id. at 661 n.5 & 662
n.6. The business opportunity represented by the Capuro report illus-tration
is the opportunity to profit from Harrods UK’s well-known
"Harrods" trademark by improperly using that mark to sell to non-South
American consumers who would think they were doing busi-ness
with Harrods UK.

Harrods BA argues that we cannot rely on the Capuro report as an
accurate gauge of its own intentions because the proposal was created
by an outside consultant, not by Harrods BA executives themselves,
and because the proposal was rejected by Harrods BA (apparently
before the initiation of this lawsuit). Harrods BA also claims to have
contacted Ernst & Young "in the first days of January" 2000 about
preparing a new report. If we had only these facts, we would be hesi-tant
to rely on the Capuro report as an indicator of Harrods BA’s
intent. Here, however, Harrods BA executives also testified that they
used the report to solicit potential partners and investors, not only in
Argentina but also in the United States and Europe. None of the solic-ited
parties agreed to invest based on the Capuro report, and Harrods
BA decided to seek a new business plan from another consultant.
Nevertheless, the fact that Harrods BA shared the report with poten-tial
partners and investors demonstrates that the report, including the
webpage illustration inside, fairly represents Harrods BA’s own inten-tions.
This fact suggests that Harrods BA did not ultimately reject the
report because it proposed an improper use of the domain names, but rather because the report generated no interest from potential inves-tors.
All in all, it is fair to draw the inference that the report reflects
Harrods BA’s intent with regard to the domain names.

Because the Capuro report’s scheme can be imputed to Harrods
BA, the report constitutes very strong evidence that Harrods BA’s
intent was to use at least some of the domain names to sell to non-South
American consumers who were seeking Harrods UK’s website
and who would think they were buying from Harrods UK. The report,
combined with Harrods BA’s registration of hundreds of Harrods-related
domain names with terms closely mirroring products tradition-ally
sold by Harrods UK but not by Harrods BA, is strong evidence
of bad faith intent on the part of Harrods BA to divert non-South
American consumers from Harrods UK’s website to its own website.
Because this evidence is so convincing, Factor (V) standing alone
supports the district court’s finding of bad faith intent on the part of
Harrods BA.

6.

Factor (VI): "the person’s offer to transfer, sell, or otherwise assign
the domain name to the mark owner or any third party for financial
gain without having used, or having the intent to use, the domain
name in the bona fide offering of any goods or services, or the per-son’s
prior conduct indicating a pattern of such conduct." 15 U.S.C.
§ 1125(d)(1)(B)(i)(VI). The district court found that this factor
favored Harrods UK. The court noted that while there is no evidence
that Harrods BA offered to sell or transfer the domain names to Har-rods
UK, "[t]he history of [Harrods BA’s] efforts to sell its business
supports plaintiff’s argument that [Harrods BA’s] registration of the
Domain Names was intended to ‘drive up the price [Harrods BA] can
command from [Harrods UK] for the sale of [the "Harrods"] name.’"
However, while Harrods BA clearly had some interest in selling out
its South American trademarks and store to Harrods UK, this is nei-ther
inappropriate nor all that incriminating. Harrods BA has a legiti-mate
right to use the Harrods name, albeit in a limited geographic
area. The Congressional Record’s section-by-section analysis of the
ACPA states that Factor (VI) "does not suggest that a court should
consider the mere offer to sell a domain name to a mark owner . . .
as sufficient to indicate bad faith. . . . [S]omeone who has a legitimate registration of a domain name that mirrors someone else’s domain
name, such as a trademark owner that is a lawful concurrent user of
that name with another trademark owner, may, in fact, wish to sell
that name to the other trademark owner." 145 Cong. Rec. S14,714
(daily ed. Nov. 17, 1999).

To the extent that Harrods BA had planned to use these Domain
Names in a legitimate attempt to offer goods and services in South
America (an assumption undermined by the evidence recounted in our
discussion of Factor (V)), Harrods BA’s registration of these names
would be no more indicative of bad faith than its registration of a
number of Harrods-related trademarks throughout South America,
such as "Harrods Magazine," "Harrods Department Store," and "Har-rodscard."
There is nothing wrong with acquiring property, such as
legitimate domain names or additional trademarks, for the express
purpose of increasing the value (and therefore the potential sales
price) of a business. Cybersquatting is considered wrong because a
person can reap windfall profits by laying claim to a domain name
that he has no legitimate interest in or relationship to. Sen. Rep. No.
106-140, at 5 ("Some [cybersquatters] register well-known brand
names as Internet domain names in order to extract payment from the
rightful owners of the marks."). It is not wrong, however, for a busi-ness
to seek to profit from the sale of its legitimate assets.

Still, to the extent that Harrods BA intended to improperly divert
non-South American Harrods UK customers, see Factor (V), and to
the extent that the sale of the Domain Names would be based on the
value to Harrods UK of preventing this practice, then Factor (VI) does
demonstrate bad faith intent to profit and weighs in favor of Harrods
UK. Because ample evidence supports the district court’s determina-tion
under Factor (V) that Harrods BA intended to use the "Harrods"
name to divert Harrods UK’s customers, the evidence also supports
the court’s conclusion that Harrods BA intended to use these Domain
Names to improperly leverage a higher price from Harrods UK. Fac-tor
(VI) therefore weighs in favor of Harrods UK.

7.

Factor (VII): "the person’s provision of material and misleading
false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate
contact information, or the person’s prior conduct indicating a pattern
of such conduct." 15 U.S.C. § 1125(d)(1)(B)(i)(VII). The district
court properly found this factor favored the Domain Names because
Harrods BA never provided false or misleading contact information.

8.

Factor (VIII): "the person’s registration or acquisition of multiple
domain names which the person knows are identical or confusingly
similar to marks of others that are distinctive at the time of registra-tion
of such domain names, or dilutive of famous marks of others that
are famous at the time of registration of such domain names, without
regard to the goods or services of the parties." 15 U.S.C.
§ 1125(d)(1)(B)(i)(VIII). This factor was intended by Congress to tar-get
the "practice known as ‘warehousing,’ in which a cyberpirate reg-isters
multiple domain names — sometimes hundreds, even thousands
— that mirror the trademarks of others." H.R. Rep. No. 106-412, at
13. See also Sen. Rep. No. 106-140, at 16. While the registration of
multiple domain names is a factor that a court may consider in deter-mining
bad faith, Congress warned that the ACPA "does not suggest
that the mere registration of multiple domain names is an indication
of bad faith." H.R. Rep. No. 106-412, at 13. See also Sen. Rep. No.
106 140, at 16. This is presumably because many companies legiti-mately
register many, even hundreds, of domain names consisting of
various permutations of their own trademarks in combination with
other words. "Just as they can have several telephone numbers, com-panies
can register multiple domain names in order to maximize the
chances that customers will find their web site." Porsche Cars North
Am., Inc. v. Porsche.com, 51 F. Supp. 2d 707, 709 (E.D. Va. 1999),
vacated on other grounds, 215 F.3d 1320 (4th Cir. 2000) (unpub-lished
per curiam).

Factor (VIII) nominally favors Harrods UK because Harrods BA
did register multiple domain names that it knew were identical or con-fusingly
similar to the mark of another, Harrods UK. We say "nomi-nally
favors" because Factor (VIII) will be triggered whenever there
are concurrent users of a trademark. For example, Delta Airline’s reg-istration
of delta.com constitutes the registration of a mark that it
knows is identical to the mark of another, namely, Delta Faucets. But the legislative history of the ACPA shows that Congress recognized
the legitimacy of concurrent uses of trademarks. See 145 Cong. Rec.
S14,714 (daily ed. Nov. 17, 1999) (recognizing the rights of a lawful
concurrent user of a name shared with another trademark owner). In
the case of legitimate concurrent users, Factor (VIII) does not reliably
indicate anything about the bad faith (or lack thereof) of the domain
name registrant. Thus, standing alone, the fact that a company named
Harrods of Buenos Aires with trademark rights in the name "Harrods"
registers hundreds of Harrods-related domain names does not indicate
bad faith.
13

Nonetheless, the district court found that this factor "heavily
favored" Harrods UK. The court reasoned that because Harrods BA
intended to use the names outside of South America and because it
"[had] trademark rights only in South America, [Harrods BA’s] regis-trations
of these Domain Names in the United States amount to regis-trations
of ‘others’ marks.’" We disagree with the suggestion that
either the registrant’s planned future use of a domain name or the
physical location of the domain name registry influences whether that
name incorporates "marks of others." Factor (VIII) simply asks a
court to compare the domain name in question with the marks of the
ACPA plaintiff.
14

In sum, because Harrods BA is a concurrent user of the mark "Har-rods,"
its registration of Harrods-related domain names nominally sat-isfies
Factor (VIII) because Harrods BA registered multiple names
identical or confusingly similar to the marks of others. This is true,
however, for all concurrent users of marks who register domain
names incorporating their marks. Factor (VIII) therefore cannot be
weighed against the Domain Names in the bad faith calculus.

9.

Factor (IX): "the extent to which the mark incorporated in the per-son’s
domain name registration is or is not distinctive and famous
within the meaning of subsection (c)(1) of this section." 15 U.S.C.
§ 1125(d)(1)(B)(i)(IX). As the district court noted, "Harrods" is both
distinctive and famous as it relates to Harrods UK. Thus, this factor
nominally favors Harrods UK. Like Factor (VIII), however, this fac-tor
is triggered in many instances involving concurrent users of a
mark. Because Harrods BA also has trademark rights in "Harrods,"
this factor cannot be given much weight.

* * *

As noted at the outset, this case presents us with the unusual situa-tion
of two companies named "Harrods," both with legitimate rights
to use the "Harrods" name in different geographic regions. It is not
surprising that concurrent users of a shared mark would resort to liti-gation
under the recently enacted ACPA in an attempt to gain through
the courts what they failed to obtain by speedy registration. In situa-tions
like these, many of the bad faith factors under the ACPA will
have been triggered; for example, the first registrant may have offered
to sell the disputed names to its competitor (Factor (VI)), and one or
both of the companies may have registered many, perhaps even hun-dreds,
of domain names incorporating the shared mark of the compet-itor
(Factors (VIII) and (IX)). For two concurrent users of a mark,
however, this sort of behavior is not cybersquatting; it is simply part
of legitimate competition. The ACPA was not designed to provide a
battlefield for legitimate concurrent trademark users. See 145 Cong.
Rec. S14,713 ("[T]here may be concurring uses of the same name that
are noninfringing . . . [and that] would not tend to indicate a bad faith
intent on the part of the registrant."). Nonetheless, while trademark law permits concurrent use of the same mark under certain conditions,
a concurrent user of a mark may still violate the other user’s trade-mark
rights in certain cases. For example, if Delta Airlines wished to
expand its business into the kitchen faucet market, it would have to
do so under a name other than "Delta."

We have reviewed the facts of this case under the nine bad faith
factors listed in § 1125(d)(1)(B)(i). Factor (IV) is not relevant because
these names were registered for a commercial purpose. Factors (I),
(II), and (VII) favor the Domain Names because Harrods BA is com-monly
known as Harrods in South America, has registered Harrods
trademarks, and did not provide false contact information when regis-tering
these names. In addition, as noted in our discussion of Factor
(III), Harrods BA’s history of offering goods and services under the
"Harrods" mark is another factor that favors the Domain Names. And
given these circumstances, Harrods BA’s failure to offer goods and
services online through these domain names (Factor (III)) does not
indicate bad faith on its part. Likewise, while Factors (VIII) and (IX),
by their terms, suggest bad faith in this case, we have explained that
given the facts, these factors are not entitled to much, if any, weight.
Harrods BA did register multiple names incorporating a distinctive
and famous mark of another (Factors (VIII) and (IX)), but this is true
of all concurrent users who register domain names incorporating the
shared mark. Finally, Factors (V) and (VI) heavily favor Harrods UK.
The evidence supports the district court’s conclusion that Harrods BA
registered these names with the intent to divert and confuse non-South
American customers seeking to do business with Harrods UK, and
that Harrods BA sought to extract a higher price for the sale of the
Domain Names from Harrods UK as a result. Harrods BA may be
presumptively entitled to register Harrods-related domain names
because it is commonly known as Harrods and has trademark protec-tion
for that name. But these facts do not give Harrods BA an absolute
right to use Harrods-related domain names. Here, the evidence dem-onstrates
that Harrods BA registered the 54 Domain Names with the
intent to use those names in a manner calculated to confuse and
deceive non-South American consumers seeking to do business with
Harrods UK. This crosses the line from a permissible intent to use
Harrods BA’s own South American "Harrods" trademark on the Inter-net
to an impermissible intent to profit online from the protected mark
of Harrods UK. Thus, the evidence as a whole supports the district court’s finding of a bad faith intent to profit from the goodwill of Har-rods
UK’s mark on the part of Harrods BA with regard to the 54
Domain Names that went to trial. Accordingly, we affirm the judg-ment
of the district court as to the 54 Domain Names.
15

B.

Finally, we turn to consider the district court’s grant of summary
judgment to the six Argentina Names.
16
We have just affirmed the
district court’s determination after trial that Harrods BA registered the
54 Domain Names with a bad faith intent to profit, so it might seem
that we must necessarily reverse the court’s earlier grant of summary
judgment to the Argentina Names on the bad faith claim. Ultimately,
we do reverse the district court’s grant of summary judgment to the
six Argentina Names and remand for further proceedings. This deci-sion,
however, does not follow as a matter of course from our affir-mance
of the bad faith finding at trial. Instead, as explained below,
the district court’s grant of summary judgment must be examined
independently of the evidence presented at trial.

In September of 2000 the six Argentina Names filed a separate
motion for summary judgment. The Argentina Names argued that at
least with respect to these six names, no reasonable factfinder could
find bad faith on the part of Harrods BA. Harrods UK responded that
even if, for example, Harrods BA had some sort of presumptive right to register and use harrodsbuenosaires, it could not intentionally use
that name to try to deceive non-South American customers searching
for Harrods UK. The Argentina Names pointed out that Harrods BA
has intellectual property rights in the name "Harrods" in Argentina
and that harrodsbuenosaires simply reflected the legal name of Har-rods
BA. On October 6, 2000, the district court awarded summary
judgment to the six Argentina Names, even though discovery was just
beginning. On appeal, as it did in its opposition to the Argentina
Names’ motion for summary judgment, Harrods UK argues on the
one hand that the evidence before the district court created a genuine
issue of material fact, precluding summary judgment, and on the other
hand that further discovery was needed in order to unearth more evi-dence
that would demonstrate a genuine issue of material fact. We
consider these arguments in turn.

1.

In reviewing a district court’s grant of summary judgment, we con-sider
only those matters that were before the district court when it
entered the judgment. "Our review is confined to an examination of
the materials before the court at the time the rulings were made. Nei-ther
the evidence offered subsequently at the trial nor the verdict is
relevant." Voutour v. Vitale, 761 F.2d 812, 817 (1st Cir. 1985), cert.
denied, 474 U.S. 1100 (1986). See also Lippi v. City Bank, 955 F.2d
599, 604 (9th Cir. 1992); Nissho-Iwai Am. Corp. v. Kline, 845 F.2d
1300, 1307 (5th Cir. 1988); 10A Charles A. Wright, Arthur R. Miller
& Mary Kay Kane, Federal Practice & Procedure § 2716, at 282 (3d
ed. 1998). That is to say, we do not consider later-discovered evi-dence
of bad faith intent, such as, for example, the Capuro business
report, to determine whether a genuine issue of material fact existed
at the time the district court granted summary judgment. Harrods UK
presented the following evidence of bad faith to the district court in
its opposition to the Domain Names’ motion for summary judgment:
Harrods BA had no right to use the "Harrods" name in the United
States, had registered multiple Harrods-related domain names, had
registered them in the United States, and had indicated in press
releases that its use of the Harrods-related names would preclude Har-rods
UK from using these names. On the basis of this evidence, we
conclude that no reasonable factfinder could have found bad faith
intent on the part of Harrods BA.

As explained in part III.A, Harrods BA’s use of a United States-based
domain name registry is not, standing alone, indicative of an
intent on the part of Harrods BA to market to U.S. consumers. Like-wise,
as also explained in part III.A, the registration of multiple
Harrods-related domain names by a company long known by the
name Harrods (Buenos Aires) Limited is not indicative of bad faith.
Harrods UK relies heavily on a news article from the Reuters news
service as evidence of bad faith intent. In the article, a Harrods BA
manager states that Harrods BA had registered more than 100
Harrods-related domain names "which the British Harrods will now
be unable to use." Harrods UK claims that this statement indicates
that Harrods BA’s purpose in registering these domain names was to
prevent Harrods UK from registering them. According to Harrods
UK, this purpose indicates bad faith. Harrods UK relies on Sporty’s
Farm L.L.C. v. Sportsman’s Market, Inc., 202 F.3d 489, 499 (2d Cir.
2000), a case where the court found bad faith based on, among other
things, the fact that the defendant "registered sportys.com for the pri-mary
purpose of keeping [the plaintiff] from using that domain
name." The court in Sporty’s Farm, however, noted that the case
involved "unique circumstances . . . which do not fit neatly into the
specific factors enumerated by Congress." Id. The defendant had cre-ated
a corporation named "Sporty’s Farm" only after it had registered
sportys.com for the purpose of depriving the company it wished to
compete with, Sportman’s Market, of use of the name. Here, both
Harrods BA and Harrods UK had used the "Harrods" mark for dec-ades.
The fact that the two would race to register Harrods-related
domain names is not surprising, nor does it indicate bad faith.
17
More-over,
the Reuters article goes on to report that Harrods BA "is only
able to use the Harrods logo for delivery within South America."
Thus, when the Argentina Names moved for summary judgment, Har-rods
UK had simply presented evidence that a company named Har-rods
(Buenos Aires) Limited with trademark rights in the name
"Harrods" throughout much of South America had registered a num-ber
of Harrods-related domain names in the United States, had said
that Harrods UK would be unable to use those names, and had
announced its intent to use those names to sell goods and services in South America. Based on this evidence, no reasonable factfinder
could determine that Harrods BA had registered harrodsbuenosaires
and harrodsargentina in bad faith. This evidence failed to create a
genuine issue of material fact on the question of bad faith intent suffi-cient
to withstand summary judgment for the six Argentina Names.

2.

The remaining question is whether the district court granted sum-mary
judgment to the Argentina Names prematurely, before Harrods
UK had an adequate opportunity through discovery to find evidence
in the sole possession of Harrods BA that might indicate bad faith.
One item not discovered at the time of summary judgment is the
Capuro report, which we have relied on heavily in part III.A to affirm
the district court’s conclusion that the 54 Domain Names were regis-tered
with the bad faith intent to divert Harrods UK customers. As
explained above, we do not consider items not before the district
court, such as the Capuro report, in reviewing the court’s grant of
summary judgment. Still, we must consider whether the district court
granted summary judgment before Harrods UK had an adequate
opportunity to discover potentially incriminating evidence such as the
Capuro report.

We review for abuse of discretion the district court’s refusal to
allow Harrods UK the opportunity to engage in discovery prior to the
entry of summary judgment. Mid Atlantic Telecom, Inc. v. Long Dis-tance
Servs., Inc., 18 F.3d 260, 262 (4th Cir. 1994). Generally speak-ing,
"summary judgment [must] be refused where the nonmoving
party has not had the opportunity to discover information that is
essential to his opposition." Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 n.5 (1986). At the same time, the party opposing summary
judgment "cannot complain that summary judgment was granted
without discovery unless that party had made an attempt to oppose the
motion on the grounds that more time was needed for discovery."
Evans v. Technologies Applications & Service Co., 80 F.3d 954, 961
(4th Cir. 1996). If a party believes that more discovery is necessary
for it to demonstrate a genuine issue of material fact, the proper
course is to file a Rule 56(f) affidavit stating "that it could not prop-erly
oppose a motion for summary judgment without a chance to con-duct
discovery." Id. In this case, although Harrods UK did advise the district court that it needed discovery, it did not file a Rule 56(f) affi-davit.
Thus, we must reconcile the "general rule [that] summary judg-ment
is appropriate only after ‘adequate time for discovery,’" id.
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)), with
Rule 56(f), which requires a party opposing summary judgment on
the grounds that more discovery is needed to file an affidavit making
that point. We have warned litigants that we "place great weight on
the Rule 56(f) affidavit" and that "‘[a] reference to Rule 56(f) and the
need for additional discovery in a memorandum of law in opposition
to a motion for summary judgment is not an adequate substitute for
a Rule 56(f) affidavit.’" Evans, 80 F.3d at 961 (quoting Paddington
Partners v. Bouchard, 34 F.3d 1132, 1137 (2d Cir. 1994)). Indeed,
"‘the failure to file an affidavit under Rule 56(f) is itself sufficient
grounds to reject a claim that the opportunity for discovery was inade-quate.
’" Id. Nevertheless, in some cases courts have held that sum-mary
judgment was premature even when the opposing party failed
to file a Rule 56(f) affidavit. See, e.g., Hellstrom v. U.S. Dep’t of Vet-erans
Affairs, 201 F.3d 94 (2d Cir. 2000); Farmer v. Brennan, 81
F.3d 1444, 1449-50 (7th Cir. 1996); Dean v. Barber, 951 F.2d 1210,
1214 n.3 (11th Cir. 1992); First Chicago Int’l v. United Exchange
Co., 836 F.2d 1375, 1380-81 (D.C. Cir. 1988). "The purpose of the
affidavit is to ensure that the nonmoving party is invoking the protec-tions
of Rule 56(f) in good faith and to afford the trial court the show-ing
necessary to assess the merit of a party’s opposition." First
Chicago, 836 F.2d at 1380. When the nonmoving party, through no
fault of its own, has had little or no opportunity to conduct discovery,
and when fact-intensive issues, such as intent, are involved, courts
have not always insisted on a Rule 56(f) affidavit if the nonmoving
party has adequately informed the district court that the motion is pre-mature
and that more discovery is necessary. See id. at 1380-81; Hell-strom,
201 F.3d at 97-98; Farmer, 81 F.3d at 1449-50; Dean, 951
F.2d at 1214 n.3. Specifically, if the nonmoving party’s objections
before the district court "served as the functional equivalent of an affi-davit,"
First Chicago, 836 F.2d at 1380, and if the nonmoving party
was not lax in pursuing discovery, then we may consider whether the
district court granted summary judgment prematurely, even though
the nonmovant did not record its concerns in the form of a Rule 56(f)
affidavit.
18

At the time the district court granted summary judgment to the six
Argentina Names, the court noted that "there’s been almost no discov-ery
conducted in this case" and that "summary judgment isn’t usually
granted or even considered this early in the proceedings . . . ." More-over,
in its order after trial awarding judgment to Harrods UK against
the 54 Names, the district court added that "the facts revealed at trial
have changed our view as to even [the] six [Argentina] Domain
Names." Thus, the district court itself later expressed doubt that its
summary judgment ruling as to the six Names was made with all of
the material facts on the table. Harrods UK’s amended complaint was
filed on August 23, 2000, and the Argentina Names moved for sum-mary
judgment just 15 days later, on September 7, 2000. The district
court granted summary judgment to the Argentina Names at the
motion hearing on October 6, 2000, just over six weeks after the
amended complaint was filed. According to the initial scheduling
order, entered September 11, 2000, discovery was to be completed by
December 29, 2000. The docket sheet indicates that the Domain
Names did not respond to Harrods UK’s first set of interrogatories
until November 2, 2000, and we can find no evidence of depositions
before December of 2000. Thus, summary judgment was granted to
the Argentina Names when little or no discovery had been completed,
and there is nothing to suggest that this was due to inactivity or delay
on the part of Harrods UK.

Moreover, Harrods UK adequately fulfilled the purpose of Rule
56(f) by putting the district court on notice of the reasons why sum-mary
judgment was premature. In its memorandum opposing Harrods
BA’s motion for summary judgment, Harrods UK argued that "[f]urther evidence of bad faith is uniquely in the possession of defen-dants,
and Harrods [UK] will need to seek and obtain discovery,
which is only beginning, before it can present further evidence on bad
faith and other issues. See, e.g., Fed. R. Civ. P. 56(f)." One of the
headings in Harrods UK’s memorandum in opposition stated that
Harrods BA’s "bad faith is a material issue of fact that precludes entry
of summary judgment absent further discovery." (emphasis added).
Several times during the hearing on Harrods BA’s motion for sum-mary
judgment, Harrods UK repeated its concern about the need for
more discovery. At one point, Harrods UK stated, "The question is
still: Would those marks . . . tend to confuse the consumer, the con-sumer
in the United States? . . . [W]e’re entitled to develop factual
evidence that, yes, they do have a tendency to confuse." Later, the
district court asked Harrods UK, "[I]s there any evidence in this
record [that] they’ve asked your client to pay them a fee in exchange
for those names?" Harrods UK responded that there had been negotia-tions,
"but another part of that factor is whether they’ve offered to sell
the name to somebody else. And we would want discovery on that."

In First Chicago the court concluded that "the combination of [the
nonmovant’s] opposition to dismissal on the merits, the accompany-ing
Statement of Material Issues, and the outstanding discovery
requests served as an adequate substitute for a Rule 56(f) affidavit."
First Chicago, 836 F.2d at 1380-81. As we have indicated, Harrods
UK, both in its opposition papers and at the motion hearing, informed
the district court that more discovery was needed. It is not clear from
this record whether Harrods UK had outstanding discovery requests
pending when summary judgment was granted, as was the case in
First Chicago. But if it did not, the only reason is that summary judg-ment
was granted so early in the proceedings: the district court
granted the Argentina Names’ motion for summary judgment with
over eleven of the fifteen weeks of scheduled discovery still remain-ing.
Moreover, the district court clearly understood that Harrods UK
would be pursuing discovery in the coming weeks and months. The
court thus opened the summary judgment hearing by noting that
"there’s been almost no discovery conducted in this case," to which
the Domain Names’ lawyer responded, "It’s beginning. It’s in pro-cess."
Even though it recognized that discovery was just getting under
way, the district court decided to grant summary judgment to the six
Argentina Names because it concluded that no discovery was needed to resolve the case as to those Names. The court did not use Harrods
UK’s failure to submit a Rule 56(f) affidavit as a basis for granting
early summary judgment to the six Names.

In sum, the district court granted summary judgment to the six
Argentina Names soon after the complaint was filed (about six weeks)
and prior to almost any discovery, and Harrods UK was not dilatory
in pursuing discovery. Moreover, Harrods UK made it clear to the
district court in the summary judgment proceedings that its case
hinged on its ability to establish Harrods BA’s bad faith, which is a
fact-specific issue. Harrods UK repeatedly explained to the district
court both in writing and orally that more discovery was needed and
that it was too early to decide the motion for summary judgment. The
district court was thus fully informed about why Harrods UK was
requesting the normal time to conduct discovery, and the absence of
a Rule 56(f) affidavit did not figure in the court’s decision to grant
early summary judgment to the six Argentina Names. In these cir-cumstances,
the purposes of Rule 56(f) were served. As a result, it
would be unfair to penalize Harrods UK for failing to file the formal
affidavit called for by the rule.
19

We now consider whether the district court granted summary judg-ment
to the six Argentina Names before Harrods UK had adequate
time to pursue discovery. Generally speaking, "[s]ufficient time for
discovery is considered especially important when the relevant facts
are exclusively in the control of the opposing party." 10B Charles A.
Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice &
Procedure § 2741, at 419 (3d ed. 1998). And summary judgment
prior to discovery can be particularly inappropriate when a case
involves complex factual questions about intent and motive. See Illi-nois
State Employees Union v. Lewis, 473 F.2d 561, 565-66 (7th Cir. 1972) (motive); Int’l Raw Materials, Ltd. v. Stauffer Chem. Co., 898
F.2d 946, 949-50 (3d Cir. 1990) (complex questions). Both of these
circumstances were present in this case. First, relevant facts about
Harrods BA’s intent were in the exclusive possession of Harrods BA.
Second, the issue of Harrods BA’s intent — whether it registered the
Argentina Names in bad faith — was a complex one that required
development of the facts bearing on the nine factors listed in
§ 1125(d)(1)(B)(i). For example, as Harrods UK made clear in the
summary judgment proceedings, further discovery was necessary to
shed light on Harrods BA’s motive in registering the Argentina
Names. See 15 U.S.C. § 1125(d)(1)(B)(i)(V). We therefore conclude
that the district court’s grant of summary judgment to the six Argen-tina
Names was premature, and we reverse the summary judgment
and remand for further proceedings, including any other discovery
that is necessary.

We noted above that the district court itself later questioned its
decision to grant summary judgment to the six Argentina Names.
Indeed, the district court went so far as to say that if we were to
reverse the summary judgment and remand, the court "would enter
judgment against the six domain names . . . for the reasons stated in
th[e] Memorandum Opinion [ruling against the 54 Domain Names]."
We believe, however, that it is still an open question whether the six
Argentina Names warrant the same treatment as the 54 Names. As the
district court noted when it granted summary judgment to the Argen-tina
Names, there are important differences between the two sets of
names. For example, the district court explained that "anyone looking
at [the six Argentina Names] is going to understand that they are
linked with South America." This observation may have bearing on,
among other things, whether the Argentina Names are "identical or
confusingly similar" to Harrods UK’s mark. In making these observa-tions,
we do not prejudge the case. We are simply emphasizing how
important it is for the district court on remand to take a fresh look at
the Argentina Names in light of the provisions of the ACPA and
whatever evidence may be relevant to those Names.

* * *

Click the case caption above for the full
text of the Court's opinion.

To sum up, we hold that 15 U.S.C. § 1125(d)(2) authorizes an in
rem action against domain names based on claims of infringement and dilution as well as bad faith registration. Accordingly, we reverse
the district court’s dismissal of the infringement and dilution claims
and remand for further proceedings. (As noted above, because we
affirm the judgment as to the 54 Names, the district court on remand
need only consider Harrods UK’s infringement and dilution claims
with respect to the six Argentina Names.) We also hold that the dis-trict
court did not err in concluding that Harrods BA registered the 54
Domain Names in bad faith, specifically, that Harrods BA registered
the 54 Names with the intent to use those names to sell goods and ser-vices
to non-South American consumers seeking to do business with
Harrods UK. Accordingly, we affirm the district court’s judgment and
order requiring the transfer of the 54 Names to Harrods UK. Finally,
we hold that the district court’s grant of summary judgment to the six
Argentina Names was premature, so we reverse the summary judg-ment
and remand for further proceedings.

AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED

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