IP Law Daily, TRADEMARKS—Neb. Sup. Ct.: CHARTER WEST BANK mark ruled not distinctive or famous to support cybersquatting claim, (May 15, 2023)

By Brian Craig, J.D.

The bank’s CHARTER WEST BANK mark did not qualify for protection under the federal Anticybersquatting Consumer Protection Act.

In an action brought against former bank customers who registered a domain name, the Nebraska Supreme Court has held Charter West Bank failed prove its CHARTER WEST BANK mark was distinctive or famous to qualify for protection under the federal Anticybersquatting Consumer Protection Act (ACPA). In vacating a preliminary injunction entered by the state trial court and dismissing the action, the Nebraska Supreme Court held that there was no evidence to show that the bank’s mark was distinctive or famous at the time the former bank customers registered the domain name (Charter West Bank v. Riddle, May 12, 2023, Cassel, W.).

Charter West Bank, a bank with multiple branches in Nebraska, brought an action against former bank customers in Nebraska state court alleging a violation of the Anticybersquatting Consumer Protection Act (ACPA) and the Lanham Act. The bank claimed that the former bank customers threatened to use a website to disseminate adverse information unless the bank purchased the website for $1 million. The former bank customers, a married couple, previously applied for a loan with the bank and the bank denied the mortgage application. The former bank customers registered the domain name “www.charterwestbank.com” during the pendency of previous litigation in federal court between the bank and the former bank customers. The former bank customers included information on the website critical of the bank. The Nebraska state trial court issued a permanent injunction in the bank’s favor prohibiting the former bank customers from using the domain name or disseminating information on the website. The former bank customers appealed.

Subject matter jurisdiction. The Nebraska Supreme Court first held that the Nebraska state court has proper subject matter jurisdiction to decide the case and appeal. The U.S. Supreme Court has held that for cases arising under federal law, there is a deeply rooted presumption in favor of concurrent state court jurisdiction, rebuttable if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim. Other federal and state courts have held the federal and state courts have concurrent jurisdiction to decide claims under the Lanham Act. Seeing nothing that affirmatively ousts the state courts of jurisdiction over claims arising under the Lanham Act and the ACPA, the Nebraska Supreme Court held that the federal and state courts have concurrent jurisdiction.

Cybersquatting claim. The Nebraska Supreme Court held, however, that the bank failed to show that it owned a distinctive or famous to qualify for protection under the ACPA. To prevail in a cybersquatting claim under the ACPA, one of the elements that the plaintiff must show is that mark was distinctive or famous at the time of registration of the defendant’s domain name. An identifying mark is distinctive and capable of being protected if it either (1) is inherently distinctive or (2) has acquired distinctiveness through secondary meaning.

In this case, the bank failed to show that the CHARTER WEST BANK mark is inherently distinctive. The words “charter”? and “west”? are, at most, merely descriptive terms that are not inherently distinctive.? The bank presented no evidence in the record establishing secondary meaning. Likewise, the Nebraska Supreme Court determined that the evidence failed to demonstrate that the bank’s mark was “famous” at the time of registration of the domain name. The bank needed to produce some evidence demonstrating that its mark was either “distinctive” or “famous” at the time the former bank customers registered the domain name.

The bank argued that the ACPA requires only that the defendant use the domain name in bad faith with intent to profit and must use a domain that contains a mark that is confusingly similar to the owner’s mark. The bank overlooked the statutory requirement and element that the mark must be “distinctive” or “famous” at the time of registration of the offending domain name. Because the bank failed to present evidence to support this element under the ACPA, the Nebraska Supreme Court reversed the decision of the trial court, vacated the entry of the preliminary injunction, and dismissed the action.

The Case is No. S-22-557.

Attorneys: Jeffrey A. Silver (Silver Kolker LLP) for Charter West Bank. Justin E. Riddle, pro se.

Companies: Charter West Bank

Cases: Trademark TechnologyInternet NebraskaNews GCNNews