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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

VIRTUALITY L.L.C. and NOW CORPORATION Plaintiffs vs. BATA LIMITED Defendant * * *

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CIVIL NO. H-00-3054

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MEMORANDUM AND ORDER

This civil action arises as a result of a an internet domain name1 dispute between the parties. Besides seeking under federal trademark law a declaratory judgment ordering that defendant Bata Limited ("Bata") has no rights or interests in certain domain names registered plaintiffs by plaintiff Virtuality, damages L.L.C. under

("Virtuality"), Maryland law.

seek

compensatory

Presently pending before the Court is defendant's motion to dismiss the complaint on the grounds that defendant Bata is not subject to jurisdiction in Maryland either as to plaintiffs' federal claim or as to their claims asserted under Maryland law.

Web pages on the internet are designated by an address called a "domain name." Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 492 (2d Cir. 2000).

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Memoranda and exhibits in support of and in opposition to this motion have been filed by the parties. Following its review of the pleadings, memoranda and

exhibits, this Court has concluded that no hearing is necessary for a decision on the pending motion. For the reasons stated herein, the See Local Rule 105.6. motion to dismiss of

defendant Bata will be granted in part and denied in part. I Background Facts Plaintiff Virtuality is a Michigan limited liability company which, according NOW to the complaint, ("NOW"), is a the predecessor to

plaintiff

Corporation

Nevada

corporation. 2

Defendant Bata is a federally chartered Canadian corporation, having its headquarters in Toronto, Canada. Bata and its affiliated companies throughout the world are the registered owners of numerous registered trademarks which use the word "POWER" in different forms. Licensees of Bata have

made extensive use of its POWER trademarks on footwear sold in the United States and elsewhere throughout the world. also the registered and owner of the internet Bata has domain Bata is names a

"bata.com"

"powerfootwear.com."

maintained

website at "www.bata.com" since 1995.

In 1999, Virtuality began

preliminary work on a website-based business which would provide internet users with a no-cost search engine. This website was

to feature interactive advertising based upon search engine and

According to defendant Bata, both Virtuality and NOW are solely owned by the same individual. 2

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browser

software

being

developed.

On

September

29,

1999,

Virtuality registered the domain name "powershoes.com", and on April 17, 2000, Virtuality registered the domain names

"powershoes.net" and "powershoes.org". Each of these domain names was registered with domain name Registrar Alabanza, Inc. ("Alabanza"). On February 10, 2000, plaintiff NOW was

incorporated under the laws of the State of Nevada. Virtuality has agreed to submit disputes relating to its three domain names to the Uniform Domain Name Dispute Resolution Policy and Rules of the Internet Corporation of Assigned Names and Numbers ("ICANN"). against Virtuality On July 21, 2000, Bata filed a complaint a dispute resolution provider

before

authorized by ICANN.

That provider is known as "eResolution" In that complaint,

and is headquartered in Montreal, Canada.

Bata sought to cancel, pursuant to the aforesaid Policy and Rules, Virtuality's domain names "powershoes.com," Since Virtuality has

"powershoes.net" and "powershoes.org."

agreed to submit domain name disputes to a dispute resolution provider authorized by ICANN, Bata challenged in the eResoluton administrative proceeding Virtuality's right to use the three domain names at issue. On August 28, 2000, Virtuality filed with eResolution its response to Bata's complaint in the administrative proceeding. Plaintiff NOW did not join in that response nor did plaintiff NOW participate in any way in the Canadian administrative

proceeding. by

Riccardo Roversi was the single adjudicator chosen to decide the 3 domain name dispute between

eResolution

Virtuality and Bata. On September 20, 2000, Mr. Roversi rendered his decision. He

found

(1)

that

Virtuality's

domain

names

were

confusingly

similar to Bata's registered domain name "powerfootwear.com"; (2) that Virtuality was making no legitimate use of its domain names; and (3) that Virtuality's behavior fell within the

definition of "bad faith" established by Article 4(b)(1) of ICANN's Uniform Mr. Domain Roversi Name Dispute that and Resolution the domain Policy. names be

Accordingly,

ordered

"powershoes.com,"

"powershoes.net,"

"powershoes.org"

transferred to Bata. with respect to any

No decision was made by the adjudicator interests which NOW might have in

Virtuality's domain names. As required by the ICANN Policy and Rules, Bata had agreed to: submit, with respect to any challenge to a decision in this administrative proceeding canceling or transferring the domain name, to the jurisdiction of the Courts in at least one specified Mutual Jurisdiction (as that term is defined in the Policy). Under the Policy and Rules, Bata therefore had, if there was a court challenge to a decision in the administrative

proceeding, the choice of electing either the jurisdiction of the court where the registered owner of the domain name at issue carried on its business or the jurisdiction of the court where the domain name Registrar Alabanza carried on its business. 4 As

its choice of jurisdiction for any challenge by Virtuality to the adverse decision rendered in the Canadian administrative proceeding, Bata elected the jurisdiction of the court where Registrar Alabanza did business. Alabanza carries on its

business in Baltimore, Maryland. On October 11, 2000, plaintiffs filed the pending complaint in this Court.3 Inter alia, they assert that the adjudicator's

award contains material errors of fact and misrepresentations and they seek appropriate redress in this civil action. II Plaintiffs' Claims Count I of the complaint is brought under federal trademark law and asks this Court to order that plaintiff's use of the domain name "powershoes" does not cause confusion as to the origin, sponsorship or approval of the owner of the registered mark "POWER" and that plaintiff has all rights and interests in

its three registered domain names. Counts II - VII seek compensatory damages under Maryland law. Count II alleges that defendant Bata published false and statements in the administrative proceeding and

defamatory

branded plaintiff

a "cybersquatter."

Count III asserts that

defendant Bata caused statements to be published slandering plaintiff's title in multiple domain name registrations and On October 5, 2000, an almost identical complaint was filed by plaintiff NOW in the United States District Court for the Eastern District of Michigan. When counsel for NOW learned that Bata had elected the Maryland jurisdiction of the Registrar for the conduct of the litigation, NOW and Virtuality filed this action in this Court on October 11, 2000. 5
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associated business units. Count IV is based on a theory of conversion by fraud. It

is alleged that defendant Bata caused to be published over the worldwide internet statements which were false and calculated to cause the arbitrator to mistakenly order a transfer of several domain name registrations from plaintiff to defendant. seeks a recovery for "reverse passing off." Count V

It is alleged that

plaintiff is the proper owner of the mark "powershoes" for internet and marketing services and that defendant does not have any right to the powershoes series of domain names. Count VI seeks a recovery for fraud and unfair competition. In Count VII, plaintiffs allege that defendant's conduct

constituted tortious interference with a prospective economic advantage. As relief, plaintiff seeks a declaratory judgment,

compensatory damages, punitive damages, attorneys' fees and costs. III Applicable Principles of Law Under Rule 12(b)(2), F.R.Civ.P., a civil action is subject to dismissal if the forum court lacks the requisite personal jurisdiction. In support of its motion to dismiss, defendant

Bata argues that this Court lacks jurisdiction of plaintiffs' Count I claim because, according to the complaint, the three domain names were assigned by Virtuality to NOW and because

Bata has never consented to jurisdiction in Maryland of any suit brought by NOW. Rule 17(a), F.R.Civ.P. requires that every

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action be commenced in the name of the real party in interest. In support of its motion to dismiss Counts II - VII, defendant Bata argues that it is not subject to either the specific jurisdiction or the general jurisdiction of this Court by virtue of any activities within Maryland. causes of action not raising federal With respect to personal

questions,

jurisdiction may be exercised (1) if authorized by Maryland's Long Arm statute, Md. Code Ann. Cts. & Jud. Proc.

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