Court limits the scope of a challenge to a domain name ruling

The ruling comes as a second victory, at least in part, for Bata Limited, a large Canadian manufacturer, which previously won domain names from an alleged cybersquatter. That victory was before eResolution, a Canadian dispute resolution provider that operates under the same rules as the better-known World Intellectual Property Organisation (WIPO). The losing party, Virtuality, went to a US court in Maryland in the hope of reversing the decision and winning damages from Bata, alleging reverse hijacking of its domain names and defamation for labelling it a cybersquatter.

Bata asked the District Court to dismiss the claim by Virtuality, which had owned the domain name PowerShoes.com and similar others until the eResolution decision. Bata, which won the names because it showed it had trade marks for “power” footwear, argued that, being Canadian and with no Maryland activities, it was not subject to jurisdiction in a Maryland court for either the federal trade mark law claim to recover the domain name or the compensatory claim under Maryland law.

The court found that it did in fact have jurisdiction to hear the case over the federal trade mark claim because, when the case was taken by Bata to eResolution under the rules of ICANN, Bata consented to the jurisdiction of a court selected by it for consideration of any challenge to a decision of eResolution. During that proceeding, Bata consented to a hearing before a Maryland court.

However, the court found that jurisdiction of the claims under Maryland law did not necessarily follow. Because Bata lacked “extensive, continuous and systematic” contacts with Maryland, the court had no jurisdiction to hear these claims. Virtuality argued that, because Bata ran a web site at Bata.com, the site constituted a “persistent course of conduct in the state.” The court observed that the web site is passive, merely positing information and not selling products on-line. The court added,

"Clearly, Bata's consent to the jurisdiction of this Court for the limited purpose of reviewing the Canadian administrative decision cannot serve as the basis for the Court's exercise of general jurisdiction in Maryland as to other claims asserted by Virtuality."