JUDGES: Harold Baer Jr., U.S.D.J.

OPINIONBY: Harold Baer Jr.

OPINION: MEMORANDUM & ORDER
 
Hon. HAROLD BAER, JR., District Judge: n1
 
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n1 James Wallick, a second-year law student at Columbia University School of Law, assisted in the research and preparation of this Memorandum and Order.
 
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

Plaintiff Mattel, Inc. ("Mattel") commenced this action against defendants Internet Dimensions, Inc. ("Internet Dimensions") and Benjamin Schiff with the filing of a summons and complaint on September 28, 1999, asserting causes of action for (1) trademark infringement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2)  [*2]  trademark dilution under Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); (3) violation of the Anti-Cybersquatting Consumer Protection Act of 1999 ("ACPA" or "the Act"), Section 43(d) of the Lanham Act of 1946, as amended, 15 U.S.C. § 1125(d) and (4) common law unfair competition.

This Memorandum and Order constitutes the Court's findings of fact and conclusions of law with respect to Mattel's federal claims for cybersquatting and trademark dilution. Mattel, through its proposed findings of fact and conclusions of law, withdrew its claim for trademark infringement under the Lanham Act and its state law claim for unfair competition.
 
I. Background

A. Procedural Background

The Court has subject matter jurisdiction over Mattel's first, second and third claims for relief in this action pursuant to 28 U.S.C. §§ 1331 and 1338(a) because Mattel is asserting rights under the Section 43 of the Lanham Act. The Court has supplemental jurisdiction over Mattel's remaining state law claim for unfair competition pursuant to 28 U.S.C. § 1367.

By notice of motion dated February 11, 2000, defendants  [*3]  moved to dismiss this action based upon the lack of personal jurisdiction. By order dated April 24, 2000, the Court denied that motion to dismiss, but held that Mattel would have the burden of proving the existence of personal jurisdiction at trial. I also noted that I had not resolved whether this District has a compelling interest in adjudicating this matter. The jurisdictional issue was mooted when defendants, by a stipulation dated May 24, 2000, waived all objections to the Court's exercise of personal jurisdiction over them.

The Court conducted a bench trial in this action on May 4, 2000. It heard the testimony of two witnesses, Mr. Schiff and Mattel's private investigator, Michael Falsone. The Court also received into evidence 55 exhibits.

B. The Parties

Mattel is a publicly held corporation organized and existing under the laws of the State of Delaware with its principal place of business in El Segundo, California. One of its principal products is the trademarked "Barbie" doll. In 1991, the Second Circuit observed that "the 'Barbie' doll is the best selling toy doll in the world--96 percent of three to eleven year old girls in the United States own at least one.  [*4]  In the past 30 years 600 million Barbie dolls have been sold--one is sold every two seconds--and, in 1990 alone 26 million of them were sold, earning gross revenues for Mattel of $ 740 million." The Miss America Organization v. Mattel, Inc., 945 F.2d 536, 537 (2d Cir.1991).

Internet Dimensions is a corporation organized and existing under the laws of the State of Nevada with its principal place of business in Broward County, Florida. Internet Dimensions owns Internet domain names for sites that provide, among other things, "adult" entertainment. One of its domain names is "barbiesplaypen.com." Internet Dimensions generates income by selling memberships in its "adult" sites through credit card orders placed over the Internet. Internet Dimensions and Mr. Schiff are both affiliated with a larger organization, Internet Access Solutions ("IAS"), which handled all the administrative work for Internet Dimensions' various sites. (Tr. 34.) Mr. Schiff is the sole officer, director, employee and shareholder of Internet Dimensions.
 
II. Liability Under the ACPA

Mattel's primary claim in this action is that defendants violated the Anti-Cybersquatting Consumer Protection  [*5]  Act. The ACPA, signed into law on November 29, 1999, provides that "a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark," 15 U.S.C. § 1125(d)(1)(C), if the domain name was "registered before, on, or after the date of the enactment of this Act," Pub. L. No. 106- 113, § 3010. It also provides that damages can be awarded for violations of the Act, but that they are not "available with respect to the registration, trafficking, or use of a domain name that occurs before the date of the enactment of this Act." Id.

The ACPA was passed to "protect consumers and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners 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'." S. Rep. No. 106-140, at 4 (1999).

The Act provides civil liability for cybersquatting as follows:

A person shall be liable in a civil action by the owner of a mark . . . if . . . that  [*6]  person (i) has a bad faith intent to profit from that mark . . . and . . . (ii) registers, traffics in, or uses a domain name that --
(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;
(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark;
(III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36.

 
In determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to--
(A) the degree of inherent or acquired distinctiveness of the mark;
(B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used;
(C) the duration and extent of advertising and publicity of the mark;
(D) the geographical extent of the trading area in which the mark is used;
(E) the channels of trade for  [*7]  the goods or services with which the mark is used;
(F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the person against whom the injunction is sought;
(G) the nature and extent of use of the same or similar marks by third parties; and
(H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

 
In determining whether a person has a bad faith intent described under subparagraph (a), a court may consider factors such as, but not limited to
(I) the trademark or other intellectual property rights of the person, if any, in the domain name;
(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;
(III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
(IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
(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 commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
(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 an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct;
(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;
(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 registration 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; and
(IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of this section.

 
The fact that a person may use a mark in a site in . . . a lawful manner may be an appropriate indication that the person's registration or use of the domain name lacked the required element of bad faith. This factor is not intended to create a loophole that might otherwise swallow the bill, however, by allowing a domain name registrant to evade application of the Act by merely putting up a non-infringing site under an infringing domain name.

 
'Tarnishment' generally arises when the plaintiff's trademark . . . is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner's product. In such situations, the trademark's reputation and commercial value might be diminished because . . . the defendant's use reduces the trademark's reputation and standing in the eyes of consumers as a wholesome identifier of the owner's products or services.