## Facts

- Via Varejo S/A, a Brazilian company, operates the Casas Bahia retail brand and an e-commerce site at casasbahia.com.br.
- Via Varejo had no U.S. brick-and-mortar stores and did not ship products to U.S. customers from its website.
- The Casas Bahia website received millions of annual visits from U.S.-located IP addresses.
- Via Varejo generated revenue by selling advertising-related services on its website, including preferred product placement, banner advertising, and a marketplace seller program.
- Via Varejo entered advertising arrangements with U.S. companies to advertise their goods on the Casas Bahia website.
- Direct Niche, LLC acquired the domain casasbahia.com at auction and used it to host pay-per-click advertising links.
- Via Varejo initiated a UDRP proceeding and obtained an order transferring the domain to Via Varejo.
- Direct Niche sued under 15 U.S.C. § 1114(2)(D)(v) seeking a declaratory judgment that its registration and use of the domain did not violate the ACPA.
- After a bench trial, the district court found Via Varejo had U.S. common-law service-mark rights in “Casas Bahia” based on use in commerce through advertising services, and found Direct Niche liable under the ACPA.
- On appeal, Direct Niche challenged only whether Via Varejo had sufficient U.S. “use in commerce” to establish ownership of the mark.

## Issues

1. Whether Via Varejo established U.S. ownership of an unregistered “Casas Bahia” service mark through “use in commerce,” despite having no U.S. stores, no U.S. product shipping, and no U.S. registration.
2. Whether providing online advertising services connected to U.S. counterparties and substantial U.S. website traffic constitutes sufficient public use in commerce to create U.S. common-law service-mark rights.

## Decision

- The Eleventh Circuit affirmed the judgment for Via Varejo.
- The court held Via Varejo owned U.S. common-law rights in the Casas Bahia service mark based on its use of the mark in connection with advertising services rendered in commerce.
- The court relied on Via Varejo’s contracts with U.S. companies for advertising on the Casas Bahia website and evidence of substantial U.S. website access.
- Applying clear-error review to the district court’s finding on ownership/use in commerce, the court found no clear error.
- Because Via Varejo had enforceable U.S. service-mark rights, Direct Niche was not entitled to declaratory relief under the ACPA.

## Legal Principles

- Rights in an unregistered trademark or service mark arise from prior use in commerce, not from registration.
- A party establishes ownership of a service mark by showing use of the mark in commerce in connection with services, with sufficient public use to identify the mark with the provider’s services.
- “Use in commerce” for services can be shown by displaying the mark in the advertising or sale of services and rendering those services in commerce; online services tied to U.S. commercial relationships may qualify even without a domestic physical presence.
- On appeal, factual findings regarding sufficient use in commerce and ownership are reviewed for clear error.

## Conclusion

The Eleventh Circuit held that a foreign company can acquire U.S. common-law service-mark rights through online advertising services directed to, and contracted with, U.S. entities and accessed substantially from the United States, and it affirmed judgment against a domain registrant under the ACPA.


Direct Niche, LLC v. Via Varejo S/A, 898 F.3d 1144 (11th Cir. 2018)