## Facts

- E. & J. Gallo Winery owned federally registered trademarks including “Ernest & Julio Gallo,” supported by extensive sales and advertising, and treated as famous and distinctive.
- Spider Webs Ltd. was formed to acquire and develop internet domain names; it registered more than 2,000 domains, including hundreds incorporating names associated with existing businesses.
- In August 1999, Spider Webs registered “ernestandjuliogallo.com,” which, because domain names cannot include spaces or ampersands, corresponded closely to “Ernest & Julio Gallo.”
- The defendants acknowledged registering such domains as “real estate” to hold and eventually profit from them.
- Gallo demanded release or transfer of the domain; Spider Webs refused.
- After Gallo sued under the Anticybersquatting Consumer Protection Act (ACPA) and Texas anti-dilution law, Spider Webs posted content at the domain criticizing the litigation, alcohol, and corporate conduct, and included a disclaimer.
- The district court granted summary judgment for Gallo, ordered transfer of the domain, enjoined further use, and awarded $25,000 in ACPA statutory damages.

## Issues

1. Whether registering and using “ernestandjuliogallo.com” constituted cybersquatting under the ACPA, including whether defendants acted with bad faith intent to profit.
2. Whether Gallo’s mark was distinctive and whether defendants’ conduct created a likelihood of dilution under the Texas Anti-Dilution Statute.
3. Whether the $25,000 ACPA statutory damages award was an abuse of discretion.
4. Whether defendants’ post-suit critical commentary and disclaimer negated bad faith or otherwise barred liability.

## Decision

- The Fifth Circuit affirmed summary judgment for Gallo on the ACPA and Texas anti-dilution claims.
- The court held the evidence supported a finding of bad faith intent to profit, including defendants’ pattern of registering domains tied to existing brands and their admitted speculative motive.
- The court accepted that “ernestandjuliogallo.com” was effectively identical to the “Ernest & Julio Gallo” mark for purposes of the statutory analyses.
- The court upheld the transfer order and injunction.
- The court held the $25,000 statutory damages award was within the statutory range and not an abuse of discretion.
- The court rejected the argument that later “gripe site” content eliminated liability arising from the initial registration and overall conduct.

## Legal Principles

- ACPA liability may be established where a defendant registers, traffics in, or uses a domain name identical or confusingly similar to a distinctive (or famous) mark with bad faith intent to profit.
- A registrant’s pattern of acquiring numerous domains incorporating well-known marks, coupled with an admitted plan to profit from resale or leverage, supports an inference of bad faith.
- Technical domain-name constraints (no spaces or ampersands; mandatory top-level domain) do not prevent treating a close transliteration as effectively the same as the protected mark.
- Under Texas anti-dilution law, a famous or distinctive mark is protected against uses likely to dilute it, including tarnishment through association with disparaging content.
- ACPA statutory damages are discretionary within the statutory range per domain name; courts may consider bad faith, the fame of the mark, and potential harm in setting an amount.

## Conclusion

The Fifth Circuit affirmed that registering a domain name effectively identical to a famous mark as speculative “real estate” supported ACPA bad-faith liability and Texas dilution liability, and it upheld transfer of the domain and a $25,000 statutory damages award despite defendants’ later use of the site for critical commentary.


E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270 (5th Cir. 2002)