## Facts

- Virtual Works, an Internet service provider, registered the domain name **vw.net** in 1996 through the then-exclusive registrar.
- Virtual Works selected “vw” partly because it matched its initials, but principals discussed that the domain’s association with Volkswagen could later be sold to Volkswagen “for a lot of money.”
- Virtual Works used vw.net for about two years in its ISP business.
- After third parties (including Volkswagen dealerships) expressed interest, Virtual Works contacted Volkswagen’s trademark department offering to sell vw.net.
- Virtual Works imposed a short response deadline and indicated it would otherwise sell or auction the domain to the highest bidder.
- Volkswagen owned long-standing rights in the **VW** mark, which was widely recognized and distinctive.

## Issues

1. Whether Virtual Works “registered, trafficked in, or used” vw.net with a **bad faith intent to profit** from Volkswagen’s distinctive or famous **VW** mark in violation of the ACPA, 15 U.S.C. § 1125(d).
2. Whether Virtual Works qualified for the ACPA **safe harbor** by claiming it reasonably believed its use of vw.net was lawful because “vw” corresponded to its corporate initials.

## Decision

- The Fourth Circuit **affirmed** the judgment against Virtual Works.
- The court held that Virtual Works violated the **ACPA** because it registered and used vw.net with a **bad faith intent to profit** from Volkswagen’s VW mark.
- The court upheld the order requiring Virtual Works to **relinquish (transfer) the vw.net domain name** to Volkswagen.
- The court rejected Virtual Works’ reliance on the ACPA **safe harbor**.

## Legal Principles

- ACPA liability requires (1) **bad faith intent to profit** from a mark and (2) registration, trafficking in, or use of a domain name identical or confusingly similar to a distinctive or famous mark.  
- The ACPA’s listed bad-faith considerations are **nonexclusive**; courts assess the **totality of the circumstances**, and direct evidence of intent to profit from trademark association can be decisive.
- Evidence supporting bad faith includes planning to sell a domain to the trademark owner for a high price, using threats of auction or sale to “the highest bidder,” and anticipating consumer association with a famous mark.
- The ACPA **safe harbor** does not apply where the registrant’s conduct shows an intent to capitalize on likely confusion or association with another’s famous mark, even if the domain letters also plausibly relate to the registrant.

## Conclusion

The Fourth Circuit treated the dispute as a paradigmatic cybersquatting case and affirmed transfer of vw.net because Virtual Works’ contemporaneous intent and later sales pressure showed bad-faith intent to profit from the natural association between the domain and Volkswagen’s famous VW mark, defeating any claim to the ACPA’s safe harbor.


Virtual Works, Inc. v. Volkswagen of Am., Inc., 238 F.3d 264 (4th Cir. 2001)