KB Home Sues for Trademark Violations, but Isn’t IT the Real Cybersquatter?

by Paul Alan Levy

KB Home has built new homes in several major markets throughout the United States, but its construction projects have left a trail of unhappy homeowners complaining about shoddy construction in several of those locations, such as here, here, here, and here.  The problem is broadly portrayed by a number of links from a web site at thekbhome.com.  This site was created by Tampa-area resident Andrew Smith after he and his neighbors found so many problems in their own development, the Willowbrook subdivision of Lakewood Ranch, that they decided to work together to find mutual solutions.  KB Home eventually admitted that the problems were serious enough to require an extensive repair problem, but Smith and many of his neighbors decided that having to live in an ongoing construction site was not what they bargained for, and that rather than simply paying for repairs, KB Home should accept responsibility by buying back their homes for the full purchase price plus interest.   Smith and his neighbors conducted a letter-writing campaign to this end, and Smith advocated this result on the web site itself.  State officials have been investigating the problems, and several lawsuits over the construction defects are pending already.

It is not unusual for companies facing strong public criticism to try to make a statement by filing suit against their detractors.  KB Home recently tried this tactic, filing suit in federal court in Tampa, and apparently alerting the press about the litigation.  The suit did not include a claim for libel, mind you, because to be libelous the criticisms would have to include false factual statements.  Instead, KB Home is invoking the trademark laws, and particularly the cybersquatting amendment to the Lanham Act, which forbids the use of domain names that are “confusingly similar” to a trademark with a “bad faith intent to profit.”  KB Home’s argument appears to be that, by using the web site to campaign for a buyback agreement that would benefit himself personally, along with the rest of his community, Smith’s use of its trademark was tantamount to extortionate use of the domain name.

In papers filed today, we have entered the case to argue that the First Amendment protects Smith’s right to use KB Home’s trademarked name in a truthful manner to identify his web site as being about KB Home. The fact that Smith hopes that he, as well as the rest of his community, will derive financial benefit from the changes for which the web site campaigns does not make his expression “commercial speech” that is entitled to lesser protection under the First Amendment.  As we point out in the papers, a long line of cases, many of which we handled at Public Citizen, establishes that domain names of this sort are perfectly legitimate so long as the web site is non-commercial and does not pretend to be sponsored by the trademark holder. 

This was, for example, the underlying issue in our litigation against Charles Carreon last year  – now  he is facing an attorney fees judgment for having forced an Internet parodist to defend his rights in court.  We will also argue that the federal cybersquatting law was designed to protect Internet “gripe sites” like Smith’s, and his expectation of personal benefit, and even the possibility that the web site might be taken down if KB Home “does the right thing” by buying back the homes, is not the sort of extortionate registration of domain names as which the cybersquatting law was aimed.

Although courts across the country have agreed with our approach to this issue, we have not yet been able to get the issue before the Eleventh Circuit:  when we defeated Walmart's claims over Charles Smith's domain names as well as his parody Tshirts, it opted not to appeal.  So this case gives us a chance to settle the issue in a new jurisdiction.

Who is the REAL Cybersquatter?

Ironically, at the same time that KB Home is complaining that Smith used the domain name “thekbhome.com” for his web site about it, KB itself is sitting on hundreds of expressly critical domain names, such as kbahomemortgagesucks.com and kbhomesucks.com (a partial listing of such names registered by KB Home appears here).  Over the years, we have argued that those who want to object to the doings of big companies should not HAVE to use vulgar words like “sucks” in their domain names, but it ill-behooves a trademark holder to complain that the domain names of gripe sites use its trademark without vulgar qualifiers when the trademark holder is blocking the use of such domain names by taking them out of circulation.  Strictly speaking, grabbing such domain names does not violate the terms of the ACPA – Alitalia to the contrary, alitaliasucks.com is not “confusingly similar” to the trademark Alitalia.  But in spirit, squatting on names that only a critic would want to use seems to be just as much an “Internet version of a land grab”  as registering a domain name that matches the trademark of a rival company would be.

Aggressive Tactics Against Its Critics

In addition to abusing trademark law to tie Smith down in court, KB Home tried to prejudice him further by linking the cybersquatting claim to a sensational allegation that other Willowbrook residents managed to hack into the computer of a construction firm that was hired to repair the problems that KB Home had created.  After I agreed to take the case, I contacted KB Home’s lawyer to ask him agree to sever the trademark claims against Smith from the hacking claims against the other defendants; eventually I was told that the complaint would be amended to address this problem. Through the grapevine, I heard from others involved in the case that what this meant was that KB Home was telling defendants that if they wanted to get out of the case, they would have to be able to give information tying Smith to the alleged hacking incident.  That KB Home feels it needs to strain to tie Smith into a claim of computer hacking suggests, of course, a certain lack of confidence in its trademark claims.  

Eventually, the complaint was amended, but instead of alleging that Smith was involved in the hacking, KB Home now alleges (in Count IV) that the defendants in the alleged hacking scheme were somehow involved in a “conspiracy” to cybersquat.   So our papers filed today explain why people who have no involvement with a domain name cannot be sued for cybersquatting.

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