Intellectual Property, Internet & E-Commerce Articles

How to Stop Cybersquatters
by Cyrus Wadia

February 16, 2009

Cybersquatting is the registration, sale, or use of a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else.  Often, the cybersquatter either holds onto the domain name or offers to sell it back to the trademark owner at an inflated price.  Depending on the extent of the cybersquatting and use of the website, trademark owners subject to cybersquatting have several options:  contacting the domain name registrant to request an informal transfer of the domain name, federal trademark infringement under the Lanham Act, litigation under the Anticybersquatting Consumer Protection Act (ACPA), or arbitration under the Internet Corporation for Assigned Names and Numbers Uniform Dispute Resolution Policy (UDRP).  This article focuses on two of the more popular formal methods - ACPA litigation and UDRP arbitration.
 
Anticybersquatting Consumer Protection Act
 
The ACPA was passed in 1999 "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."  It provided for civil penalties if a trademark owner could establish:  (1) the trademark owner's mark is distinctive or famous; (2) the domain name owner had a bad faith intent to profit from the mark; and (3) the domain name and trademark are either identical or confusingly similar (or dilutive for famous marks).  One of the benefits of the ACPA is that it provides for "in rem" civil action against the daomain name itself if the trademark owner cannot obtain jurisdiction over the claimed cybersquatter.  One of the ACPA's limitations is the requirement of the famous/distinctive trademark, which eliminates some trademark owners from invoking the ACPA remedies depending on the distinctiveness of the mark.  Some evidence of "bad faith" for a court's consideration include: 

  • the trademark or other intellectual property rights of the person, if any, in the domain name;
  • 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;
  • the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
  • the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
  • 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;
  • 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;
  • 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;
  • 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
  • the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous.

The court may order the forfeiture, cancellation, or transfer of the domain name to the trademark owner, and ACPA remedies are in addition to any other civil action or remedy otherwise available to the trademark owner.
 
UDRP Arbitration
 
The UDRP is an expedited arbitration process established by ICANN to resolve disputes regarding the registration of domain names, and applies to most top-level domain names and several country-specific domain names.  Any person or company can file a UDRP Complaint, and the procedure is available for alleged “abusive” registrations of domain names, which include: (i) the registered domain name is identical or confusingly similar to the trademark owner's mark; (ii) the domain name registrant has no rights or legitimate interests in that domain name; and (iii) the domain name has been registered and is being used in bad faith.  The UDRP cites the following non-exclusive examples of evidence of bad faith registration:

  • Circumstances indicating that the domain name was registered or acquired primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of the domain name registrant's out-of-pocket costs directly related to the domain name; or
  • The domain name was registered in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the domain name registrant has engaged in a pattern of such conduct; or
  • The domain name was registered primarily for the purpose of disrupting the business of a competitor; or
  • By using the domain name, the domain name registrant intentionally attempted to attract for financial gain, Internet users to the registrant's website or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of the registrant's website or location or of a product or service on the registrant's website or location.

The UDRP Complaint procedure is generally seen as faster, cheaper (costs run between $1,000-$4,000 depending on the arbitration provider and number of domain names), and more informal than standard litigation, but the only remedy available is transfer or cancellation of the domain name.  

Generally, there are five stages to UDRP arbitration: (1) the trademark owner files a Complaint with an ICANN-accredited dispute resolution service provider; (2) the domain name owner files a response; (3) the dispute resolution service provider chooses an administrative panel to decide the dispute; (4) the administrative panel issues a decision; and (5) if there is a decision in favor of the trademark owner to cancel or transfer the domain name, that decision is implemented.  The Rules are relatively straightforward. 

For further information on either process, please contact Cyrus Wadia.

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