- within Privacy, International Law and Consumer Protection topic(s)
By: Joshua Bressler
Internet domain name "cybersquatters" may soon find that their squatting days are numbered as the result of a recent federal Trademark Act amendment.
"Cybersquatting" is the practice of registering an Internet domain name that arguably should belong to someone else. In recent years, cybersquatters have made headlines and large profits by beating multinational corporations and world-renowned personalities to the punch and registering domain names incorporating their names and trademarks. McDonalds.com, Panavision.com, MTV.com and BarryDiller.com are just a few examples of Internet domain names that fell into the hands of registrants other than the ones suggested by those names.
Cybersquatting has presented such a difficult problem for intellectual property attorneys because the practice had not necessarily violated traditional trademark and unfair competition principles. To be sure, a trademark owner generally had little difficulty ousting a cybersquatter who used the domain name to promote goods and services that competed with those of the domain's namesake. But in those instances in which the cybersquatter simply left the website "under construction" or provided news stories or editorials about the namesake, trademark owners had difficulty wresting the name from the cybersquatter's clutches. Indeed, many famous trademark owners have paid substantial sums to acquire domain names from those who had the foresight to register them first.
Trademark owners have also had to contend with "typosquatting" – the practice of registering an intentionally misspelled version of another's trademark or Internet domain name. Typosquatters capitalize on a law of nature; that is, given the millions of attempts by visitors to access a well-known website, some percentage of those visitors will inadvertently type an incorrect spelling of the domain name. This small percentage of input errors can generate significant website traffic for a cybersquatter – and perhaps much more than the typosquatter would have generated by promoting its own original domain name identity.
Organizations such as Network Solutions Inc. ("NSI") who administer the Internet domain name registration process provided mechanisms to resolve disputes between domain name registrants and other parties who want use of the domain names stopped. These mechanisms were not always available to parties victimized by cybersquatters, however, due to their limited application as prescribed by domain name dispute resolution policies. More recently, the Internet Corporation for Assigned Names and Numbers ("ICANN") has promulgated a more flexible and accessible domain name dispute resolution policy.
On November 30, 1999, President Clinton signed the Anticybersquatting Consumer Protection Act (the "ACPA"), which will add a new provision – Section 43(d) – to the Lanham (Trademark) Act effective as of March 1, 2000. The ACPA is an ambitious effort to eliminate the incentives to engage in cyberpiracy and force those who do to suffer the consequences.
Lanham Act Section 43(d) provides that a trademark owner or the owner of a personal name may bring an action against any individual who, with "a bad faith intent to profit," "registers, traffics in, or uses a domain name" which is "identical or confusingly similar" to a distinctive or famous trademark or which dilutes any famous mark. The ACPA also creates a right of action against anyone who registers a domain name identical or confusingly similar to a person's name with the intent to sell that domain name for profit.
The statute sets forth nine non-exhaustive factors which can be evaluated to determine whether an alleged cybersquatter has registered the domain name in bad faith; namely, (i) the extent of any trademark rights in the domain name; (ii) whether the domain name is the person's own name; (iii) whether the domain name holder has previously used the name to sell goods; (iv) whether the domain name is a good faith noncommercial or fair use of the mark; (v) whether the domain name was selected to divert traffic to the domain name site in a manner disparaging or tarnishing to the mark; (vi) whether the owner has offered to sell the name without using the site commercially; (vii) whether misleading personal information was given when registering the domain name; (viii) whether the domain name owner has registered multiple confusing domain names; and (ix) whether the domain name is the same as a distinctive or famous mark.
Section 43(d) also provides robust remedies for those whose rights have been violated by cybersquatters. The ACPA provides for injunctive relief and the recovery from a cybersquatter of its profits, the claimant's actual damages and action costs. In lieu of actual damages, the claimant can elect at any time before final judgment an award of statutory damages ranging from $1,000 to $100,000 per trademark per identifier, as the court considers just.
The ACPA also grants courts authority to order the forfeiture, cancellation or transfer of a cybersquatter's domain name. The ACPA will apply retroactively to all Internet domain names. Accordingly, despite its March 2000 effective date, the ACPA's force has already been influential during settlement negotiations with cybersquatters who know that the end is drawing near for them.
