Imagine that you own a business which manufactures and sells the best thweems known to man - Thweemland, Inc. Your business has a 75% market share, and your brand is the most well known brand in the industry. You hear that the Internet is the wave of the future for selling goods, so you decide to start a web site. You conduct some research, hire a webmaster, decide on a theme and layout, and instruct your webmaster to contact a domain name registrar to register your domain name (the .com, .net, or .org name exclusively assigned to your site server's numeric Internet address). Naturally, you would like to use your trademark within your domain name - "Thweemland.com."
Within a couple of days your webmaster contacts you to discuss the site. You leap to the phone, excited at the prospect of becoming an e-commerce giant, only to be advised that "Thweemland.com" has already been registered. You go online, type in "Thweemland.com," and discover that this site is merely a "shell" site. That is, there are no services, products, or meaningful information being provided or offered at this site, just a banner that says "Under Construction," perhaps with a blurry picture of a thweem. You identify and contact the registered owner of the Thweemland.com domain, who cheerfully offers to sell you the name comprised of your trademark for a mere $20,000. Alternatively, and perhaps worse yet, you discover that your chief competitor, ThweemAmerica, is the culprit, and has hijacked your trademark to draw people to its web site to sell its competing products!
Many large and small businesses have experienced this exact scenario over the past several years. Some simply negotiated or paid the asking price. Others were enraged or frustrated enough to file suit. Well, the cavalry is on the way. On November 29, 1999, Congress passed the Anticybersquatting Consumer Protection Act ("Anticybersquatting Act"), which specifically prohibits this kind of exploitation of trademarks. Although the enactment was buried in a rider to an omnibus appropriations bill passed as Congress left town for the holiday recess, it is just as effective as a more conspicuously passed bill.
The Anticybersquatting Act prohibits the use of another individual's or entity's trademark within a domain name if the offending person uses that mark with a bad faith intent to profit. An example of bad faith is the use of a trademark within a domain name for the purpose of selling the domain name to the trademark owner, or another individual or entity, for commercial gain. In other words, the exact scenario described above, where the owner of the shell site offered to sell Thweemland, Inc. the domain name "Thweemland.com." In fact, bad faith can be demonstrated by merely a history of this type of behavior. Another example of bad faith is the use of a trademark within a domain name to divert people to the offender's web site, rather than the trademark owner's web site, for purposes of commercial gain or with the intent to tarnish or disparage a mark. This was depicted in the second scenario above, where ThweemAmerica used Thweemland's trademark within its domain name in hopes of drawing away Thweemland's customers.
The Anticybersquatting Act also prohibits using the name of another living person where the name is "substantially and confusingly similar," the individual has not consented to the use, and the offender is using this name with the "specific intent to profit" by selling the domain name for financial gain. The best example of this type of behavior is the use of a celebrity's name within a domain name. Ultimately, however, the extent to which the use of an individual's name will be considered a violation of the Anticybersquatting Act is yet to be fully evaluated, as Congress has ordered that a study be conducted regarding this issue.
Violations of the Anticybersquatting Act carry the same severe penalties provided for traditional trademark infringement. That is, the offending party may be enjoined from further use of the trademark, including the forfeiture or cancellation of the domain name or a transfer of the domain name to the owner of the mark. Additionally, the trademark owner may recover compensatory damages, the costs of pursuing the action and attorneys' fees. The Anticybersquatting Act further provides that a victim of cybersquatting can opt for statutory damages, rather than compensatory damages, which range from $1,000 to $100,000 per domain name, without any specific proof of economic injury.
Although the Anticybersquatting Act may not eliminate all "cybersquatters," it does provide definitive "black letter" law that counsel can rely upon when dealing with a squatter. More importantly, as individuals protect their rights under the Act, and news of the severe penalties leaks out, other "cybersquatters" will hopefully be dissuaded from stealing your mark. Unfortunately, the law is still playing "catch up" to technology. Hopefully, the Anticybersquatting Act will help to close the gap.
If you require any further information regarding the Anticybersquatting Act, please contact Karen Kontje Waller at (717) 257-7506 or kwaller@saul.com, Scott D. Patterson at (610) 651-5089 or spatterson@saul.com, or any other member of Saul Ewing's Intellectual Property Group.
Note: Posted articles are for general information only and should not be considered legal advice.