Lanham Act Amended To Control "Cybersquatting"

One of the last legislative enactments of 1999 was the "Anticybersquatting Consumer Protection Act." This new law, amending the Lanham Act, targets cybersquatting, the registration of Internet domain names that are identical or confusingly similar to protected marks or the names of individuals. It is a response to the increasing incidence of registering such names to prevent the use of a name by others or to profit by selling a name to the owner of the mark or individual.

The Act allows the owner of a protected mark to file a civil action against a cybersquatter in cases where the facts show a bad faith intent to profit from the mark and registration of the offending domain name. The court is to determine bad faith upon consideration of such factors as:

  • Whether the defendant has any trademark or other rights in the domain name;

  • Whether the domain name consists of the legal name of the defendant;

  • The defendant's prior use of the domain name in the bona fide offering of goods or services;

  • The defendant's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;

  • The defendant's intent to harm the goodwill represented by the mark, either for commercial gain or to disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation or endorsement of the site;

  • An offer to sell the domain name to the owner of the mark or to a third party for profit, without having used the domain name in the bona fide offer of goods or services, or a prior pattern of such conduct;

  • The defendant's provision of false information in the application for registration of the domain name;

  • The defendant's knowing registration of multiple domain names that are identical, confusingly similar or dilutive of distinctive or famous marks; and

  • The extent to which the mark in the offending domain name is or is not distinctive and famous.

Remedies include forfeiture or cancellation of the domain name or transfer of the domain name to the owner of the mark and the award of either statutory damages up to $100,000 or actual damages.

In addition, the owner may file a so-called "in rem" action against the domain name itself wherever the domain name registration authority is located. An in rem action is permitted if the owner cannot obtain personal jurisdiction over the individual who would have been a defendant or cannot find that person. However, the remedies provided under the Act in an in rem action are limited to cancellation or forfeiture of the offending domain name or transfer of the domain name to the owner of the protected mark.

The Act also protects individuals from unauthorized use of their names as domain names. It provides a civil right of action against any person who registers the name of a living person without consent if the intent is to derive a profit from the registration by selling the domain name for financial gain. There is a narrow exception to liability for any person who registers such a domain name in good faith if the name is used in a work of authorship protected under the copyright law. This exception is available only to a person who is the copyright owner or licensee of the work and intends to sell the name in conjunction with the lawful exploitation of the work, and the registration is not otherwise prohibited by contract. The remedies available to an injured individual are limited to injunctive relief, such as forfeiture or cancellation, and the award of attorney's fees to the prevailing party (i.e. not just the winning plaintiff).

The Act follows on the heels of the Domain Name Dispute Resolution Policy recently adopted by the Internet Corporation for Assigned Names and Numbers (ICANN). The ICANN policy requires the offending registrant to submit to mandatory arbitration at the election of the owner of the mark.

Trademark owners support the Act as a tool for cracking down on the hoarding of domain names by speculators out to make a quick profit. Free speech advocates criticize the Act's ambiguity as having the potential to chill the rights of legitimate, non-commercial domain holders by forcing them to defend potentially costly lawsuits initiated by well-heeled corporate plaintiffs.

Since its enactment at least a dozen lawsuits have been filed. In clear-cut cases seeking preliminary restraints against the use of offending domain names, the courts have not been reluctant to grant relief to the plaintiffs. However, the reach of this Act may intersect with well-established First Amendment rights. Although it aims to curtail the increasingly troublesome incidence of cyberpiracy, this Act is certain to be subject to constitutional challenges.

Litigator Antoinette R. Stone is a shareholder with the Philadelphia office of the law firm of Buchanan Ingersoll.

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