New Weapons In The War Against Cybersquatters

If you had wanted information about Bill Bradley's bid for the Democratic presidential nomination, you may have gone to the Internet to get information about his campaign. If you typed in "www.bradleyforpresident.com," however, you were greeted with the message, "THIS SITE IS FOR SALE!" Much further down the page came the disclaimer that the site was not affiliated with the Bradley campaign at all. A similar message greets Internet users who type "www.bush2k.com". In fact, if you remain at "www.bush2k.com" too long, you are automatically taken to "www.mccain2k.com," the official web site of Senator John McCain's campaign.

The Bradley and Bush campaigns were victims of "cybersquatters" Q people who register a famous or trademarked name as a domain name (i.e., an Internet address) for the purpose of selling it back to the rightful owner of the name or trademark. Businesses, celebrities, and institutions have paid large amounts to buy back their own domain names from cybersquatters who registered the web site long before the rightful owners thought to do so themselves. Cybersquatters learned that registering a domain name is easy. One can simply log onto a domain name registrar and pay a nominal fee to reserve a domain name for a two-year period. Registrars typically do not require the registrant to show what connection he has, if any, to the desired domain name address.

Some corporations and celebrities chose to fight rather than pay. Panavision International was one of the first to successfully sue a cybersquatter for trademark dilution. See, Panavision International, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998). But the judiciary was slow to provide complete relief. At times, courts declined to help trademark holders against the warehousing of or trafficking in domain names. Also, cybersquatters were taking increasingly sophisticated precautions against legal exposure under laws such as the Federal Trademark Dilution Act.

Now, there are two new tools against cybersquatters: the federal Anticybersquatting Consumer Protection Act and the Internet Corporation for Assigned Names and Numbers' Uniform Domain Dispute Resolution Policy.

The Anticybersquatting Act. Signed into law on November 29, 1999, the Act (15 U.S.C. Section 1125(d)) creates a new cause of action for one whose trademark has been infringed upon by the registration of a domain name. To prove cybersquatting under the Act, a trademark owner must establish that the squatter who registered the domain name had a bad faith intent to profit from the registration. Factors which may prove bad faith include:

any intellectual property rights that the registrant might have, whether the registered name is the legal name of the plaintiff (or a name commonly used to identify the plaintiff), the registrant's prior use, if any, of the domain name in the bona fide sale of goods and services, the registrant's intent to divert consumers from the plaintiff's web site, the registrant's intent to tarnish the value of the trademark by confusing consumers, and the registrant's efforts to transfer, sell, or assign the domain name for financial gain without ever having used it for bona fide purposes.

Plaintiffs can recover their actual damages, including lost profits, or elect statutory damages of not less than $1,000 and not more than $100,000 per domain name.

Some predict that passage of the Anticybersquatting Act marks the beginning of the end of the "Wild West" on the Internet. Others criticize the Act as doing little for consumer protection and more to help corporations guard every conceivable variation of their name. The Act may also be of little help to trademark owners against registrants who use allegedly infringing domain names for legitimate purposes.

Nonetheless, the Act has proven popular. Over 100 lawsuits were filed in its first 60 days. These include actions by:

Teen Magazine over a web site "teenmagazine.com" which linked users to a pornographic site (the Court enjoined the registrant and ordered the address be surrendered to the plaintiff); Musician John Tesh against "Celebsites.com," which had registered "www.JohnTesh.com" (Celebsites.com settled by transferring the name to Mr. Tesh);

Ford Motor Company against a registrant who reserved "Sporttrac" (which is the Ford Explorer SUV) and then offered it for sale on Yahoo!'s auction page;
Harvard University against the registrants of 65 Harvard-related web sites who had tried to sell them at "harvardyardsale.com"; and
the New York Yankees against one who allegedly demanded $25,000 for the name "newyorkyankees.com".

The Anticybersquatting Act can also be used against those who register domain names to capitalize on typographical or spelling errors commonly made by web surfers seeking a company's site. For example, in Bargain Bid v. Ubid, the plaintiff (a computer goods seller using the web site "bargainbid.com") obtained a temporary injunction against a competitor who registered the domain name "barginbid.com" (which linked users into Ubid's own site).

To remedy the problem of obtaining personal jurisdiction over cybersquatters, the Act also has an "in rem" provision that allows a trademark owner to sue the domain name itself, even if it cannot obtain service of process on the registrant. In an in rem judgment, a court can award disputed domain names to a plaintiff without the registrant's knowledge or presence. For example, when it was unable to find the domain name owners for some twenty allegedly infringing web sites, Bell Atlantic used the new in rem provision to obtain control of the domain names.

The ICANN Policy. For years, Network Solutions, Inc. had a government-sanctioned monopoly on the registration of domain names. In 1999, however, registration of domain names was opened up to competition, and there are now over 80 registrars. A new entity, the Internet Corporation for Assigned Names and Numbers (ICANN), was created to oversee the newly-competitive domain name process. On October 24, 1999, ICANN adopted its Uniform Domain Name Dispute Resolution Policy. That Policy provides an arbitration-type procedure for resolving a variety of domain name disputes. To prevail, a complainant must prove (a) how the domain name in question is identical or confusingly similar to its own trademark or service mark, (b) why the domain name holder has no legitimate interest in the name, and (c) why the domain name should be considered as having been registered in bad faith. Similar to the Anticybersquatting Act, the ICANN Policy lists factors as evidence of bad faith, including indications that the registrant registered the domain name "primarily for the purpose of selling, renting, or otherwise transferring the domain name registration" to the rightful trademark or service mark owner.

The ICANN administrative process is designed to be quick (roughly 45 days) and inexpensive ($1,000 in fees, which are paid by the complainant). If the complaint is valid, the registrar will either disconnect the domain name or transfer it to the complainant. There are three arbitrators which can be used, including the World Intellectual Property Organization (WIPO).

Cybersquatting victims can now choose between strong and effective remedies. An action under the Anticybersquatting Act allows a plaintiff to pursue other causes of action (such as trademark dilution and unfair competition) which might yield other remedies (monetary damages, treble damages, punitive damages, and attorney's fees). It also authorizes injunctive relief pending resolution of all claims. By contrast, the ICANN Policy provides only a limited remedy (the cancellation or transfer of an infringing domain name), but a faster, less expensive process. Both tools will prove helpful to trademark holders in the ongoing battle against their abusers.