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Two recent developments in Internet and trademark law signal increased protection for trademark owners in the escalating battle against cybersquatters: (1) enactment of the federal Anticybersquatting Consumer Protection Act (the "Act"), and (2) approval of the Uniform Domain Name Dispute Resolution Policy (the "Policy") by the Internet Corporation for Assigned Names and Numbers.
The Act adds to the existing trademark protections embodied in the Lanham Act by creating a new cause of action against the misappropriation of trademarks as domain names. By specifically targeting bad faith domain name registrations and transactions - including ransoming the domain name to the rightful trademark owner - the Act significantly expands the trademark owner's arsenal against unauthorized use. Prior to its enactment, mark owners were forced to proceed against cybersquatters using existing infringement or dilution laws not designed to encompass such activities.
Like the Act, the Policy also attempts to remedy the misappropriation of trademarks as domain names; it does so, however, by providing an alternative dispute resolution proceeding. The purpose of the Policy is to provide an accessible, expeditious and cost-effective method of resolving disputes arising from cybersquatters' bad faith registration of domain names that are identical or confusingly similar to the trademarks of others. Prior to the Policy's adoption, most domain name disputes were resolved through the courts if the parties were unable to resolve the matter.
While the Act and Policy both attempt to address the same problems and issues, there are both subtle and significant differences between the two alternatives. Trademark owners will need to carefully consider such factors as the type of relief sought, whether such relief is required immediately, and the resources available to pursue the matter before deciding which alternative will provide the most effective and efficient method of resolving a domain name dispute.
I. THE ANTICYBERSQUATTING CONSUMER PROTECTION ACT
On November 29, 1999, the President signed into law the Anticybersquatting Consumer Protection Act. The Act creates a civil cause of action that a mark owner can assert against those who "register, traffic in, or use" a domain name that is identical or confusingly similar to the mark owner's distinctive or famous mark; or dilutive of its famous mark; or a mark, word or name specifically protected by federal statute. The Act also provides a remedy for the unauthorized use of personal names as domain names, and provides for anin rem proceeding against the domain name where the registrant is not subject to personal jurisdiction or has concealed its identity.
A. Civil Action Regarding Trademark Misuse
• Targeted Activities
The Act protects against the unauthorized use of trademarks as domain names by targeting: (1) the activities of those registering a domain name that is identical or confusingly similar to the mark owner's distinctive or famous mark, dilutive of its famous mark, or identical to a mark specifically protected by federal statute; (2) the activities of those registrants or their licensees operating under such a domain name; and (3) the actions of those who "traffic in" the domain name by selling or otherwise exchanging it for consideration.
• "Bad Faith" Requirement
To avoid imposing liability on innocent parties or violating a registrant's First amendment rights, the Act requires the plaintiff to show that the defendant registered, used or trafficked in the domain name with a "bad faith intent" to profit from the mark. the Act specifically lists factors that a court may consider in determining whether the defendant had such intent. They include such considerations as: (1) the defendant's own intellectual property rights (if any) in the domain name; (2) the extent to which the domain name is also the defendant's legal or commonly used name; (3) the defendant's prior use (if any) of the domain name in connection with the offering of goods or services; (4) the defendant's noncommercial or fair use of the mark in a site accessible under the domain name; (5) the defendant's intent to divert consumers from the mark owner's web site to a site accessible under the domain name; (6) the defendant's offer to sell, transfer, or assign the domain name to the mark owner or another for financial gain without having used the domain name (or a pattern of prior such conduct); (7) the defendant's offering of material and false contact information when applying to register the domain name, or intentional failure to maintain accurate contact information (or a pattern of prior such conduct); (8) the defendant's registration or acquisition of multiple such domain names; and (9) the extent to which the mark incorporated in the domain name is or is not distinctive and famous under the federal antidilution statute.
The Act does not specify whether the factors are to be weighed equally, and therefore leaves the balancing of the various factors up to the courts. The Act also does not indicate which factors weigh in favor of, or against, a finding of bad faith. However, the context of the statute suggests that evidence supporting the first four factors would indicate an absence of bad faith, while evidence supporting the next four would indicate bad faith. The final factor could, depending on the circumstances, support either the presence or absence or absence of bad faith.
The Act additionally contains an escape clause preventing a court from finding bad faith intent if the court determines that the defendant both believed and had reasonable grounds to believe that use of the domain name was a fair use or was otherwise lawful. Such reasonable grounds are left open to the court's determination.
• Available Remedies
The remedies available in the civil proceeding involving trademark misuse include injunctive relief such as forfeiture or cancellation of the domain name; transfer of the domain name to the mark owner; or monetary relief as in cases of infringement or dilution under 15 U.S.C. § 1117(a) including profits, damages (which may be trebled), costs, and, in exceptional cases, attorneys fees. The plaintiff can also elect, at any time prior to final judgment, to receive an award of statutory damages between $1,000 and $100,000 per domain name, to be set by the court. These statutory damages are available only for domain names that were registered on or after November 29, 1999.
B. Special In Rem Civil Action
To cover situations in which the mark owner cannot bring a cause of action against a potential defendant because the potential defendant is not subject to personal jurisdiction in federal court, or has successfully eluded the plaintiff, the Act permits the mark owner to file suit literally against the domain name itself. In order to proceed with this in rem action against the domain name, the mark owner must show that it was unable to find the domain name registrant by sending a notification of intent to proceed in rem to the address given by the domain name registrant to the registrar, and by publishing notice of the action as the court may direct after filing. The action may be filed in the federal judicial district in which the authority that registered or assigned the domain name is located. Remedies in such a proceeding are limited to a court order for forfeiture or cancellation of the domain name, or the transfer of the domain name to the mark owner.
C. Civil Action Regarding Misuse of Personal Names
In a separate provision providing protection against unauthorized use of personal names, the Act imposes liability on those who, without consent, register as domain names the name or a confusingly similar variation of the name of another living person. Available remedies include injunctive relief, including forfeiture, cancellation or transfer of the domain name; and an award of costs and attorneys fees. Causes of action under this section are available only to domain names that were registered on or after November 29, 1999.
D. Limitation On Liability Of The Domain Name Registrar
The Act limits the liability of domain name registering authorities. For example, the registrar is liable for injunctive relief only if the registrar has failed to provide the court with documents concerning the registration; has transferred, suspended or modified the domain name during the proceedings (except by court order); or has willfully failed to comply with a court order. The registrar cannot be liable for monetary relief for registering or maintaining a domain name that violates a mark owner's rights absent a showing that the registrar had a bad faith intent to profit from those activities. Further, the registrar cannot be liable for monetary relief for refusing to register a particular domain name pursuant to a reasonable policy prohibiting the registration of domain names identical or confusingly similar to or dilutive of another's mark. Such limitations on registrar liability represent an attempt to reduce the risk assumed by companies engaged in registering domain names.
E. Effective Date
The Anticybersquatting Consumer Protection Act took effect on November 29, 1999 as part of the Intellectual Property and Communications Omnibus Reform Act of 1999, set forth in the Omnibus Appropriations Act for FY2000 signed by President Clinton.
II. UNIFORM DOMAIN NAME DISPUTE RESOLUTION POLICY
The Internet Corporation for Assigned Names and Numbers ("ICANN") has approved a final version of the Uniform Domain Name Dispute Resolution Policy ("the Policy") to be implemented by all registrars of .com, .net and .org TLDs. The Policy provides a procedure for the resolution of disputes involving the bad faith registration of a domain name that is identical or confusingly similar to another's trademark. The Policy is incorporated by reference into the registration agreement of each accredited registrar.
A. Approved Dispute Resolution Service Provider
Under the Policy, domain name registrants are required to submit to a mandatory administrative proceeding if a third party complainant files a complaint with a dispute-resolution service provider ("Provider") approved by ICANN. The first, and currently the only, Provider approved by ICANN is the World Intellectual Property Organization ("WIPO"), which will provide a web-based dispute resolution service. Other providers are being considered for approval by ICANN.
B. Elements of a Complaint and Defense
Complaints under the Policy must assert each of the following elements: (1) the registrant's domain name is identical or confusingly similar to the complainant's mark; (2) the registrant has no legitimate interest in the domain name; and (3) the domain name was registered in bad faith. "Bad faith" is defined under the Policy as registration of a domain name primarily for the purpose of selling, renting or transferring the domain name; preventing the trademark owner from reflecting its mark in a domain name; disrupting a competitor's business; or intentionally attracting Internet users to a Web site for commercial gain by causing a likelihood of confusion.
In its defense, the registrant can file a response claiming that it registered the domain name in connection with a bona fide offering of goods or services; or for a legitimate noncommercial or fair use without intent for commercial gain, consumer confusion or dilution of the complainant's mark. The registrant can also claim that it is commonly known by the domain name (i.e., the domain name represents the registrant's commonly known nickname).
C. The Panel's Decision
The administrative proceedings will be presided over by a one- or three-person Panel. The Panel's written decision will be based upon the statements and documents submitted. Except for exceptional situations, no in-person hearings will be provided. The available remedies under the Policy will be limited to cancellation or transfer of the domain name. The Policy does not preclude the parties from submitting the dispute to a court of competent jurisdiction.
D. Fee Structure
Each Provider will determine its own fees for presiding over a dispute. The fees charged by WIPO will vary depending on the number of domain names included in the complaint and whether a single panelist or a three-person panel resides over the dispute resolution process. WIPO's fees range from U.S. $1,000 for a single panelist reviewing one to five domain names, up to U.S. $3,500 for a three-person panel reviewing six to ten domain names. Fees for single panelist or three-person panel review of more than ten domain names will be decided after consultation with the WIPO Arbitration and Mediation Center. All fees will be paid by the complainant, unless the complainant chooses a single panelist and the registrant requests a three-person Panel. In this situation, the fees will be split evenly between the parties.
E. Effective Date
The Policy went into effect on December 1, 1999 for all domain names that were sponsored by registrars other than America Online, Inc., Network Solutions, Inc. and the NameIT Corporation. The Policy will go into effect for domain names sponsored by these registrars on January 3, 2000.
III. CHOOSING THE BEST PROCEDURE
The Act and Policy both provide trademark owners with new methods of protecting their intellectual property. The differences in the applicability and relief provided under the two approaches, however, will require a trademark owner to consider several factors before determining whether the Act or Policy is the appropriate procedure to use in a particular situation. Among the factors to consider are the type of relief sought, the time frame in which such relief is required, and the temporal and financial resources available to challenge the infringing activity.
A. Remedy Sought
The Act. Trademark owners filing a cause of action under the Act may request monetary relief including profits, damages (which may be trebled), costs, and, in exceptional cases, attorneys fees. Trademark owners proceeding under the Act can also elect to receive an award of statutory damages from between $1,000 to $100,000 per domain name. Statutory damages are only available for domain names that were registered on or after November 29, 1999.
The Act also is appropriate when the potential plaintiff is seeking to obtain relief against parties that the Policy (which is limited to actions against registrants) cannot reach, such as any of the registrant's licensees operating a site accessible under the domain name, and those trafficking in the domain name.
The Policy. The remedies available under the Policy are limited to cancellation or transfer of the domain name. Use of the Policy, however, does not preclude the parties from submitting the dispute to a court of competent jurisdiction.
B. Preliminary Relief
The Act. The Act is more appropriate when there is an urgent need to shut down an offensive Web site immediately. One of the more common situations that require immediate action involve the unauthorized use of a trademark owner's mark in connection with an offensive or pornographic Web site. Proceeding under the Act provides the trademark owner the ability to request a temporary restraining order or a preliminary injunction to shut down the offending Web site pending a final determination by the court.
The Policy. While the Policy strives to provide an expeditious resolution to cybersquatter issues, it does not provide a mechanism for preliminary relief. The Policy may be the preferable vehicle if the circumstances do not warrant a temporary restraining order or preliminary injunction and the mark owner wants to secure reasonably expeditious relief.
C. Resources Available to Pursue the Matter
The Act. The court filing fees associated with a cause of action under the Act are likely to be less than the fees charged by the Provider under the Policy. The costs associated with a lengthy lawsuit, however, can be significantly greater than the cost of resolving the matter under the Policy. A cause of action under the Act also may take much longer to resolve if a prompt resolution is not reached.
The Policy. The costs charged by a Provider to resolve a matter will probably be greater than the initial filing fees associated with a cause of action under the Act. A trademark owner, however, has much more control over the total costs incurred resolving a matter under the Policy than if a lawsuit is filed. The Policy, therefore, allows a trademark owner to estimate the total cost with more certainty than would be the case with an open-ended litigation under the Act.
IV. CONCLUSION
The Anticybersquatting Consumer Protection Act and Uniform Domain Name Dispute Resolution Policy both promise to greatly expand trademark owners' ability to protect their marks from infringement by cybersquatters. While nearly identical in purpose, the two procedures differ in many respects, including cost, expediency and the remedies provided. Before determining which approach to use, a trademark owner will have to analyze the facts and circumstances surrounding the infringement and identify the type of relief needed.
INFORMATION AVAILABLE ON LINE
Information concerning the Act and Policy can be found at several Internet Web sites.
The full text of the Act is available at http://www.aipla.org./html/S.1948IS.html.
The full text of the Policy and the required elements of a complaint or defense are listed at http://www.icann.org/udrp/udrp-policy-24oct99.htm.
A listing of all approved Providers is maintained by ICANN at http://www.icann.org/udrp/approved-providers.htm. Because additional Providers are expected to be approved by ICANN over the next few months, it is recommended that trademark owners periodically check this site.
A summary of WIPO's dispute resolution services and its fee structure can be found at http://arbiter.wipo.int/domains/.