Source: https://www.fr.com/news/defeating-cybersquatters/
Timestamp: 2019-04-25 00:33:38+00:00

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Many unsuspecting American businesses are losing sales and facing intellectual property rights erosion due to an unwelcome Internet presence: the cyber-squatter. Cybersquatters reportedly have already cost businesses approximately $175 billion worldwide in lost revenue. 1 This article will discuss the parameters of anti¬cybersquatting laws and various legal and practical options for companies to combat these modern¬day outlaws.
Cybersquatters register domain names that are the same as or confusingly similar to existing brands. Similar to traditional “squatters,” cybersquatters stake claims to unused Internet domain names, and refuse to leave without compensation. In the mid¬1990’s, a virtual gold rush on domain name registrations was fueled by tales of regular folks striking it rich, armed only with the clothes on their backs and dial¬up AOL accounts.
Notwithstanding the Panavision decision, trademark laws were not well suited to address various nuances of cybersquatting. Other district court decisions refused to hold that mere “warehousing” of a domain name for the purpose of selling it constituted “use in commerce” of an infringing trademark, thus leaving a legal loophole for cybersquatters in most jurisdictions. Accordingly, in 1999 Congress enacted the Anticybersquatting Consumer Protection Act (ACPA). 5 The same year, the Internet Corporation for Assigned Names and Numbers adopted the Uniform Domain Name Dispute Resolution Policy (UDRP), a low¬cost administrative procedure specifically designed to resolve cybersquatting issues. Since the adoption of ACPA and UDRP, numerous court rulings and administrative decisions have defined the scope of these laws and confirmed their effectiveness in curbing unlawful Internet activities.
While there are now multiple strategies one can pursue to ensure that trademark rights are not infringed online, by no means has the Wild West of cyberspace been completely tamed. Choosing the best approach for a specific situation is more crucial than ever. Reaping a ransom for transfer of the domain is less common now than in the past, but present¬day cybersquatters still generate illicit revenue by hosting “parked” Web pages that contain advertisements and links to goods and services that compete with the brand¬holder’s business. Each click on a banner or link will result in profit for the cybersquatter and the loss of a potential sale to the brand owner.
Cybersquatters also may use their domain names to redirect to a competing Web site, again resulting in a loss of business to the brand¬holder. Along with this tangible harm, this causes significant damage to the targeted owner’s intellectual property rights. As consumers searching for an official company Web site are led to unrelated pages, the brand becomes increasingly diluted. This is especially true if consumers are led to believe that an unauthorized Web site is endorsed by or affiliated with the brand¬holder itself, resulting in a diminution of consumer trust in the brand.
Sometimes the best defense is a good offense. Domains can be obtained for as little as $1.99 each. By preemptively registering all of the top¬level domains (e.g., .com, .net, .info, .biz) that relate to any existing or planned brand names, one limits vulnerability and the likelihood of a costly encounter with a cybersquatter. Planning in advance to accommodate the inattentive Web¬surfer by registering domains with commonly misspelled words is an additional step. In the long term, this planning can be expected to save both time and money.
Through various online tools, it is generally possible to track down almost any domain registrant. Having a trademark attorney send a cease and desist letter to a cybersquatter, advising of legal rights and requesting the voluntary transfer of the domain, will sometimes work. If the cybersquatter complies, potentially expensive legal action is avoided; if not, little is lost.
Generally, legal options are administrative remedies through the UDRP or a federal lawsuit under the ACPA.
A company should consider proceeding under the UDRP when it seeks the relatively speedy and low¬cost transfer of an offending domain name. As compared to a federal lawsuit, which can last anywhere from six months (for a default judgment) to three years, the average UDRP proceeding lasts approximately six weeks. Legal fees for the administrative proceeding will be considerably lower, as the entire UDRP process consists of a single complaint and an optional reply brief. Unlike formal litigation, there is no discovery, no motion practice, no in¬person hearings, and no trial. However, the UDRP mechanism affords a limited remedy. A successful plaintiff can only obtain the transfer of the infringing domain name. There is no possibility of recovering monetary damages.
In especially egregious cases in which a cybersquatter has registered numerous infringing domains that have caused measurable financial damage to a business, it often is advisable to choose the ACPA option, which allows for up to $100,000 in damages per domain as well as costs and attorney’s fees. Further, in contrast to the UDRP, which requires that the plaintiff prove bad faith registration and use of the domain name, the ACPA only requires bad faith registration or use. A company should bring a federal action under the ACPA in cases in which the cybersquatter initially procured the domain innocently but subsequently commenced using the corresponding Web site in a manner designed to capitalize on the goodwill of the company’s trademark.
Note that both laws require only that the infringing domain be “confusingly similar,” not “identical” to an existing trademark. This distinction is key, as more than a decade has passed since the initial “gold rush” on Internet domain names, and the majority of domains that are identical to established trademarks have been taken. The days of stumbling upon an available domain such as walmart.com or mcdonalds.com are long over. But a new form of cybersquatting called “typosquatting” is alive and well. Typosquatting involves the registration of domains with a slight misspelling of a brand name in an attempt to capture careless Web¬surfers (e.g., wallmart.com or mcdanalds.com). Another variation of typosquatting involves the addition of common generic terms to the trademark in an effort to lure unsophisticated Internet users who type in descriptive search terms in their Web browser (e.g., walmartsales.com, mcdonaldschickennuggets.com). Both types of domains are considered infringing, so long as the trademark owner can prove “bad faith” on the part of the domain name registrant.
Above is much of the information necessary to take on and defeat the cybersquatter, scourge of the Internet. Those who encounter cybersquatters should, of course, consult an experienced trademark attorney, and together, protect the valuable goodwill in their company’s trademarks!
1 Howard, Theresa, Cybersquatting Crooks Profit on Marketers’ Brand Names, USA TODAY May 11, 2009.
2 Panavision Int’l. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998).
3 141 F.3d at 1325.
5 Codified at 15 USC 1125(d).
6 Bank of Am. Corp. v. Nw. Free Cmty. Access, FA 180704 (Nat. Arb. Forum Sept. 30, 2003); see also Virtual Works, Inc. v. Volkswagen of America, Inc. (finding bad faith where the defendant offered the domain name for sale to Volkswagen).
7 Victoria’s Secret et al. v Tri X Group, Ltd., FA 96540 (Nat. Arb. Forum Feb. 1, 2001).
8 DaimlerChrysler v. The Net Inc., 388 F.3d 201 (6th Cir. 2004).
9 Sony Kabushiki Kaisha v. Anderson, FA 198809 (Nat. Arb. Forum Nov. 20, 2003) (finding a pattern of registering domain names in bad faith when the respondent previously registered domain names incorporating well¬known third¬party trademarks); and E. and J. Gallo Winery v. Spider Webs Ltd., 129 F.Supp.2d 1033 (SD Tex. Jan. 24, 2001), aff’d, 286 F.3d 270 (5th Cir. 2002) (Court ordered defendant to transfer to plaintiffs, noting that defendant had registered approximately 2,000 other domain names, including those involving the names of many famous companies and places).
FA 814312 (Nat. Arb. Forum Nov. 29, 2006) (finding bad faith registration and use where the respondent had been subject to numerous UDRP proceedings where panels ordered the transfer of disputed domain names containing the trademarks of the complainants).
11 The Leather Factory, Inc. v. Virtual Sky, FA 611781 (Nat. Arb. Forum Feb. 1, 2006) (finding bad faith registration and use because “Registrant is using the disputed domain name to provide links to third¬parties offering commercial products and services…similar to those provided by Complainant”); and Citigroup, Inc. v. Chen Bao Shui, 611 F.Supp.2d 507 (E.D.Va. 2009) (Court found violation of the ACPA where the defendant registered and used the site to garner click-through revenue).
12 Intel Corporation v. M. Macare a/k/a M. Macar, FA 660685 (April 26, 2006) (“[T]he Panel infers that Respondent receives click¬through fees for each consumer it diverts to these other websites[,] finds that Respondent is taking advantage of the confusing similarity between the domain names and Complainant’s marks in order to profit from the goodwill associated with the marks, and holds that Respondent’s registration and diversionary use of the disputed domain names constitutes bad faith…”).
13 Lahoti v. Vericheck, Inc., 2007 WL 2570247 (W.D. Wash. Aug. 30, 2007) (finding bad faith where the defendant’s Web site directed consumers to another site that provided search results listing some of plaintiff’s competitors); and Ritchie Bros. Auctioneers (Canada) Ltd. v. Stargateway, FA 616234 (Nat. Arb. Forum Feb. 6, 2006) (finding for complainant and ordering transfer of domain name where “Respondent’s use of the ritchiebrother.com domain name in association with a website that offers similar products and services to those of Complainant suggests that Respondent is attempting to attract Internet users to its website through a likelihood of confusion”).
14 A. H. Belo Corp. v. King TV and 5 Kings, D2000¬1336 (Dec. 8, 2000 WIPO); and Cricket Communications, Inc. v Louise Oliver, FA 954005 (Nat. Arb. Forum May 29, 2007) (bad faith found where the registrant transferred the domain names immediately after being served with the UDRP complaint, a transaction that the Panel found to be “almost certainly a sham”).
15 Audi AG v. D’Amato, 381 F.Supp.2d 644 (E.D. Mich. 2005) (plaintiff prevailed in ACPA action where defendant prominently featured the AUDI trademarks and logos on his site in connection with the unauthorized sale of AUDI¬branded merchandise); see also World Wrestling Federation Entm’t, Inc. v. Ringside Collectibles, D2000¬1306 (WIPO Jan. 24, 2001) (concluding that the respondent registered and used the domain name in bad faith because the name directed users to a commercial Web site that the complainant’s customers were likely to confuse with the source of the complainant’s products, especially because of the respondent’s prominent use of the complainant’s logo on the site).
16 Silpada Designs, Inc. v O’Malley, CA No 04¬2303¬CM (D. Kan 2006) (affirming statutory damages where domain name was registered after cease and desist letter was received).
17 Orange Glo Int’l, Inc. v. Blume, FA 118313 (NAF Oct. 4, 2002) (finding that respondent had constructive notice of the complainant’s trademark rights where the complainant possessed a federally registered trademark).
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