Want to join the Utah Business Law Section? Visit https://services.utahbar.org/ and use the "My Associations" portal card to access our exclusive resources today.
Home » Treatises » Anti-Cybersquatting: Protecting Your Brand
We live in a digital world. Long gone are the days when your business only needed to be listed in the Yellow Pages. The advent of the internet opened up drastic changes to how businesses market their goods and services and revealed seemingly endless possibilities for business owners to reach potential customers. The internet has truly globalized economies and expanded the reach of every business. A business’s website is now a central part of its marketing strategy and a critical aspect of building its brand.
For trademark owners, however, the internet is a vast sea of problems for protecting their brand. For every legitimate website properly offering its goods to the public there are at least two others that peddle counterfeit products under the trademarks or brand of another. The internet also has made it easier for some to do business by profiting off another’s trademarks or brand by claiming or implying affiliation with the trademark or brand owner even though their goods are clearly inferior. Pirates are continually thinking up new ways to profit from the extent trademark and brand owners go to build their reputation by diverting their customers.
Cybersquatting is the practice of registering names, especially well- known company, brand names and trademarks, as Internet domains, in the hope of reselling them at a profit. The Cybersquatter essentially holds a domain containing one’s trademark hostage and often offers to sell it to the owner for an exorbitant price. Before business owners became more savvy regarding the internet’s marketing potential, cybersquatting became a really big problem with some of the biggest brand names falling victim to a new type of piracy.2 However, cybersquatting is not a problem of the past, but continues to cause problems for trademark holders.
When dealing with a potential cybersquatter, business owners have a couple of possible solutions at their disposal. Business owners may bring a claim under the Anticybersquatting Consumer Protection Act (ACPA) or they may take advantage of the remedies under the Uniform Domain-Name Dispute-Resolution Policy (UDRP). While the ACPA is a statute under federal law, the UDRP is governed by the Internet Corporation for Assigned Names and Numbers (ICANN).3 Although both the ACPA and the UDRP help business owners achieve similar results, each are fairly different in how they go about doing it.4
Using the ACPA to Protect Your Business
To combat the growing dilemma cybersquatters presented to business owners, Congress enacted the Anticybersquatting Consumer Protection Act (ACPA), an addition to the unfair competition provisions in the Lanham Act, in 1999.5 The ACPA creates a mechanism for cybersquatting victims to stop the cybersquatters.6 A business owner must bring a claim under the ACPA, generally in federal court, and allege that the cybersquatter (i) is acting with bad faith intent to profit from the business owner’s company name or trademarks and (ii) has trafficked
in or registered a domain name that is (a) identical or confusingly similar to a distinctive mark or (b) identical or confusingly similar to or dilutive of a famous mark.7
In determining the bad faith of the cybersquatter, the court will consider a number of statutory factors:
the trademark or other intellectual property rights of the person, if any, in the domain name; the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly
the trademark or other intellectual property rights of the person, if any, in the domain name; the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly These nine factors play a critical role in litigation as cases under the ACPA often hinge on the defendant’s bad faith. Thus, a business owner could prove that the allegedly infringing domain name is identical or confusingly similar to its trademarks, but if they cannot show the domainer’s bad faith, the whole claim collapses. The business owner may still have other claims under the Lanham Act which are not so contingent on bad faith, like trademark infringement or common law unfair competition, but the ACPA hinges on a finding that the domainer acted in bad faith.9
However, even if the business owner can successfully demonstrate the cybersquatter’s bad faith, they will still need to demonstrate that his or her trademark(s) are distinctive or famous and that defendant’s domain name is identical or confusingly similar those marks.10 When it comes to determining the distinctiveness or fame of a mark or trade name, the business owner must show that the mark is recognized by the general public to describe their goods or services.11 Fame will be determined by how widely the mark is recognized by the consuming public, which will be based on a detailed factual analysis.12 The greater the distinctiveness or fame of a particular mark, the higher the court’s level of scrutiny and broader measure of relief.
Whether a domain will be considered confusingly similar is usually based on a multi-factor analysis, which looks at many aspects of the marks/domains, the goods marketed under each, the channels of trade, class of customers, etc. However, similarity is often not an issue as the domainer usually incorporates the business owner’s mark.13 If a business owner can successfully show that a domainer is acting in bad faith in registering domain names that are confusingly similar to its distinctive or famous trademarks, then the court could order the forfeiture, cancellation or transfer of the domain name to the business owner as applicable.14 To the extent that the cybersquatter’s actions have damaged the business owner, he or she may be entitled to damages for any other violation under the Lanham Act, such as for trademark infringement.15 Perhaps one of the most famous cases dealing with cybersquatting was Verizon California, Inc. v. Navigation Catalyst Systems, Inc., et al., which by most accounts was the first case where a plaintiff bringing claims under the ACPA won in court.16 What made this case so unique was that the defendant in that case, Navigation Catalyst, had an automated system for temporarily registering domain names under the five day Add Grace Period implemented by ICANN, often registering domain names that often had nothing to do with anyone’s trademarks.17 Verizon filed suit because the defendants had registered more than 128 domains which all included variations (including misspellings) of the word Verizon and other Verizon trademarks.18 The primary concern was that the defendant was taking common misspellings of, and in some cases even wholly incorporating, Verizon trademarks and using them in their domain names.19 Not surprisingly, the court found that each of the domain names were confusingly similar
However, the primary fight was over whether the defendants acted in bad faith.21 The defendants argued “that their registration of a few ‘scarcely recognizable’ domain names” did not merit a finding of bad faith.22 Verizon maintained, and the court agreed, that defendant’s actions banked on the “likelihood that a particular domain name might be typed in accidentally by someone trying to type one of [Verizon’s] marks or domain names.”23 The court also considered all of the factors of bad faith outlined in the statute and found that defendants had the requisite bad faith. A careful analysis of all of the factors demonstrated overwhelming evidence of the defendant’s bad faith.24 As a result, the court imposed an injunction against defendants from using the infringing domain names and any name that is identical or similar to “VERIZON, VERIZON WIRELESS, FIOS, VERIZON FIOS, VZ, VZACCESS, VZEMAIL, VZGLOBAL, VZVOICE, and VZW.”25
Filing a claim under the ACPA has its limitations. Despite Verizon’s success in 2008, it is one of the few success stories in ACPA litigation.26 Since litigation in federal court can be prohibitively expensive,27 as with most litigation, it is often only available to companies or businesses that can afford it. Many, if not most, small businesses can simply not bare the arduous and labor-intensive costs associated with preparing for a ACPA case. Litigation also has no guarantees, which means that a business owner could spend thousands, if not tens of thousands of dollars and still be in the same position he or she was before filing the lawsuit. Many are not willing or unable to take that risk.
Another drawback ACPA claims is the timeframe. Often, lawsuits drag on for months or in some cases, years. Unfortunately, claimants in federal court are at the mercy of the court’s, and to some extent, the opposing party’s schedule. This may mean a significant lag in getting the infringing domain taken down.
Using the UDRP: Possibly a More Cost-Effective Choice
A practical alternative to the ACPA is the ICANN sponsored UDRP, which is an international set of rules and regulations governing the process by which domain names are cancelled.28 “Under the policy, most types of trademark-based domain-name disputes must be resolved by agreement, court action, or arbitration before a registrar will cancel, suspend, or transfer a domain name.”29 However, in cybersquatting cases, there are expedited procedures a trademark holder can initiate by filing a complaint with one of ICANN’s approved dispute-resolution service providers.30
Regardless of whether a trademark owner uses the ACPA or the UDRP, he or she will need to work through ICANN to cancel a registration. However, the UDRP requires domain owners to submit to a mandatory administrative proceeding before one of their approved arbiters.31 Business owners must file a complaint with the approved service provider of their choice and allege that: domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;” (b) that the domain was registered in bad faith; and [the domain owner] has no rights or legitimate interests in respect of the domain name; and [the] domain name has been registered and is being used in bad faith.
The elements, although worded slightly differently, are almost identical with the ACPA.33 The UDRP adopts a four-factor test for determining the registrant’s bad faith in lieu of the ACPA’s nine factors, which arguably makes it easier for trademark owners to demonstrate bad faith.34
Although the cost of the arbitration must be born by the party making the complaint,35 the streamlined approach of the UDRP to resolving domain disputes helps keep the costs down. The average cost for a UDRP arbiter is between $1,300.00 – $5,000.00,36 which is likely to be much cheaper than litigating an ACPA claim in federal court. Claims made under UDRP are also much faster.37 In general, baring special circumstances, the arbiter’s decision should be made within a couple of months from the date the complaint was filed.38 Even with special circumstances, a decision within 90 days is called for under the rules.39
Yet, one of the drawbacks to going through UDRP is that a trademark owner’s only remedy is cancellation or transfer of the infringing domain name.40 Thus, if the trademark owner is otherwise harmed and wants to recover damages for the infringement, they will have to take their claim to federal court under the Lanham Act.41 However, if a trademark owner is successful in getting the domain cancelled under the UDRP prior to bringing a claim in federal court,42 it could give them a lot of leverage if they are looking for damages, which may prompt a settlement.
Conclusion
Overall, both the ACPA and the UDRP can be effective tools to stopping a potential cybersquatter. While the ACPA is more dynamic in the remedies it affords (along with the rest of the Lanham Act claims that usually come with a ACPA claim), it carries with it the burden of litigation costs. The UDRP is very streamlined and can be a cost- efficient tool to stop cybersquatters quickly, but is limited in the scope of its remedies. In some instances, it may make most sense to employ both the ACPA and the UDRP. In any case, trademark owners are not helpless against cybersquatters and the damage they can do to one’s business and brand. In the end, it is important to remember that there are always options for