What are the Top Legal Options to Combat Cybersquatting?

Cybersquatting Is Becoming Increasingly Common…

Cybersquatting — the practice of registering or using a domain name to profit from the goodwill of someone else’s trademark— is increasingly common. For example, the estate of the late singer Prince recently filed a lawsuit alleging that a New Jersey business is cybersquatting through its use of Prince.com. The suit alleges that Domain Capital is infringing on the estate’s “PRINCE” trademark and seeks permanent injunctive relief, transfer of the domain, damages, and attorneys’ fees under the Anticybersquatting Consumer Protection Act (“ACPA”).

If a domain name uses a company’s trademark without authorization, there are a number of legal remedies, including the (ACPA) the Uniform Domain Name Dispute-Resolution Policy (“UDRP”). Both legal tools have their advantages and disadvantages, which are described in greater detail below.

Uniform Domain Name Dispute-Resolution Policy

The UDRP, which is administered by the Internet Corporation for Assigned Names and Numbers (ICANN), requires trademark-based domain-name disputes to be arbitrated and establishes procedures for quickly resolving disputes. Trademark holders can pursue expedited administrative proceedings in cybersquatting cases by filing a complaint with an approved dispute-resolution service provider, such as the National Arbitration Forum (NAF) or the World Intellectual Property Association (WIPO).

When deciding cases, arbitrators must take the following criteria into consideration:

• Whether the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;
• Whether the respondent has any rights or legitimate interests in the domain name (for example, the legitimate offering of goods and services under the same name); and
• Whether the domain name was registered and is being used in bad faith.

If the complainant is successful, the domain name will be canceled or transferred to the complainant.

The UDRP is quicker and less expensive than filing a lawsuit, which makes it an attractive option for many businesses. Trademark owners also retain the right to file suit at a later date. The primary disadvantage is that damages are not available. However, for trademark owners who are only seeking to have the domain name transferred or canceled, the UDRP makes the most sense.

Anticybersquatting Consumer Protection Act

Under the ACPA, trademark holders can file federal lawsuits against cybersquatters. To prevail in an ACPA suit, a plaintiff must show that (1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted with “bad faith intent to profit from that mark.” In determining if the defendant has bad faith, the court may consider the following non-exclusive factors:

• The trademark or other intellectual property rights of the defendant, if any, in the domain name;
• The extent to which the domain name consists of the legal name of the defendant or a name that is otherwise commonly used to identify the defendant;
• The defendant’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
• The defendant’s bonafide noncommercial or fair use of the mark in a site accessible under the domain name;
• The defendant’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 defendant’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 bonafide offering of any goods or services, or the defendant’s prior conduct indicating a pattern of such conduct;
• The defendant’s provision of material and misleading false contact information when applying for the registration of the domain name, the defendant’s intentional failure to maintain accurate contact information, or the defendant’s prior conduct indicating a pattern of such conduct;
• The defendant’s registration or acquisition of multiple domain names which the defendant knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and
• The extent to which the mark incorporated in the defendant’s domain name registration is or is not distinctive and famous within the meaning of Section 1125(c)(1)of the Lanham Act.

The ACPA authorizes a court to order the forfeiture or cancellation of a domain name or the transfer of the domain name to the owner of the mark.  In lieu of actual damages, plaintiffs may pursue statutory damages ranging from $1,000 to $100,000 per domain name. Where multiple infringing marks are at issue, the ACPA become an increasingly attractive option.

If you have any questions, contact us

If you have any questions or if you would like to discuss the matter further, please contact me, David Einhorn, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.