Cybersquatting and Domain Disputes

The common word “squatting” means to live in a building that someone does not have a right to live in.  Similarly, “cybersquatting” means to purchase an internet domain name in bad faith that includes a trademark term belonging to someone else.

The typical cybersquatter purchases a domain name comprised solely of or including a trademark owned by someone else, such as the name of a company or a product. The cybersquatter may or may not use the domain for a website, but will offer to the sell the domain to the original trademark holder for an unreasonable amount of money.  Cybersquatters generally purchase multiple domain names for the same purpose.

What is not Cybersquatting?

The bad faith aspect of cybersquatting is important, because it separates cybersquatting from other, innocent, uses of someone else’s trademark in a domain name.

Domain names purchased for purposes other than profiting from someone else’s trademark do not usually lead to cybersquatting.  For example, if someone is really mad at Company X, he can purchase “companyxsucks.com” and put up a website criticizing Company X.  That would not be cybersquatting, because the consumer is not profiting off of the trademark “Company X.” Rather, the consumer is using Company X in a descriptive way, as the name of the company that he is criticizing.

Also, if the trademarked term has another use that does not refer to the entity owning the trademark, that is not usually cybersquatting either, as long as the use is not in bad faith.  An example of this is the name of a town.  If Company X is also the name of a town, and a resident in the town buys “companyx.com” and creates a website about the town itself, that may not be cybersquatting.  As long as the website is not created in bad faith—such as a fake website meant to prevent a cybersquatting charge while the owner tries to sell the domain name to Company X for a lot of money—courts or ICANN will not act against the site owner.

Domain Name Law

There are two main ways to stop a cybersquatter in the United States:  the laws of the United States in the Anticybersquatting Consumer Protection Act of 1999 (ACPA), or the Uniform Dispute Resolution Policy (UDRP) of the Internet Corporation for Assigned Names and Numbers (ICANN).

Anticybersquatting Consumer Protection Act of 1999

The ACPA expended the Lanham Act (the American law governing trademarks and unfair competition) to prohibit cybersquatting.  In order for the ACPA to be applied by an American court for damages besides return of the domain name, however, the court must have jurisdiction over the defendant, the owner of the infringing domain name.  This can be difficult, because if the owner lives in another country, there are often few grounds to argue for jurisdiction in the United States.  If the owner were to sue the defendant in his own country, there might not be specific anti-cybersquatting laws in that country.

The ACPA allows a trademark holder to sue the person who registered the domain name or the domain name itself (called an “in rem” action, meaning it is against the property) when the domain was registered with the sole intent of selling the domain back to the trademark owner for a profit.  It applies to domain names containing trademarks and/or individuals’ names.  A plaintiff can only sue under the in rem provision after she has determined that she cannot get personal jurisdiction over the defendant (for example, if he lives in another country) or she has been unable to locate the defendant after certain specified good faith efforts.  If she is victorious under the in rem provision, she can only recover the domain name itself; she could not get damages, costs, or attorney’s fees.

To bring a claim under the ACPA due to the use of a trademark, the plaintiff must show:

• the mark is distinctive or famous;
• the domain name registrant had a bad faith to profit from the mark; and
• the domain name and the trademark are identical or confusingly similar (for famous marks, the domain name can be identical, confusingly similar, or dilutive)

Courts use the following nonexclusive factors to identify bad faith:

• the rights of the domain owner in the domain name;
• whether the domain name is the name of the owner;
• if the owner used the domain name in connection with the sale of goods or services;
• the owner’s noncommercial or fair use of the mark on an associated website;
• whether the owner intended to divert consumers from the mark owner’s own website, either for commercial gain or to tarnish or disparage the mark by creating a likelihood of confusion over whether the website is associated with the mark owner;
• whether the owner offered to sell the domain name without intending to use it to sell goods or services, and whether the owner has a history of registering domain names just to sell them back to mark holders or third parties;
• whether the owner used false contact information when applying for the registration of the domain name or updating the registration, or whether the owner has a history of providing false information during registration;
• whether the owner has multiple domain names which he knows are identical or confusingly similar to marks of others that are distinctive, or dilutive of famous marks of others; and
• how distinctive or famous the mark is within the meaning of the Lanham Act.

Domaine Dispute Resolution

ICANN is charged with overseeing the assignment and maintenance of domain names and other indicators on the internet.  Mark holders can file an action under the UDRP if they feel someone is cybersquatting on one of their marks.  Although ICANN has authority over domain names in general and thus jurisdiction is a lesser concern than under the ACPA, UDRP actions can be appealed to other courts, such as United States federal courts.  Plaintiffs can bring an ACPA action in federal court if they lose at ICANN.  Generally, the UDRP is intended to be more cost-effective than a typical legal case.

Similar to cases under the ACPA, the plaintiff in a UDRP action must show three things to establish a cause of action:

• the domain name is identical or confusingly similar to a mark owned by the plaintiff;
• the owner of the domain name does not have any rights in the domain name; and
• the owner registered the domain name in bad faith.

The nonexclusive factors considered by ICANN in identifying bad faith are:

• whether the owner registered or acquired the domain name primarily for the purpose of selling the domain name to the owner of the mark (or to a competitor of the mark owner), at a price higher than the out-of-pocket cost of the domain name;
• whether the owner registered the domain name to prevent the owner of the mark from using the mark in its own domain name, if a pattern of such conduct by the domain name owner;
• whether the owner of the domain name registered the domain primarily for the purpose of disrupting the business of a competitor; or
• whether the owner has intentionally used the domain name to create a likelihood of confusion between his own website and the trademark at issue to attract internet consumers to his website for commercial gain.

Domain Name Attorney

If you believe that someone else is cybersquatting on one of your trademarks, or someone has accused you of cybersquatting, you should speak to an internet law attorney right away.  The specific facts of your case will determine which forum your cases will proceed in, and what causes of action and defenses may be available.  Because of the importance of the facts, you should speak to an attorney to determine your rights.