What is cybersquatting? Cybersquatting is the act of purchasing a domain name that uses the names of existing businesses, which are usually trademarked, for the sole purpose of either profiting from the goodwill of that person’s business/trademark or holding the domain name hostage in exchange for a sum of money from the business or person that owns the trademark in order to acquire the domain.
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The ACPA Generally
In 1999, Congress enacted the Anti-Cybersquatting Consumer Protection Act (“ACPA”). 15 U.S.C. § 1125(d). The Act creates a cause of action for anyone who registers or uses a domain name that is confusingly similar to, or dilutive of, the trademark or personal name. Cybersquatting became apparent during a time when the Internet was first blossoming in some corporations were not savvy enough to realize the opportunities that existed on the Internet. Some companies that were victims of cybersquatting were Panasonic, Hertz, and Avon.
A potential plaintiff must satisfy the following in order to bring an action under the ACPA:
- The mark must have been distinctive. In other words, the mark must have enjoyed trademark status at the time that the domain name was registered. If the claim is that the domain name dilutes the mark the mark must have been famous at the time that the domain name was registered.
- The plaintiff must also provide evidence that the “squatter” acted with bad faith intent to profit.
Bad Faith Intent
In determining whether a person has a bad faith intent, a court may consider factors such as, but not limited to:
- 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 name that is otherwise commonly used to identify that person, i.e. establish nickname,
- The person’s prior use, if any, of the domain name in connection with a 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 use, or having an intense 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 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 person’s domain name registration is or is not distinctive and famous.
15 U.S. Code § 1125(d)(1)(B).
In 2008, Verizon won a $33.2 million lawsuit against us services company, OnlineNic that had registered hundreds of domain names with Verizon trademarks. Some of the domain names included myverizonwireless.com, iphoneverizonwireless.com and verizon-cellular.com. Verizon sued OnlineNic under the ACPA.
Some remedies under the ACPA include injunctive relief, recovery of the defendant’s profits. The ACPA also allows for statutory damages that range from $1000-$100,000 per domain name. In the Verizon case, the $33.2 million judgment was because the judge awarded $50,000 for each of the 663 addresses that OnlineNic registered with bad intent.
If a personal name qualifies as a mark per the Lanham Act than it is also protected by the ACPA. But, it should be noted that cybersquatting on a personal name is limited to when a registrant’s intent in registering a plaintiff’s personal name is to profit for financial gain.