Domain name disputes in the land of cybersquatting, cyberpiracy

The advent of the Internet created new possibilities for business owners. Small and large business owners alike now realize the importance of building a Web site at a domain address that reflects their well-known name or brand. However, many business owners’ plans have been stifled when they realized that computer savvy individuals had already registered a domain name containing or comprising their valuable trademark or name. Thus, the term cybersquatting or cyberpiracy was coined.

Cybersquatting or cyberpiracy describes the practice of deliberately and in bad faith registering a domain name that reflects another’s famous or distinctive trademark. Faced with their valuable brand name being pirated, business owners turned to the law to protect their trademark rights resulting in the collision of historical trademark law and Internet domain name use.

Harmonizing this new technology with conventional trademark law proved daunting as traditional trademark laws were drafted to protect trademark owners in the real world not cyberspace. Many distinctions exist between traditional trademark law and Internet domain name registration and use. For example, in the United States, trademark rights arise from use, whereas domain names are registered on a first come, first served basis with no initial regard for prior trademark rights. Under trademark law, arbitrary, fanciful, made-up marks are most often valuable, while generic and some descriptive trademarks cannot be protected.

On the Internet, descriptive and generic domain names can have great value. For instance, the domain name <business.com> recently sold for a record $7.5 million whereas it is doubtful that “business” alone could be registered as a valid trademark. Under trademark law, the same trademark can co-exist across different product lines, such as, DELTA faucets with DELTA airlines and UNITED airlines with UNITED van lines. Conversely, there can be only one <delta.com> or <united.com> domain name. Under trademark law, consumer confusion is the guiding principal and minor variations in trademarks may be insufficient to permit registration for the same types of goods. Minor changes to domain names (as simple as adding a period, a dash, or another letter) create an entirely different domain name. As one might expect, this collision of the Internet and traditional notions of trademark law has resulted in significant litigation.

In the early days of the Internet, there was no Federal legislation specifically aimed at combating cybersquatting. Businesses were forced to either pay exorbitant sums to cybersquatters in order to buy back their domain names or rely on traditional notions of trademark law unsuited to deal with this problem. Recognizing that many American businesses were being victimized by these cybersquatters, on November 29, 1999, President Clinton signed into law the Anticybersquatting Consumer Protection Act (the “ACPA”). The ACPA prohibits bad faith registration of distinctive trademarks as Internet domain names with the intent to profit from the goodwill associated with such marks. Under the ACPA, a trademark owner can obtain injunctive relief from a federal court including, transfer of the disputed domain name, monetary damages, and statutory damages up to $100,000. per domain name. The ACPA also provides for in rem (against the property) jurisdiction whereby a trademark owner can bring an action against a domain name registrant whose identity is unknown or who is located outside the United States.

Another new weapon in business owners’ arsenal is the Internet Corporation for Assigned Names and Numbers’ Uniform Domain Name Dispute Resolution Policy (the “UDRP”). The UDRP was adopted by ICANN, the agency charged with overseeing the registration of Internet domain names, in October 1999. The UDRP permits a business to file an administrative proceeding against a domain name registrant where: (1) the domain name is identical or confusingly similar to a trademark in which the business has rights; (2) the registered owner of the domain name has no rights to the domain name; and (3) the domain name has been registered and is being used in bad faith. An action under the UDRP is far less costly than federal court litigation and a decision is forthcoming with in 45-60 days. However, under the UDRP the only relief available is cancellation of the domain name registration or transfer of the registration to the complainant.

Despite recent efforts to curb cybersquatting, it appears that trademark verses domain name disputes are here to stay. On November 16, 2000, ICANN announced that it has selected 10 new top level generic domain names including, .info, .biz, .pro, .name, .museums, .aero and .coop. Although it has not been determined when these new domain names will be available to the public, one thing is certain, domain name prospectors and cybersquatters will likely take advantage of this additional opportunity to register domain names comprising or containing your valuable trademarks and trade names.

What to do to protect your valuable trademark and trade name:

• Inventory and register your trademarks and other valuable intellectual property;
• Select your domain names after examining thoroughly the target audience for your Web site and how they are likely to search for you on the Internet;
• Police domain names by plugging your trademark into search engines to see what comes up;
• Use the new dispute resolution mechanisms now available to prevent interlopers from usurping your goodwill.

William R. Grimm is a partner in the law firm of Hinckley, Allen & Snyder, and chairs the firm’s business litigation practice group. He has more than 15 years experience in the area of intellectual property.