Cybersquatters Attempt to Profit from the Trademarks of Others

With the proliferation of online business and advertising in the 1990s, the demand for domain names (Internet addresses) that are in some way relevant to a website’s source or content increased dramatically. The pool of available domain names rapidly began to disappear as people scrambled to register popular names, resulting in legal disputes over the use of domain names.


For example, a business owning a federally registered trademark might want to use that trademark as the domain name for their website, or at least prevent another from using it. However, trademark holders sometimes discovered that their desired domain names (or a confusingly similar one) were already taken by someone else, sometimes in bad faith. “Cybersquatting” is a term which refers to registering, selling or using a domain name with the intent to profit from the goodwill of another’s trademark. 


Trademark Law

A “trademark” (or a less common service mark) is a word, phrase, symbol or design, or combination thereof, that identifies and distinguishes the source of goods or services. Trademarks allow consumers to correctly identify the source of the product which offers them a guarantee of standardized quality. This in turn helps businesses profit by advertising and selling their product via the goodwill of their trademark. Trademark laws offer protection to trademark owners by awarding them exclusive rights in the use of their “marks.”   


Domain Name Registration

Website owners must register their chosen domain name, or Internet address. Businesses often desire a domain name that describes their goods or services in a manner that will be accessible and memorable to as many consumers as possible. Generally, to register a domain name, the holder must select one of the numerous domain name registry services and pay a fee to register their selected domain name. The domain name holder then has the exclusive right to that particular name for a specified period of one year or more, and may elect to renew it after the initial period has expired.


Trademarks & Domain Name Disputes

A business which owns a trademark would naturally want to use that trademark as its domain name or at least to prevent others from using the mark (or a confusingly similar one) as, or within, their own domain names. However, due to the “first come, first served” basis on which domain names were given out, desired domain names began to disappear at a rapid pace.


Several disputes arose as trademark holders quickly discovered that their trademarks were being used as or within a domain name belonging to someone else. Such disputes have included suits for traditional trademark infringement and trademark dilution as well as a newer form of infringement known as “cybersquatting.”


Cybersquatting as a Means to Profit from the Trademarks of Others

As commercial activity over the Internet began to increase, the availability of valuable domain names began to shrink. This negative relationship spawned the potential to profit from acquiring and selling such valuable domain names to businesses willing to pay large sums for them. Recognizing this potential, individuals known as “cybersquatters,” quickly began to register domain names using existing trademarks and company names with the intent sell them back to the trademark holder or company for a profit. However, trademark owners who are victims of cybersquatting have at least two forms of legal recourse, including filing a court action or submitting the matter to arbitration.


Anticybersquatting Consumer Protection Act

In 1999, the Anticybersquatting Consumer Protection Act (ACPA) was signed into law. The ACPA allows U.S. victims of cybersquatting to litigate the matter in court. Under the ACPA, the trademark owner must prove the following elements:

  1. The domain name registrant had a bad faith intent to profit from the trademark;

  2. The trademark was distinctive at the time the domain name was first registered;

  3. The domain name is identical or confusingly similar to the trademark; and

  4. The trademark qualifies for protection under federal law.

If the plaintiff is successful, a judge may order the cybersquatter to forfeit or cancel the domain name, transfer the name to the plaintiff, and may also award monetary damages.


For example, in a 2000 case, a Pennsylvania judge ordered a cybersquatter to pay Electronics Boutique $100,000 per domain name which they were held to have registered in bad faith. The defendant registered five domain names using variations on the name “Electronics Boutique” in violation of the ACPA. 


Uniform Domain Name Dispute Policy

Alternatively, victims of cybersquatting may submit their matter to an international arbitration panel created by the Internet Corporation of Assigned Names and Numbers (ICANN). ICANN assumed control of domain name registration in 1999 and has since implemented the Uniform Domain Name Dispute Policy (UDNDP). Under the ICANN procedure, the party complaining of cybersquatting must prove the following elements:

  1. The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;

  2. The domain name holder has no rights or legitimate interests in the name; and

  3. The domain name has been registered and is being used in bad faith.

Remedies under the UDNDP are limited to cancellation of the domain name by the cybersquatter or transfer of the domain name registration to the complainant. Monetary damages cannot be awarded through ICANN arbitration proceedings.

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