This article first appeared in the January 12-18, 2001 issue of Long Island Business News.
"Cybersquatting" is a term frequently used to refer to the practice of registering someone else’s trademark or trade name as your domain name. Some cybersquatters divert traffic to their own site. Others simply make a quick profit by selling the domain name to the trademark owner. After the enactment of the Anti-cybersquatting Consumer Protection Act of 1999, trademark owners can turn to the courts.
The anti-cybersquatting law protects not only famous trademarks, like "Kodak" and "Coca Cola," but distinctive marks regardless of fame. Further, it prevents the use of "confusingly similar" marks, not just identical ones. This can be particularly important in cases where someone registers a misspelled trademark as a domain name, hoping to divert traffic.
An allegation of "confusing similarity" was the basis of a claim by Electronics Boutique, a company that sells video games and personal computer software though retail stores and a web site at electronicsboutique.com. The company contended that John Zuccarini had violated the law by registering confusingly similar domain names. Two of the objectionable names were "electronicboutique.com" and "electronicbotique.com." The first part of the word in both instances uses the singular rather than the plural, and "boutique" is misspelled in the second name. According to the company, Zuccarini "mouse-trapped" anyone accidentally keying one of his domain names, rather than the Company’s, in a barrage of advertising windows. These windows featured a variety of products, including credit cards, answering machines, games and music. The consumer could not exit the Web without clicking on the succession of ads that appeared. Advertisers paid Zuccarini between 10 and 25 cents for every click.
In the Electronics decision, the court first found Electronic Boutique’s trademarks were protectable under the anti-cybersquatting law. Next, it determined that Zuccarini’s "business" consisted entirely "of trading on the goodwill developed by [Electronics Boutique]." Indeed, the court observed, Zuccarini’s profitability was completely dependent on his ability to create and register domain names that were confusingly similar to famous names. As the similarity in the spellings of Zuccarini’s domain names to popular or famous names increased, the likelihood that an Internet user would inadvertently type one of his domain names (and that Zuccarini would be compensated) increased.
Concluding that Zuccarini had intended, in bad faith, to profit from the domain misspellings, the court barred him from using the names, and ordered him to pay statutory damages and attorney fees incurred by Electronic Boutique in the litigation.
Not all alleged cybersquatting cases are so clear. It is frequently difficult to determine whether the alleged cybersquatter is trying to divert traffic (or extort money) from a trademark owner, or has a good faith basis for believing he has a right to a particular domain name. Registering someone else's trademark is not always cybersquatting. Courts still are struggling with what to do when a company in one industry has the same trademark as another company in another industry. For example, a popular word, such as "sports," could be a trademark or service mark for many businesses, but only one "sports.com" can be registered as a domain name. Still, as the Electronics Boutique decision makes clear, courts are unwilling to allow true cybersquatters, that is, those with no real claim to a protected mark, to profit at the expense of businesses that own legitimate marks.
Eileen Breslin, a partner in Garden City’s Jaspan Schlesinger Hoffman LLP, represents clients in connection with e-commerce/internet, corporate finance, mergers and securities law matters.
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