New Remedies For Trademark Owners Against Cybersquatting
Since nearly anyone can register a domain name for $35 or less per year, speculators known as "cybersquatters" register names that may be desirable to others in the hope of selling them for a large profit. Often, trademark owners and public figures cannot register their marks or names as domain names due to cybersquatters. To date, there have been mixed reviews when trademark owners have sued cybersquatters in federal court for trademark infringement or on the basis of dilution. These "true owners" now have two additional ways to combat cybersquatting.
Dispute Resolution Policy
As of January 1, 2000, a new method of obtaining the transfer of domain names registered in bad faith became available to trademark holders. The Internet Corporation for Assigned Names and Numbers (ICANN) which now manages the Internet’s domain name system worldwide, has new regulations under the Domain Name Dispute Resolution Policy and Rules of Procedure.
Prior to the ICANN rules, Network Solutions controlled these issues and required a claimant to have a federally registered trademark for the identical mark to combat cybersquatters. If a claimant was successful, a domain name could be enjoined but could not be transferred without court order or by agreement of the parties.
Under the new ICANN rules, a domain name can be transferred to a trademark holder in less than 60 days after a complaint is filed. These new rules also allow a trademark holder to recover a domain name without incurring the time and expense of discovery proceedings and jurisdictional issues which often are a part of federal litigation.Mechanically, the ICANN rules provide that a complaint may be filed with one of three approved dispute resolution providers for a fee as little as $750. The provider then appoints a panelist (or panel of three) that has the power to both enjoin the use of the domain name and to transfer the name to the party with superior rights. The complainant must establish three facts to prevail:
- the domain name must be identical or confusingly similar to the complainant’s trademark ,
- the respondent domain name holder must have no rights or legitimate interests in the domain name, and
- the domain name was registered and is being used in bad faith.
The third factor – bad faith – is defined fairly broadly including that the registrant acquired the domain name for the purpose of selling or renting it, to prevent the true owner from using the domain name, to disrupt the businessof a competitor, or using the name to intentionally attract Internet users to a web site for commercial gain.
New Federal Act
In a related response to cybersquatting, Congress enacted the Anticybersquatting Consumer Protection Act (Act) effective November 29, 1999. (See CURRENTS Winter 2000 "Cybersquatting: Good Old American Ingenuity or High-Tech Extortion" for a full description of the Act.) The Act formally provides that a party can be found liable in a civil action brought by the owner of a trademark, service mark or famous personal name if the cybersquatter registers the domain name with bad faith and an intent to profit. "Bad faith" is defined in a similar manner as in the ICANN rules.
The domain name must also be proven as "identical, dilutive, or confusingly similar" to that of the true owner. In addition to a transfer of the name, the plaintiff may be awarded between $100 and $100,000 in statutory damages per name, or may elect to recover actual damages. Recovery of statutory damages can be very useful where actual damages are difficult to prove. The Act gives the court the discretion to award costs and attorneys fees to the prevailing party but does not mandate such an award.
In many respects, the Act adds little to what was perceived as an existing remedy under the federal trademark statute. However, where bad faith is shown, an ACPA claim is likely easier for a plaintiff to prove than a claim for dilution or for a trademark claim. In addition, the ability to make a claim for statutory damages adds a new and unique advantage for potential plaintiffs.
The ICANN rules and the Act create powerful new weapons in the arsenal against cybersquatters. Critics of the new rules and new statute claim that such actions will stifle legitimate communication and harm small businesses. However, these apprehensions should be lessened since the new remedies appear to be being even-handedly enforced and the requirement to prove bad faith is being diligently applied.
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