In November, 1999, two big things happened in the domain name world. The first was that the ICANN domain name dispute resolution process which had begun formation in 1998 was finalized. At approximately the same time, the Anticybersquatting Consumer Protection Act (ACPA), part of the Trademark Act under 15 USC 1125, went into effect in the United States.Cybersquatting Ain’t What It Used To Be
Part 1: Trademark Holders and the Future
By Judith Silver, Esq.1
In November, 1999, two big things happened in the domain name world. The first was that the ICANN domain name dispute resolution process which had begun formation in 1998 was finalized. At approximately the same time, the Anticybersquatting Consumer Protection Act (ACPA), part of the Trademark Act under 15 USC 1125, went into effect in the United States.
Since then more than 700 lawsuits seeking injunctions or damages and almost 4000 arbitration proceedings regarding over 7000 domain names have been filed. Of the 3132 arbitration decisions, 2503 have resulted in domain name transfers or cancellations – that is in almost 80% of the cases, the domain names were transferred to trademark holders.
Under the ACPA, a trademark holder can bring legal action to (a) have a domain name transferred to the holder or cancelled; and (b) obtain actual damages and costs, or statutory damages of between $1000 and $100,000 per domain name at the court’s discretion. At least one court has already awarded $500,000 to a plaintiff, $100,000 per domain name, to deter a known cybersquatter from further squatting and to put him out of business.2
The ACPA requires a finding of “bad faith”. According to the statute, a court should consider at least the following factors in deciding whether the registrant had “bad faith”:
* Whether the registrant has any trademark rights in the name
* Whether the registrant has any personal name rights in the name
* Whether the registrant had another bona fide noncommercial or fair use of the domain name
* Whether the registrant had an intent to divert consumers from the trademark holders site for financial gain or to disparage the trademark and create confusion as to the source of the site
* Whether the registrant has offered to transfer, sell or assign the name without having used or intended to use the name or whether the registrant has a prior pattern of such conduct
* Whether the person provided false and misleading contact information to the registrar
Under the ACPA, if a trademark holder cannot obtain personal jurisdiction over the domain name holder, such as a foreign person or corporation, or has been unsuccessful in locating the domain holder after trying through use of the information which he or she provided to the registrar, a court may have the domain name transferred without the domain holder present. While courts making decisions without someone present is nothing new legally, the taking of domain names is. The legal history of taking tangible property is the idea that the United States has jurisdiction over property located within its borders. This concept, called in rem jurisdiction, means that even if the defendant is not here, the property (traditionally, a Ford Mustang or an acre of land) is, and thus the court can make decisions about it. What’s unusual in the ACPA is that the US has unilaterally decided for the world that names are ours to govern and the names are located in the US – legally, in the same way that physical property is.
If, instead of filing a claim under the ACPA, a trademark holder were to file a claim through ICANN’s domain name dispute resolution system instead, an entirely different result could transpire. Through dispute resolution, the domain name holder (“the respondent”) would be contacted wherever he or she is located through the registrar’s contact information provided and served via email with a copy of the complaint filed by the trademark holder. The respondent would then have several weeks to answer the complaint with their own legal argument, with or without an attorney. The arbitrator would then decide the matter based entirely on the documents submitted, without any oral discussion, and issue a written decision.
Under ICANN’s system, the issue of “bad faith” is also important and the arbitrator is to consider the following factors, similar to those used under the ACPA:
* Any circumstances indicating that the registrant acquired the name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the trademark holder or a competitor of a the holder
* That the registrant registered the name to prevent the trademark holder from doing so, provided that there is a pattern of such conduct
* That the domain name was registered primarily for the purpose of disrupting the business of a competitor; or
* That by using the domain name, the registrant has intentionally attempted to attract, for commercial gain, Internet users to a web site or other on-line location, by creating a likelihood of confusion with the trademark holder’s mark as to the source, sponsorship, affiliation, or endorsement of the site
Consideration of the ACPA and the ICANN procedures reveals that if you are a non-US citizen trademark holder trying to obtain a domain name, you should use ICANN’s domain name dispute resolution system in which you can have a decision made without ever making a US citizen, thousands of miles from you, show up in a court, and that if you are a US trademark holder and the domain name holder is foreign, you should file a claim in US court under the ACPA so that you can be sure that the domain name holder has no opportunity to speak to the court — unless he or she flies to America for the proceeding and assuming, he or she even received notice of it.
There is another interesting element to current law and my related prediction: in about 2 to 3 years, there will be a big outcry over the present system, with the trademark holders doing the crying. Remember that these are the same folks who cried so loudly the first time to Congress that we got the ACPA. Well, I think that eventually, the trademark holders will again cry, but this time about the math. The math here is not pretty.
There are approximately 42 classes of good and services in the US trademark registration system. This means that for each trademark registration granted, there can be at least 42 of registrations granted for the same mark – each being in a different class, associated with a different industry, and in theory therefore not causing any consumer confusion. Additionally, within each class, there are numerous different products and goods which may be registered — so in reality there are considerably more than 42 marks which may be the same. For example, Proctor & Gamble owns the mark “Tide” in several classes as Laundry Detergent. There are other registered trademarks for the word tide describing other products in other classes. The theory is that consumers are not going to think that Tide surf shop is a Proctor & Gamble shop and therefore be confused as to the source of the goods or services.
So, do the math with me. Ror each domain name and its derivations, there are at least 42 possible trademark holders in the US that have valid claims to the names. Of course, this does not include all the foreign trademark holders who would also have valid claims. Therefore, we have a little problem which is going to hit as soon as all the really slow, conservative corporate types realize that some tiny Podunk trademark holder has his company’s big time domain name, and has it under equally legally valid trademark rights, and there’s nothing that can be done under the current system. If you have trademark rights, assert them now. You have been warned.
Nonetheless, the future continues to bode well for trademark holders. As part of rolling out the new domain ending “.biz”, the designated sales agent, Neulevel.biz, has created an IP claim period in which persons who have pending, registered or common law trademarks may notify potential registrants of this fact. Upon attempting to register another’s trademark, the registrant will (a) be warned of the rights of the trademark holder, (b) be forced to acknowledge those rights as part of the process, (c) the name will be placed on hold for 30 days, and (d) a mechanism for getting the name back will be provided.
In the end, the surest way to keep your domain names safe is to be sure that your trademark are safe.
1 Judith Silver is a computer, internet, intellectual property and free speech attorney licensed in CA, FL and TX. This article is informational only and not to be relied on as legal advice.
2 See Electronics Boutique Holdings Corp. v. Zuccarini, US Dist. Court, Eastern District of PA; October 30, 2000.
(c) 2001 Judith Silver
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