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 2: The Cybersquatter’s Day

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

Even as a sole practitioner, I get at least three calls a month from someone who has registered a domain name and has just gotten a “cease and desist” letter like this one which was posted in a chat room on the web regarding Porsche:

LAW OFFICES

HOWARD, PHILLIPS & ANDERSEN

A PROFESSIONAL CORPORATION

July 21, 2000

VIA E-MAIL and REGULAR MAIL

X in Germany

Re: Infringement and Dilution of Porsche Trademarks

Dear Mr. X:

This law firm represents both Dr. Ing. h.c.F. Porsche AG and Porsche

Cars North America, Inc. (“Porsche”) on trademark matters and in

trademark litigation. Porsche takes policing and enforcement of its

trademark rights on the Internet seriously. This letter is an attempt

to resolve your infringement and dilution of the Porsche trademarks

short of litigation.

You should be aware that Porsche recently obtained a preliminary

injunction against the registrant of PORSCHESOURCE.COM in Porsche Cars

North America, Inc., et al. v. Spencer, 2000 WL 641209 (E.D. Cal.).

Porsche is also seeking $100,000 in statutory damages in this lawsuit

under the recently enacted Anticybersquatting Consumer Protection Act.

As you may also be aware, Porsche has filed a lawsuit against 128

Internet domain names that use the trademarks Porsche(r) or Boxster(r), or

variations of the trademarks Porsche(r) or Boxster(r) in Internet domain

names. This lawsuit is presently pending before the Fourth Circuit

Court of Appeals. The Eastern District of Virginia held that “the mere

act of registration [of domain names containing Porsche trademarks]

creates an immediate injury [to Porsche] . . . [c]ustomers might try to

contact Porsche through ‘PORSCHE.NET,’ for example, only to find that

they have reached a ‘dead end’ on the Web and then to conclude that the

strength of Porsche’s brand name is not as great as they first

thought.” Porsche Cars North America, Inc. et al. v. PORSCH.COM, et

al., -F.Supp.2d-, 1999 WL 378360 (E.D.Va. 1999). In short, the law is

well settled that the misappropriation of famous trademarks as domain

names violates the Lanham Act and dilutes trademarks. See, e.g.,

Panavision International, L.P. v. Toeppen, 1998 WL 178553 (9th Cir.

April 17, 1998).

It has recently come to Porsche’s attention that you have registered the

Internet domain name PORSCHEFANCLUB.COM that uses the world famous

trademark Porscheâ. It appears from the many other domain names that

you have registered and that are listed in the Internic Whois Database

that you are a cyberpirate and a cybersquatter. You should be aware

that the Anticybersquatting Consumer Protection Act makes it unlawful to

register famous trademarks in an Internet domain name and provides for

statutory damages of up to $100,000.00 per domain name.

PORSCHE(r), the Porsche Crest(r), CARRERA(r), TARGA(r), and BOXSTER(r) are some of

the registered trademarks of Dr. Ing. h.c.F. Porsche AG, and are

proprietary property of that corporation. Usage of the Porsche

trademarks or any confusingly similar variation thereof, without

consent, violates state and federal law, is misleading to the public,

and constitutes a misappropriation of the goodwill and reputation

developed by Porsche.

In order to resolve this issue amicably and without litigation, please

sign and return a copy of the enclosed Declaration of Cancellation of

Domain Names. This matter will then be fully resolved as far as you are

concerned. If the Declaration is not signed and returned to me on or

before August 4, 2000, Porsche will initiate legal action against you

with respect to the Internet domain names that you have registered and

seek damages in the amount of $100,000 per domain name as the

Anticybersquatting Consumer Protection Act allows.

This letter is without prejudice to all rights of Porsche, including

past or future royalties, past or future damages, attorneys’ fees, and

to bring enforcement actions for all past or future infringement,

dilution, or unauthorized uses.

Should you or your attorney have any questions concerning Porsche’s

position in this matter, please do not hesitate to contact me.

Sincerely,

Ms. X

Trademark Paralegal

I find these letters depressing. These are the kind of letters that cause people to hate lawyers.

Notice of the problem and the trademark holders’ intent to file a claim are required by the ACPA, but the tone of these letters is not. Instead of nicely explaining what the law is, what the goal is and how appreciative the trademark holder would be if the domain name holder was courteous enough to transfer the name as requested, these letters bombard the recipients with legal jargon and serious threats without context or explanation. In the above case with Porsche, this is especially striking since the domain name at issue is porschefanclub.com which obviously is owned by people that like, or used to like, Porsche.

What is also surprising is how the trademark holders, even regarding relatively unknown marks, assume that the registrant knew all about the mark and is trying to steal something. The registrants I’ve spoken with did not know that their action was not legal and often did not know anyone owned a trademark matching the domain name registered. If the mark doesn’t have international fame, then the registrants simply do not know there’s a potential problem. The registrant then gets the above letter and is angry and afraid. Angry because the registrant is often out time, effort and money if they comply and angry because the registrant thinks that he or she had the foresight to register this name and the letter writer did not. The “cease and desist” letters never offer to compensate the domain name holder in any way – not even for the registration fees paid – and if the domain name holder should be unfortunate enough to ask for any money for his or her time or the name or whatever, that can be used as evidence of bad faith in the court or arbitration proceeding.

When I have a client on either side of the cybersquatting scenario, I urge starting with the polite request approach. Usually, I can succeed that way through some polite explanation of the law over the phone and a little patience. That approach also costs my clients less that either court or arbitration would since both of those require filing fees and lengthy legal briefs. More importantly, solving disputes through discussion makes me feel good and helps me prove that, at least occasionally, lawyers can act like human beings and make someone’s day instead of ruining it.

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

954.630.3551

www.coollawyer.com

jsilver@coollawyer.com