Internet/Computer Law

Tools to Stop Cybersquatters

Back in the early 1990s, the Internet was in its infancy. Few companies recognized the Internet's economic potential, but some entrepreneurs did. Those individuals, known as "cybersquatters" or "cyberpirates," bought up the top-level domain names of many well-known companies (e.g., trademarks followed by ".com", ".net", and ".org"), without any intention of ever using those domain names themselves. Instead, the cybersquatters sat and waited, thereby earning their moniker. When Internet usage skyrocketed, around 1996-1998, companies hustled to go onto the Web, knowing that's where customers would try to locate them. Since customers typically try to find a company's website by typing in the company's main trademark, followed by ".com," companies flocked to try to register their brands as domain names. Unfortunately, the cyberpirates had gotten there first (e.g., coca-cola.com).

If a company wanted a snared name, it only had two choices: pay the cybersquatter a ransom (typically $5,000-$50,000) to transfer the domain name, or pay to litigate. Litigation often cost much more, with mixed results.

To combat these modern-day thieves, companies lobbied Congress and the domain name registrars. The result was two recently installed systems, specifically designed to address cyberpiracy: the United States Anticybersquatting Consumer Protection Act ("ACPA"), signed into law on November 29, 1999 as part of the federal Trademark Act; and the Uniform Domain Name Dispute Resolution Policy ("UDRP") adopted by the Internet Corporation for Assigned Names and Numbers ("ICANN"), available January 1, 2000.

By far, the best tool is the UDRP! The UDRP is an expedited administrative proceeding by which the true company can secure its domain name, usually with little hassle or expense. The procedure normally lasts 2-3 months and costs approximately $3,000-$6,000, which includes attorneys' fees.

To succeed under UDRP, the complainant has to prove four elements: (1) rights in a trademark or service mark; (2) the domain name at issue is identical or confusingly similar to that trademark or service mark; (3) the domain name registrant (cybersquatter) has no rights or legitimate interest in the domain name; and (4) the domain name is being used in bad faith (e.g., the domain name registrant tried to sell that name to the complainant). The complainant will prevail only if all four elements are satisfied.

Typosquatting

"Typosquatting" is another tool used by IP infringers. The infringers purchase misspelled Domain Names of well-known brands (e.g., Mossburg instead of Mossberg®) to drive customers to their associated websites. Usually competing goods are sold. Fortunately, UDRP works well to shut down the sites.

Complainants prevail over 75% of the time!

There are two major drawbacks to the UDRP. No damages are awardable (in fact, all that happens is a transfer of the domain name), and the domain name registrant can pursue the matter in Court, if it is unhappy with the administrative result.

The second procedure - the ACPA - involves litigation. It is more complex but has its advantages. Damages (which are statutorily set) are automatically awarded to the prevailing plaintiff. In addition, if the defendant resides in another country, the domain name itself can be litigated domestically - something unavailable under prior law. In that instance, however, the plaintiff must waive its right to damages.

Whichever route one prefers, Justice is probably around the corner. A lot better than just a few years ago.