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Internet Cybersquatting: Definition and Remedies

It was only a matter of time before people started to take advantage of the internet for a profit by holding domain names for ransom. There have been laws passed recently, however, that attempt to prevent people from making a buck by jumping on other people's trademarks.

Cybersquatting is generally defined as the registering, sale or use of a domain name containing a trademark that the registrant doesn't have the rights to with the intent to profit from the goodwill of the mark. There are generally two remedies for trademark holders in this situation. First, you can treat it like a general trademark case and sue to get rights to the domain name and possibly obtain money damages as well. Second, under the 1999 law known as the Anti-Cybersquatting Consumer Protection Act (ACPA), you are allowed to initiate arbitration procedures under the authority of the Internet Corporation of Assigned Names and Numbers (ICANN), so you may be able to win your domain name back without having to go to court at all.

Cybersquatters are notorious for cheaply registering thousands of domain names with the intent to sell some of them off for a large profit. Cybersquatters generally depend upon the goodwill associated with someone else's trademark. By buying up domain names that are closely linked with a pre-existing business or person, cybersquatters hope to profit through an association with well-known trademarks or through sale of the domain to the trademark owner.

History of Cybersquatting

Cybersquatting first started when a few entrepreneurial and sneaky people realized the potential of the internet for business marketing. Long before many large companies realized the massive volume of traffic that the internet could bring to their business, cybersquatters paid for and registered domain names using the trademarks of several prominent businesses. When these companies realized that the internet was the next big marketing tool, they went online to find that their company names had already been taken by these cybersquatters. Companies like Fry's Electronics, Panasonic, Avon and Hertz were among the first big victims of cybersquatting. However, as companies became more internet savvy, the opportunities for cybersquatters diminished.

Have I been Cybersquatted?

There are few ways you can tell if you have been the victim of cybersquatting. Generally, you should first check out the domain name that you want to register to see if it leads to a legitimate website. If the address is of a website that looks to be functional and related to the subject of the domain name, then you have most likely just come to the game too late and will have to offer to buy the domain name unless you can make a case for trademark infringement.

However, if you find that the domain name is linked to any of the below, you may be more concerned.

  • The website is "under construction" for a long time (a year or more)
  • Your browser shows a "cannot find server" error, or
  • The website bears no relation to the domain name

You must be careful, however, because these results do not absolutely mean that someone is cybersquatting on your trademark, particularly if the website in question really is still under construction. Domain name owners can reserve the domain name for two years, which means that the website may not be up and running for a long time after the domain name is taken. A website that is under construction for a year and a half may just mean that the owner wants to take his or her time making the site.

There is a simple way to figure out who the domain name is registered to – you can visit WhoIs.com to look up the domain name registrant for free. With this information, you can contact the registrant to see if the person is using it for a valid purpose, or wants to sell it to you.

In some situations, unfortunately, it may be easier and cheaper to pay a cybersquatter the price they demand for the domain name. Litigation can be very costly and time-consuming, and even arbitration can take quite a bit of time. In addition, even if you win your lawsuit, there is no guarantee that you will be able to recover your attorney's fees, which may be more than the cost of buying the domain name to begin with.

Fighting a Cybersquatter

Under the ACPA, those who have experienced cybersquatting can now sue or fight the cybersquatter using an arbitration system created by ICANN. The ICANN arbitration system is considered by many to be the better choice of the two because it is less expensive and usually faster than suing under the ACPA.

Lawsuits under the ACPA

ACPA is designed to allow trademark owners to sue an alleged cybersquatter in federal court. If the trademark owner wins, these lawsuits generally result in a court order requiring the cybersquatter to transfer the domain name to the trademark owner and, in some situations, pay money damages as well.

For a plaintiff to be successful in such a lawsuit, he or she must be able to prove the following:

  • That the trademark was distinctive at the time the domain name was first registered
  • That the domain name registrant (the alleged cybersquatter) had a bad faith intent to profit from the trademark
  • That the registered domain name is identical or similar enough to cause confusion with the real trademark, and
  • That the trademark is protectable under federal trademark law (meaning that the trademark is distinctive and its owner was the first to use the mark in commerce).

In order to defend against such a lawsuit, the domain name registrant must be able to show that he had reasonable grounds to believe that using the domain name was lawful and fair. If they are able to do so, they may be able to avoid a judgment against them and be able to keep the domain name. In short, if the registrant can show the judge that he had a reason to register the domain name other than selling it later to the trademark owner or otherwise exploiting the goodwill associated with the trademark, the alleged cybersquatter may win the case.

ICANN Arbitration System

The ICANN started its arbitration system after assuming control of domain name registration. ICANN began using the Uniform Domain Name Dispute Resolution Policy (UDNDRP), an international policy aimed at arbitrating most domain name disputes instead of litigating. Under this policy, an action for arbitration can be brought by anyone that claims that:

  • The domain name owner has no rights or legitimate interest in using the domain name,
  • The domain name in question is identical or similar enough to be confused with a trade or service mark that the claimant has rights to, and
  • The domain name was registered in bad faith.

If the trade or service mark owner can establish each of these elements during the arbitration, they will win. When this happens, the domain name will be cancelled and transferred to the claimant. However, there is no possibility of money damages being awarded under UDNDRP.

You can find out how to start such a complaint by visiting ICANN website here.

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