A friend recently asked for my counsel with respect to a claim that his company was cybersquatting. In short, he was accused of registering and using another company’s domain with the intent to profit from the other company’s goodwill. In this case, my friend, in a stroke of foresight, bought a host of domains in the late 1990s, to secure his company’s online presence. One of these included a domain very similar to the alleging company’s trademark. But he had purchased the domain with the intent the use it in his business, and, get this, it was over 10 YEARS before the alleging company even used the name! They had the gall to send a cease and desist demanding that he turn over the domain, without compensation, and stop using it (and probably to say he was super duper sorry and really bad too).
He had a few options. Turn it over and be done with it. C’est la vis. I didn’t like that one since the other company was being a bully, and they had no rights to the domain. The better option was to string them along a little while longer until they made an initial offer to purchase (or came up with better proof of our infringement). I was hesitant to advise that we offer to sell, as offering the domain for sale is part of an element of cybersquatting. But what is cybersquatting, specifically, and what isn’t it?
Cybersquatting is registering, selling or using a domain name with the intent of profiting from the goodwill of someone else’s trademark. It generally refers to the practice of buying up domain names that use the names of existing businesses with the intent to sell the names for a profit to those businesses.
Allow me to add that my friend and his competitor are not “famous” like some of the early victims of cybersquatting (such as Panasonic, Hertz, and Avon).
Under the provisions of the Anticybersquatting Consumer Protection Act (ACPA), a trademark owner may sue an alleged cybersquatter in federal court to seek an order transferring the domain back to the trademark owner. Sometimes, the cybersquatter must pay damages to the owner.
To prove cybersquatting, the trademark owner must prove the following:
- the domain name registrant had a bad-faith intent to profit from the trademark
- the trademark was distinctive at the time the domain name was first registered
- the domain name is identical or confusingly similar to the trademark, and
- the trademark qualifies for protection under federal trademark laws — that is, the trademark is distinctive and its owner was the first to use the trademark in commerce.
If the accused cybersquatter demonstrates a reason to register the domain name other than selling it to the trademark owner, he will probably get to keep it.
Here, my friend registered the domain. No question there. But even he lacked bad faith intent, that is ultimately a question of fact. Next, the trademark was not distinctive when my friend registered his domain — it didn’t even exist! So, the second element should win the day. Skipping element 3, since we could argue all day over whether it was “similar”, does the mark qualify for protection and was the owner the first to use it in commerce? We know he wasn’t first to use it, since we beat him to the punch by at least a decade.
Going back to whether my friend had a bad faith intent to profit, a court may consider many factors, including nine that are outlined in the statute:
- the registrant’s trademark or other intellectual property rights in the domain name;
- whether the domain name contains the registrant’s legal or common name;
- the registrant’s prior use of the domain name in connection with the bona fide offering of goods or services;
- the registrant’s bona fide noncommercial or fair use of the mark in a site accessible by the domain name;
- the registrant’s intent to divert customers from the mark owner’s online location that could harm the goodwill represented by the mark, for commercial gain or with the intent to tarnish or disparage the mark;
- the registrant’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or a third party for financial gain, without having used the mark in a legitimate site;
- the registrant’s providing misleading false contact information when applying for registration of the domain name;
- the registrant’s registration or acquisition of multiple domain names that are identical or confusingly similar to marks of others; and
- the extent to which the mark in the domain is distinctive or famous.
I believe we prevail on all enumerated factors. We were using the domain for legitimate business, before the other party even used the mark they now own. I don’t take well to bullies, especially when their claims are groundless. Before threatening others, you’d be wise to learn what cybersquatting is, and what it isn’t.