Legal Matters | Archive

Cybersquatting: Can you recover a name that is rightfully yours?

by David Zerbee
for Virginia Business
June 2006

It's a simple process to obtain a domain name for your company in order to establish an Internet site. For a nominal annual fee, you can register your domain name with companies like Network Solutions and GoDaddy. The process is much like selecting a vanity plate for your car - if the name you want is taken, you will need to select another - or is there a remedy?

In recent years, companies have found it increasingly difficult to select domain names that are similar to their own corporate names because "cybersquatters" have beaten them to the punch. Cybersquatters are people or companies that register and claim rights over Internet domain names - and, often, many variants of the name - that are arguably not for the taking. The cybersquatter offers the domain name at an inflated price to the company that owns a trademark contained in the name.

The revenue potential for cybersquatters who sell high recognition domain names with a ".com" suffix has been on an upward trend during the past two years. For example, the domain name "Sex.com" was reportedly sold recently for $12 million. The average price for each of the next five most expensive domain names sold in 2006 exceeds $500,000. This increasing revenue trend will contribute to an upsurge in cybersquatting.

Is there a remedy if your name is taken?

What can you do if you find yourself confronted with trying to obtain a domain name for which a cybersquatter demands an inflated price? Often, the easiest thing to do is to use a variant of the name. But you might want to pursue a legal remedy if you believe the cybersquatter is in bad faith infringing on your trademark or trade name.

Currently, there are two legal processes to recover a domain name you believe should be rightfully yours. If the cybersquatter is in the United States, you can sue under the provisions of the Anticybersquatting Consumer Protection Act (ACPA), or you can fight the cybersquatter by using an international arbitration system created by the Internet Corporation of Assigned Names and Numbers (ICANN) under its Uniform Domain Name Dispute Resolution Policy (UDNDRP).
Using the ACPA

The ACPA authorizes a trademark owner to sue an alleged cybersquatter to seek a court-ordered transfer of the domain name to the trademark owner. The cybersquatter also may be required to pay damages depending on the level of bad-faith involved.

In order to recover from a cybersquatter under the ACPA, the trademark owner must show the following:

" the domain name registrant (i.e., the cybersquatter) 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.

It is often difficult for a company to prove a cybersquatter has bad-faith intent. If the cybersquatter can demonstrate a legitimate reason for registering the domain name other than to sell it back to the trademark owner for a profit, then the company will not be successful under the ACPA. Recently, the Fourth Circuit federal district court ruled on the bad-faith intent standard in the case of Lamparello v. Falwell in which Jerry Falwell brought suit against Mr. Lamparello, the owner of the Web site "Fallwell.com." The court found no evidence that Lamparello had a bad-faith intent to profit from his registration of his domain name by offering to sell it - rather he merely wanted to use the site to protest Falwell's policies.
Using the ICANN procedure

ICANN is an international private, nonprofit that controls the Internet's name and numbering systems. ICANN has adopted a dispute resolution policy, UDNDRP, which provides for the resolution of domain name disputes. Under UDNDRP, a binding arbitration action can be brought against the alleged cybersquatter for transfer or cancellation of the disputed domain name. Financial remedies are not available. In order to prevail, the company must prove that:

(1) the domain name registered by the cybersquatter is identical or confusingly similar to a the company's trademarks;

(2) the cybersquatter has no legitimate interests in the domain name; and

(3) the domain name has been registered and is being used by the cybersquatter in bad faith.

If your company is faced with defending its trademark rights against a cybersquatter, it may be worth pursuing these legal remedies rather that paying the cybersquatter's inflated price.