DNS: US:
Anti Cybersquatter Protection Act

In the cacophony of disagreement over domain names and Internet governance, there is one issue over which there is rough consensus: cybersquatters bad! The White House identified cybersquatting as bad in a DNS White Paper; Federal Courts have had disdain for Cybersquatters; and the 106th Congress, a gridlocked Congress, found rough consensus to pass the AntiCybersquatter Protection Act (ACPA).

Purpose

The ACPA was passed to rectify what was perceived to be shortcomings with the current legal system. It was passed

to protect consumers and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners by prohibiting the bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks--a practice commonly referred to as 'cybersquatting'.

[Senate Report] Congress viewed the legal remedies available for trademark owners before the passage of the ACPA as "expensive and uncertain." The ACPA was designed to thwart cybersquatters "who register numerous domain names containing American trademarks or tradenames only to hold them ransom in exchange for money."

Congress defined the evil villain cybersquatters as

those who: (1) “register well-known brand names as Internet domain names in order to extract payment from the rightful owners of the marks;” (2) “register well-known marks as domain names and warehouse those marks with the hope of selling them to the highest bidder;” (3) “register well-known marks to prey on consumer confusion by misusing the domain name to divert customers from the mark owner’s site to the cybersquatter’s own site;” (4) “target distinctive marks to defraud consumers, including to engage in counterfeiting activities.” S. R EP . N O . 106-140 at 5-6. [Lucas]

The term ''domain name'' means any alphanumeric designation which is registered with or assigned by any domain name registrar, domain name registry, or other domain name registration authority as part of an electronic address on the Internet. 15 U.S.C. § 1127.

Elements of Cause of Action

In order for a trademark owner to bring a claim under the ACPA, the trademark owner must establish:

• the trademark owner’s mark is distinctive or famous;
• the domain name owner acted in bad faith to profit from the mark; and
• the domain name and the trademark are either identical or confusingly similar (or dilutive for famous trademarks).

[15 USC § 1125(d)(I)(A)] [Anlin slip 9] [Bosley 680]

Distinctive Or Famous Trademarks

The ACPA is not available for everyone – it is only available to owners of famous or distinctive trademarks. Factors that a Court will look at to determine whether a mark is famous include whether the mark is sufficiently distinctive as opposed to being generic, whether it has been in use for an extended period of time, the amount of the investment made in promoting the mark, the geographic region where the mark is used, and whether there are similar marks in use. In addition, courts will look to see whether the mark has been registered with the Patent and Trademark Office. The Court can recognize that a mark is distinctive without it being famous. Examples of marks that have been found to be famous or distinctive include Sporty’s Farm, Joe Cartoon, Porsche, and VW. However, CLUE, as in Hasbro’s detective board game, has been found to be neither famous or distinctive.

Bad Faith Intent to Profit

The next element is a determination that the domain name owner acted in bad faith intent to profit (it is not clear whether this necessitates that the activity be commercial in nature). [Lucas] [Interstellar Starship 946] [Anlin Slip 11] This is where the unique nature of online activity is key. In order to facilitate court’s determinations of bad faith, Congress provided nine factors for consideration:

1. the trademark or other intellectual property rights of the person, if any, in the domain name; [Chatam]
2. the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person (See also Personal Names);
3. the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
4. the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name; [Lucas] [Gallo]
5. the person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; [Toronto]
6. the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct; [VW] [Anlin Slip 11 (offering to sell five domains for $100,000)]
7. the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct;
8. the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; [Gallo] and
9. the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of this section.

15 U.S.C. § 1125(d)(1)(B)(i). There is no particular manner in which a court has to consider these factors, nor is the court limited to or required to follow these factors – they are merely guidelines. 15 U.S.C. § 1125(d)(1)(B)(i). A court is left to weigh the different factors pursuant to the unique facts of individual cases. Different factors may have different strengths in different situations.

The focus of the ACPA is thwarting attempts to extort apparent trademark holder. Where an attempt to sell the domain name is lacking, the ACPA is not applicable. Bad faith cannot be found where the domain name holder had reasonable grounds to believe that the use of the domain name constituted fair use or was otherwise lawful. 15 USC § 1125(D)(I)(B)(ii). [Lucas]

One colorful case was People for the Ethical Treatment of Animals v. Doughney. It provides a good walk through of how a court conducts a “bad faith” analysis.

Doughney registered the domain name PETA.org prior to organization People for the Ethical Treatment of Animals (PETA). Doughney’s site was entitled “People Eating Tasting Animals” and provided information on a wide range of hunting, meat eating, and leather and fur topics. His site included multiple links to third party commercial websites on related topics. Partly it was a parody site in response to a view point with which Doughney clearly disagreed and partly it provided information on a hobby that Doughney thought merited a website. It was clear from the moment that you arrived at Doughney’s website that you were not at the PETA organizations website.

Nevertheless, PETA was the owner of the registered trademark PETA. In its “bad faith” analysis, the Court first noted that that Doughney had no trademark interest in PETA at the time he registered the domain name. This is of course an interesting catch-22. One cannot gain trademark interests in a mark until one uses it – but here the Court demands a trademark interest prior to use.

The Court also noted that Doughney had never used PETA.org prior to the establishment of his website. But this factor of course discriminates against entities with solely online presences. Those entities that have physical existences prior to online existences would have superior rights those with solely online existences. In the physical world, Cannon Towels, Canon Camera, and Cannon Fish Market can all coexist (you are unlikely to confuse those entities). But all of those entities could have superior rights to me, according to this Court, if I set up cannon.org– using the mark for the very first time in relationship with my new online venture. What is untrue of the physical world becomes discrimination in favor of meat space over cyberspace in the online world.

Arguably, Doughney had developed common law trademark rights – you do not have to register your mark with the Patent and Trademark Office in order to have rights (you just have stronger rights if you do). [Bihari] [Bigstar] Simple use and provision of a service or a product can establish trademark rights. And it is entirely possible for two similar marks to coexist if there is not confusion between the marks.

Ultimately, the Court found that Doughney was a cybersquatter and ordered that the domain name be transferred to PETA.

Generally, however, the key factors for this analysis are whether domain name holders engage in the practice of domain name warehousing and whether the domain name holders have attempted to speculate or profit from the domain name. A good example of this is Morrison & Foerster, LLP, v. Wick. Wick was a self pronounced anti-corporate-America individual who sought his revenge by acquiring a large number of domain names of different corporate entities. Wick decided that one of his targets would be law firms that represent corporate America. Among other names, he registered mofo.com, the nickname and trademark of Morrison and Foerster. Wick explained in testimony

I got to thinking, Well, who else in corporate America can I have fun with. And I figured, well, hey, you know, I got the executives pissed off as a result of me because of the names I own regarding their corporation. I can fool with them where they recreate. Well, who are they going to get to represent them? So I started getting into targeting www.martindale.com, large law firms.

[Mofo] Wick then proceeded to offer to sell the warehoused domain names to the corporations in question. He set up the website www.NameIsForSale.com and on some of the warehoused domain name sites he put up the message

We bend over for you ... because you bend over for us! As long as someone is bending over ... then someone is getting paid! Make sure you are bending over the right way! We tell you what you want to hear ... because you pay us! Greed is good!

Don’t Settle for Nothin’

Finally, note a trap within the bad faith elements. Reasonable people who find themselves in disputes frequently are able to come to reasonable settlement. Reasonable courts like to encourage this type of behavior. But ACPA could cause trouble for legitimate settlement of disputes. Say there is a situation where one individual legitimately holds the domain name and another legitimately wants the domain name. In order to resolve their dispute, the parties may wish to come to an amicable agreement. But it might be a mistake for the domain name holder to say, “This domain name is valuable to me but it is more valuable to you, so I will sell it to you for $5000.” This $5000 might appropriately go towards new branding including new stationary, new work with search engines, and new advertisements. If the owner of the domain name attempts to settle, the individual who want the domain name could hold it against the owner, arguing that the owner was attempting to speculate and profit from the domain name, which could amount to “bad faith.” This is exactly what happened to Doughney who sought to settle his case with PETA; there was no other way that the court could establish that his parody site was for profit. [Lucas] In other words, a reasonable domain name owners who attempt to settle disputes could have their good behavior backfire on them. [See also Northland]

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