TRADEMARKS:  LOST IN CYBERSPACE?
(2001)

Protecting domain names from theft and misuse has become an increasingly important and time-consuming enterprise for companies doing business on the web.  Many companies have had to fight for domain names that contain their company’s name or trademark, but have been registered by third parties and used improperly by, for example, linking to pornography sites, disparaging the company or its products, and advertising competing companies or products.  Another common problem is “cybersquatting,” a practice where people register domain names containing famous names in the hope of selling them to their rightful trademark holders.  Many people register domain names in bad faith, whether to profit from the trademark holder or to use the company’s name to attract Internet users to a site for another purpose.  Others are not aware of the illegality of their registrations.  In any case, with millions of people around the world going on-line every day, protecting a company’s marks on the Internet is increasingly important. The federal Anticybersquatting Consumer Protection Act (“ACCPA”) and the new alternative dispute resolution procedures recently adopted by ICANN (Internet Corporation for Assigned Names and Numbers) make curbing such practices easier.

Legal Bases
All top-level domain registrars follow the Uniform Domain Name Dispute Resolution Policy (“UDRP”) promulgated by ICANN.  Under this policy, trademark-based domain name disputes must be resolved by agreement, court action or arbitration before a registrar will cancel, suspend or transfer a domain name.  Trademark holders thus have three options; they may:  (1) simply secure the offending party’s agreement to direct the registrar to cancel or transfer the infringing registration (this relatively inexpensive option is obviously impossible without the other side’s cooperation); (2) file a lawsuit against the infringing domain name holder; or (3) submit a complaint to an ICANN-approved dispute resolution service provider for arbitration.

The ACCPA allows trademark holders to sue cybersquatters in federal court.  Cybersquatters are civilly liable if they have bad faith intent to profit from a recognized trademark, including a protected personal name, and they register, traffic in, or use domain names that are identical orconfusingly similar to the trademark.  A prevailing plaintiff may collect up to $100,000 in damages and attorneys’ fees.  Plaintiffs may also seek injunctive relief to shut down sites while their cases proceed.  In addition to awarding damages and fees, courts may order registrars to cancel or transfer domain names when trademark holders prevail.

Suing under the ACCPA provides companies and individuals an effective method to protect their trademarks, and can force cybersquatters to pay damages.  This option is particularly important where a company has suffered actual harm, such as when AT&T’s site was mirrored using a look-alike globe logo thus fooling consumers into buying non-AT&T products.  The disadvantages of this option are that it is slower and more expensive than arbitration, and obtaining jurisdiction over a cyberpirate can prove difficult.

In California, the legislature passed a law last year imposing liability on cybersquatters who register, traffic in, or use with bad faith intent a domain name that is identical or confusingly similar to the name of a famous person or deceased personality.  The remedies under this law presumably include all of the remedies available under California unfair competition law, including injunctive relief to stop use of the domain name, and monetary damages.  Since the law is new, it remains to be seen how courts will treat cases brought under it.

Arbitration Considerations
Arbitrating a domain name dispute is a faster and cheaper yet more limited resolution method.  All domain name applicants are required to agree to submit to arbitration, so obtaining jurisdiction is not a problem.  Unlike a court, however, the arbitrator may only order the cancellation or transfer of a domain name.  An arbitrator may not assess damages or attorneys’ fees, and does not have the power to shut down the site during the arbitration.  The decisions are not binding.  A company that does not agree with the result may sue in court under the ACCPA.  To prevail in arbitration proceedings, complainants must prove that the registered domain name:  (1) is identical or confusingly similar to the complainant’s trademark or service mark; (2) is not one in which the registered owner has rights or legitimate interests; and (3) was registered and is being used in “bad faith.”  Proving all three elements can be difficult, and the definitions of “rights and legitimate interests” and “bad faith” are subject to varying interpretations, so each dispute is very fact specific and decided on a case-by-case basis.

For example, in contrast to the recent successes of actions brought on behalf of musicians Jimi Hendrix, Madonna and Sade, in a January 2001 ruling, Bruce Springsteen lost his arbitration attempt to force a well-known Canadian cybersquatter to transfer the domain name brucespringsteen.com.  The cybersquatter has registered more than 1,500 domain names, many of which divert users to his central web site, which at first glance would appear to be evidence of bad faith.  Two of the three arbitrators on the panel found, however, that Springsteen failed to prove two of the three elements and thus refused to transfer the domain name to him.

Arbitration Services
There are currently four ICANN-approved providers that arbitrate domain name disputes:  the World Intellectual Property Organization (WIPO) (in Geneva); the National Arbitration Forum (in Minneapolis); the CPR Institute for Dispute Resolution (in New York); and eResolution (a Canadian company based in Montreal).  They all operate under ICANN’s uniform rules, the UPRP, and provide similar services.  They allow valid trademark holders to file complaints online.  The services provide rosters of experienced arbitrators (lawyers or judges) who decide the cases.  For disputes involving one to five domain names, costs presently range from $950 to $2,000, and arbitrators render decisions approximately 55 days after the proceeding is initiated.

WIPO has emerged as the most popular forum among the four in arbitrating these disputes.  Statistical review shows that it favors the complainant/trademark holder 83% of the time.  The other three ICANN-approved services also render decisions favoring plaintiffs the majority of the time, even when the domain name in question does not involve a registered trademark.  Companies and individuals thus have significant incentive to arbitrate disputes, as the percentages are in their favor and the process is faster and cheaper than going directly to court.

Conclusion
Both the ACCPA and ICANN’s arbitration procedures provide valuable avenues of pursuit for companies or individuals seeking to protect their marks.  Which option is most preferable will depend on the degree and harmfulness of the infringing activity, and the available resources.  A preventive approach involves companies taking proactive internal steps before such problems arise.  One such step is to organize all of the company’s registered domain names with one registrar.  Requiring all employees registering domain names for the company to get prior approval might help to avoid difficult issues later, such as who owns the domain name in question when an employee-registrant leaves the company.  Finally, companies should consult with their trademark counsel to be sure they have maximized protection of the valuable marks in the first place.  Taking positive measures to oversee and protect its domain names will ensure that a company’s intellectual property is protected and will discourage cybersquatters from attempting to trade on a company’s goodwill.

© 1999-2008 Donahue Gallagher Woods LLP.  All rights reserved.