Anti-Cyber Squatting Consumer Protection Act Update

Our law firm receives a lot of calls from people and companies who are being threatened with an Anti-Cyber Squatting Consumer Protection Act claim because they registered a domain name identical or similar to a trademark held by someone else. Inevitably, we hear the words "Network Solutions allowed me to register the domain, so there is no way someone can say that I did anything wrong."

Of course, Network Solutions and the other registrars do little to ensure that a person registering a domain has legal right to do so. In fact, about the only thing registrars do is make each person who purchases a domain affirm that they are not interfering with some else's legitimate trademark rights. The fact that you are able to register a domain doesn't mean that you won't get sued for having done so under federal law.

The ACPA is a federal law that took effect in November 1999, in order to preclude bad faith registration of domain names. This new domain name dispute law is intended to give trademark and service mark owners legal remedies against defendants who obtain domain names "in bad faith" that are identical or confusingly similar to a trademark or service mark. In order to win a case of cyber squatting, plaintiff must prove that defendant has a bad faith intent to profit from the mark that is identical or confusingly similar or dilutes plaintiff's mark. The key element is that plaintiff must prove that defendant has"bad faith intent to profit from the mark." What this means is that if defendant merely registers the domain and does nothing with it commercially, plaintiff will have a difficult if not impossible time proving bad faith. Typically, intent to profit is shown by the use of the domain as a commercial site which sells goods or services. For an alleged domain violator who does not develop a website, bad faith intent to profit is often shown when the defendant tries to sell the domain name to the trademark holder. Any transfer of the domain for consideration will typically satisfy the profit test.

Another bad faith factor is if the registrant provides false contact information to the registrar or fails to maintain correct contact information moving forward. Because of this bad faith factor, it is important for all domain name owners to check their domain registrations regularly in the Who's database to determine if their contact information is correct.

If you should decide to file an ACPA lawsuit, you have a variety of remedies which are available to you under the act. The most important one is potential forfeiture or cancellation of the domain name or transfer of the domain name to the plaintiff. In lieu of actual damages, the plaintiff may elect statutory damages and has discretion to award between $1,000 and $100,000 in damages for bad faith registration. Attorney's fees are also available for a bad faith registration. Sometimes, the domain owner cannot be found or served with a Summons and Complaint because they have provided false information or are not located within the United States. In these instances, a trademark owner may bring in "In Rem" action against the domain name in the judicial district in which the domain name registrar, domain name registry or other domain name authority that registered or assigned the domain name is located. Money damages are not available in an "In Rem" lawsuit. Typically, the trademark owner is more focused at having the domain name transferred to them.

One recent Sixth Circuit Court of Appeals case, Interactive Products, Corporation v. A2Z Mobile Office, No. 01-3590 (6th Cir., April 10, 2003), was not good news for trademark holders in our jurisdiction. The Court held that the "post-domain path of a URL (the sub-file directory). . . does not typically signify source (of goods or services). The post-domain path merely shows how the website's data is organized within the host computer files." Accordingly, the Sixth Circuit held that the presence of plaintiff's trademark in the path of the domain name of a competitor was unlikely to cause consumer confusion. Interestingly, the Court reached this result even though the defendant, A2Z, was selling competing products. It should be noted that the Court did not hold that using some else's trademark in the top level domain, on the website itself or in the meta tags is exempt from ACPA liability.

Each ACPA case turns on the particular facts presented. It should also be noted that the Interactive Products plaintiff did not present any evidence that the presence of its trademark in the post-domain path caused actual confusion or was likely to cause consumer confusion. If such evidence existed and was presented, the outcome could have been different. The ACPA in an important weapon for trademark holders in protecting their intellectual property in the online world. If you do not protect your trademarks, you may lose rights in those marks altogether. Besides, if you don't protect your marks, who will?

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