Cybersquatting Law Firm Case | Bad Faith Cybersquatting Statutory Damages

Statutory damages provided in bad faith cybersquatting lawsuit: 

In a recent cybersquatting case decided on April 18, 2011, the 4th Circuit Court of Appeals affirmed the District Court’s finding of bad faith cybersquatting by defendant as a matter of law and award of $80,000 in statutory damages.  The decision titled Newport News Holdings Corporation v. Virtual City Vision Incorporated VCV can be found here. 

This internet case is interesting because of the lower court’s finding of bad faith cybersquatting as a matter of law on plaintiff’s motion for summary judgment.  Many of these cybersquatting cases under the Anticybersquatting Consumer Protection Act are clear instances of bad faith intent to profit.  However, there is relatively little internet case law on the subject, leaving many courts confused as to exactly how to apply the “bad faith intent to profit” elements under the Anticybersquatting Consumer Protection Act (ACPA), also known as the Anti Cyberpiracy Protection Act.   Here, there was no question about the trademark for “NEWPORT NEWS” in the international class and description of services for women’s apparel.  There was no dispute that in 1997, defendant changed its domain www.newportnews.com from information and news from the Newport News area, to primarily advertize and market ads for women’s apparel.  There was no question that there would be confusion of consumers in comparing the www.newportnews.com website with plaintiff’s trademark (note the court does a nice analysis of the difference between showing confusion in a trademark infringement case, versus an ACPA).  The lower court awarded $80,000 in statutory damages plus attorney’s fees in favor of plaintiff.  With regard to the cybersquatting attorney’s fee award, the court of appeals noted:

Is Navigation Catalyst Systems a Typical Domainer? All Domainers are not Cybersquatters.

Eric Goldman at the Technology & Marketing Law Blog has a post about the recent ACPA injunction entered against Navigation Catalyst Systems and registrar Basic Fusion. Mr. Golman states that this is the first decisions against a "domainer" which of course raises the issue of definition. What is a domainer?

Technology & Marketing Law Blog: Domainer Loses Cybersquatting Lawsuit--Verizon v. Navigation Catalyst Systems

This is an extremely interesting and potentially precedent-setting case regarding domaining and domain name tasting. The court condemns both practices, leading to a preliminary injunction against the domainer and its registrar based on the Anti-Cybersquatting Consumer Protection Act (ACPA). As far as I can recall, this is the first time that a domainer has lost an ACPA lawsuit in court, and it provides an important data point confirming that domaining can be cybersquatting (a previously unresolved issue). I also believe that this is the first time a domain name registrar has lost an ACPA lawsuit. Although the court wasn't asked to assess damages (it was just an injunction request), it's clear from the strongly worded opinion that Verizon will get paid if the case gets that far. As a result, this is a major loss for domainers and might very well force them to change their practices.

The defendants are Navigation Catalyst Systems, a domainer, and Basic Fusion, its registrar. Navigation Catalyst Systems engaged in some common domainer practices, including:

* high volume automated domain name tasting. Many of the registered domains have nothing to do with anyone's trademark, but some were typographical error versions of Verizon's trademarks (allegedly, nearly 1400 were variations of Verizon's trademarks)
* trademark "scrubbing" of domain names during the tasting period (both an automated blacklist and a manual review)
* disabling ads on any challenged domains and offering to transfer those domain names to the trademark owner.

All of the attributes above might be indicia of cybersquatting, but do not describe a domainer. A domainer is someone who registers generic, descriptive or even arbitrary words, to the extent they are not trademark protected, for resale, development or advertising revenue. A cybersquatter is someone who registers trademark protected domains to divert traffic from trademark holders. Most legitimate domainers I know consider Navigation Catalyst Systems to be a black hat cybersquatting company.
Technorati Tags: cybersquatting, verizon, navigation catalyst, ACPA, Domain disputes

Hobbits v. Hobbitts: Generic Mark Argument Won't Prevent Panel From Seeing Pay Per Click Parking as Bad Faith

Seemingly generic domain names can often turn into a trademark nightmare when used in combination with pay per click parking pages.  A recent proceeding in front of the World Intellectual Property Organization demonstrates that a registrant’s inability to control these pay per click parking ads can result in the loss of a domain name.  It is important to realize that these parking pages can be used against you as evidence of your bad faith intent to profit from the trademark of another.

$100,000 in Statutory Damages Plus Attorney Fees

Yes, maximum damages are sometimes awarded against cybersquatters under the Anti-Cypersquatting Consumer Protection Act.  Thanks to the Seattle Trademark Lawyer Blog for alerting us that The Western District recently entered its Findings of Fact and Conclusions of Law in the Lahoti v. Vericheck, Inc., cybersquatting case. 

The Plaintiff lost a UDRP proceeding and filed a declaratory judgment action within the 10-day period challenging the National Arbitration Forum’s UDRP order that his domain name, vericheck.com, be transferred to Complainant Vericheck, Inc. The arbitrator made findings as follows:

Complainant has continuously used and operated under the VERICHECK name since Complainant’s establishment in 1989. Moreover, Complainant registered the VERICHECK mark with the State of Georgia in August 2001. Since its establishment, Complainant has spent more than $85,000 on marketing its products and services and now conducts more than $1.2 million per month in financial transactions over the internet under the VERICHECK name. The third-party that holds the active trademark registration for the VERICHECK mark with the United States Patent and Trademark Office is VeriCheck Systems, Inc., an Arizona corporation. The registrant, however, does not use the mark. The record shows that Respondent is not commonly known by the <vericheck.com> domain name. Moreover, Respondent is not using the domain name to offer any goods or services of its own but is using the name to direct internet users to links, including links to Complainant’s competitors. Respondent acknowledges that in response to Complainant’s offer to purchase the name Respondent quoted a price of $48,000. Furthermore, consumers seeking to find Complainant’s website who use Respondent’s domain name are redirected to a website that features advertisements of competitors of Complainant, presumably for a referral fee paid to Respondent. Respondent does not merely “park” the domain name.