2004.12.18

The Anticybersquatting Consumer Protection Act

Our attorneys specialize in trademark, WIPO / NAF arbitration, Uniform Domain Name Dispute (UDRP), domain monetization, domain protection, cybersquatting and typosquatting matters. Our domain name specialists have a proven track record representing clients on technology and domain name issues. Many of the cases we handle involve federal court litigation against cybersquatters under the ACPA.

What is the ACPA?  The Anti-cybersquatting Consumer Protection Act is a federal law that took affect on November 29, 1999.  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.  If a trademark is a famous mark, the same remedies are available if the domain name is identical to, confusingly similar to or dilutive of the trademark. 

What Must a Mark Owner Show to Win a Case of Cybersquatting?

The plaintiff must prove the following elements:

  1. The Defendant has a bad faith intent to profit from that mark, including a defendant name which is protected as a mark; 

  2. registers, traffics in, or uses a domain name that--

    (I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

    (II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or

    (III) is a trademark, word, or name protected by reason of 18 U.S.C. § 706 (the Red Cross, the American National Red Cross or the Geneva cross) or 36 U.S.C. § 220506

The key element that must be proven is that the defendant has a "bad faith intent to profit from the mark."  ''Traffics in'' refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.

What is Bad Faith Intent to Profit from a Mark?

The ACPA gives the court some guidance to assist it in determining if the requisite bad faith exists.  In determining if the defendant has bad faith, the court may consider the following non-exclusive factors:

  1. the trademark or other intellectual property rights of the defendant, if any, in the domain name;

  2. the extent to which the domain name consists of the legal name of the defendant or a name that is otherwise commonly used to identify the defendant;

  3. the defendant's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;

  4. the defendant's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;

  5. the defendant'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;

  6. the defendant'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 defendant's prior conduct indicating a pattern of such conduct;

  7. the defendant's provision of material and misleading false contact information when applying for the registration of the domain name, the defendant's intentional failure to maintain accurate contact information, or the defendant's prior conduct indicating a pattern of such conduct;

  8. the defendant's registration or acquisition of multiple domain names which the defendant 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; and

  9. the extent to which the mark incorporated in the defendant's domain name registration is or is not distinctive and famous within the meaning of Section 1125(c)(1) of the Lanham Act.

Bad faith intent will not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.

What's the Quickest & Easiest Way for Domain Name Owner to Lose an ACPA Lawsuit?

If the domain name owner, including a domain name owner that may not otherwise be liable under the ACPA, offers at any time to sell or transfer the domain name for value, most courts will find that the owner has acted in bad faith and if the other elements of the case are proven, the plaintiff will win. 

Another easy way for the plaintiff to prevail is if the domain name owner supplied material misleading contact information on the domain name registration application or if the defendant intentionally fails to maintain accurate contact information with the domain name registrar.  Because of this bad faith factor, it is important for all domain name owners to check their domain name registrations at their registrars Whois database to determine if the contact information is correct. 

What Remedies May be Granted by the Court for Violations of the Act?

The Act authorizes a court to order the forfeiture or cancellation of a domain name or the transfer of the domain name to the owner of the mark.  In lieu of actual damages, the plaintiff may elect statutory damages and the court has discretion to award damages of not less than $1,000 and not more than $100,000 per domain name, as the court considers just. 15 U.S.C. § 1117(d).

An infamous cybersquatter named John Zuccarini lost an ACPA lawsuit in October of 2000, when the court awarded the plaintiff statutory damages of $500,000 for each of five domain names that were obtained in bad faith and that were confusingly similar to the plaintiff's trademark.  The court also ordered Mr. Zuccarini to pay attorneys' fees of more than $30,000. 

What if the Domain Name Owner Cannot be Found?

If the owner of a domain name cannot be found and served with a summons and complaint, the trade mark owner may bring an "in rem" action against a 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 if (i) the domain name violates any right of the owner of a mark registered in the Patent and Trademark Office, or protected under subsections (a) or (c) of Section 1125; and (ii) the court finds that the owner (I) is not able to obtain in personam jurisdiction over a person who would have been a defendant in a civil action; or (II) through due diligence was not able to find a person who would have been a defendant in a civil action.

What Remedies are Available in an In Rem Lawsuit?

The remedies in an in rem action for cybersquatting are limited to a court order for the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark.  Money damages are not available.

Is the ACPA the only Weapon Available to Trademark Owners in the War Against Cybersquatters?

No.  Trademark owners may also elect to file a complaint under ICANN's Uniform Dispute Resolution Policy. The UDRP is a fast-track procedure under which a victorious trademark owner receives an order from an arbitration panel that the domain name be cancelled or transferred the trademark owner.

When Would a Trademark Owner Sue Under the ACPA Instead of Filing a UDRP Complaint?

In general, a trademark owner will sue under the ACPA when the trademark owner seeks any remedies in addition to canceling or transferring the domain name.  For example, if the trademark owner seeks money damages in addition to the domain name, the mark owner must bring an ACPA lawsuit.  Another reason to use the ACPA is to avoid the time and expense of a UDRP action when the trademark owner suspects the cybersquatter would "appeal" the results of the UDRP action.  After an adverse ruling in a UDRP action, the cybersquatter has ten days within which to bring a lawsuit to prevent the transfer or cancellation of the domain name.  If you think the cybersquatter will challenge an adverse UDRP ruling, it makes sense to skip the procedure and go straight to court.

What's the Downside to an ACPA Action?

An ACPA action is a lawsuit, which means that it will be costly and take a lot of time unless the defendant defaults.  Whenever you litigate, there is also the risk that you may lose.

COMMENTS

The new .co domain extension is here. What implications, if any, are there to the ACPA if one company or person takes a .co of a well-established brand or is confusingly similar to another established company's business?

Cybersquatting laws need to be tougher and less expensive.

Is ICANN in charge of the Cybersquatting Act or is that only US law? I know ICANN cybersquatting provisions include the UDRP.

The Cybersquatting Act helps protect trademarks for sure but he practical aspect is that it cost money to protect your trade marks. I wish Cybersquatting Act could also go through UDRP style arbitration.

is a good writing and will be here always congratulations

There are, for all practical purposes, three venues appropriate for in rem proceedings under the ACPA (1) the location of the registrar, (2) Herndon, VA - the location of the .com registry, (3) Mountain View, CA - the offices of Verisign, the .com registry.

Kevin J. Heller wrote a very nice primer on how do defeat bogus cybersquatting claims, The Young Cybersquatter's Handbook.. If you are intersted in this issue, you should check it out here.

Cybersquatting, Typo-squatting, Competing Legitimate Use, Reverse Domain-Name Hijacking, Trademark Rights are all discussed.

Kevin concludes:
As e-commerce continues to proliferate, trademark holders will require greater protection. However, the extension of ever-greater protection must be carefully balanced with the rights of individual citizens in securing space on the web. Also, as the law changes and further clamps down on established practices, the ingenuity of the cybersquatter and/or entrepreneur will evolve to circumvent these laws. The new wave of cybersquatters is already registering generic and multi-lingual domain names to resell at substantial sums.

Rather than waiting for lawmakers to attempt to keep pace, trademark holders should rely on their attorneys to give them prospective advice when forming a corporation, so as to minimize conflict. For example, an attorney working with a start-up corporation should advise management that before selecting a name and incorporating, they will need to perform a trademark search not only in the PTO registry, but also on the Internet, in each of the gTLD's, with multilingual characters (if operating in foreign markets), along with a host of other requirements. This will be necessary for avoiding disputes with and/or making substantial payments to co-existing legitimate rights domain name holders. Ultimately, it will be up to the vigilant trademark lawyer to institute preventative care, in order to stem the tide of infringement and dilution spawned by the ever more clever cybersquatter.


Only Anticybersquatting Act, Not Trademark-Dilution Claim, Provides for Transfer of Offending Domain Names

Cybersquatting involves, for example, a cybersquatter registering an Internet domain name that includes or is very similar to a trademark that is owned by a third party. The cybersquatter is usually an individual that has no legitimate right to use the third party’s trademark. Rather, the intent of the cybersquatter is typically to sell the domain name to, or use it to disparage, the legitimate owner. In the recent case of Porsche Cars North America, Inc. v. Porsche.Net, __ F.3d __, 2002 Westlaw 1941442 (4th Cir, Aug. 23, 2002), it was made clear that only a claim under the Anticybersquatting Act, not a trademark-dilution claim, enables the legitimate owner of a trademark to seek and obtain ownership of domain names from a cybersquatter.

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See this site for some great case links

Chatam International, Inc. v. Bodum, Inc.
157 F. Supp. 2d 549, Civ. Act. No. 00-1793 (E.D.Pa. August 7, 2001)
Plaintiff, holder of a federally registered trademark in the mark "Chambord" for sale of a liqueur and assorted food products, brought this action under the Anticybersquatting Consumer Protection Act, and for trademark infringement and dilution, against defendant, who holds a federally registered trademark in the mark "Chambord" for the sale of coffee makers. The action was triggered by defendant's registration of the domain name "chambord.com," at which it planned to, but had not yet offered for sale its coffee makers. The court dismissed the action, holding, inter alia, that (a) the ACPA claim failed because defendant had not acted in bad faith in continuing to utilize its federally registered mark for the sale of coffee makers; (b) the trademark infringement claim failed because the initial interest confusion doctrine (a consumer looking for company's As site finds company B's instead) was inapplicable to situations where the parties in question did not offer competing goods; and (c) the dilution act claim failed because plaintiff's mark was not famous at the time defendant commenced its use of the mark.

E. and J. Gallo Winery v. Spider Webs Ltd., et al.
Civ. Act. No. H-00-450, 129 F. Supp.2d 1033 (S.D. Tex., January 24, 2001) aff'd., 286 F.3d 270 (5th Cir., 2002)
Court enjoined defendants from continuing to utilize the domain name ernestandjuliogallo.com, and directed them to transfer the name to plaintiff E. and J. Gallo Winery ("Gallo"), which holds a trademark in the mark "Ernest and Julio Gallo." The court further awarded Gallo statutory damages under the Anticybersquatting Consumer Protection Act ("ACPA") in the amount of $25,000 as a result, inter alia, of defendants' registration of the domain name at issue, and their use of that domain name to operate a web site that commented on this lawsuit, and contained articles critical of alcohol consumption. Defendants had also registered some 2000 other domain names, a number of which contained the names of famous companies, cities and buildings.

Garden of Life, Inc. v. Barry Letzer, et al.
Case No. CV 04-2619AHM (MANx) (C.D. Ca., May, 2004)
Finding plaintiff likely to prevail on claims of trademark infringement and cybersquatting, Court issues preliminary injunction directing defendants, purported competitors operating a business under the same name as plaintiff, to transfer to plaintiff 74 domain names which contain plaintiff's trademarks or variations thereof, during the pendency of this suit. The Court further directed plaintiff to remove the existing content on the sites found at those domains and replace it with an "under construction" notification, and pay all registration fees for these domains which may become due. The Court reached this result notwithstanding the fact that defendants had registered the main domain at issue, gardenoflife.com, before plaintiff commenced its use of that mark in commerce. On this motion, the Court rejected defendants' claim that they had been using the mark "gardenoflife" in commerce continuously since 1974. The Court found instead that defendants' use of the mark did not commence until after plaintiff's. As a result, and because defendants registered many of the domains at issue after plaintiff had entered into negotiations with defendants for the purchase of the gardenoflife.com name, which domains contained variations of plaintiffs marks unrelated to defendants' business, the court found plaintiff likely to prevail on claims of trademark infringement and cyberquatting.

Lamparello v. Falwell
Civil Action No. 03-1503-A (U.S. Dist. Court, Eastern District of Va., August 5, 2004)
Court holds plaintiff infringed defendants' trademarks, and violated the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of his operation of a 'typo' web site at the domain Fallwell.com at which he criticized the Rev. Falwell's views on homosexuality, and expressed his own contrary views on that subject. At one time, the site informed interested visitors of a book plaintiff considered relevant to this discussion, and provided a link to Amazon.com at which they could purchase it. The Court reached this result notwithstanding the fact that plaintiff's site featured a prominent disclaimer, advising users that it was not defendants' official site.

Mattel, Inc. v. Adventure Apparel
(S.D.N.Y. September 19, 2001)
Court grants Mattel, the holder of numerous trademarks in and including the word "Barbie," summary judgment, holding that defendant violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering the domain names "barbiesbeachwear.com" and "barbiesclothing.com," causing those who accessed such domains to view a commercial web site selling women's apparel operated by the defendant, and effectuating a single $10 sale of merchandise to an investigator hired by plaintiff who accessed one of the domains in question. The court ordered defendant to relinquish the domain names at issue, and to pay Mattel $2000 in damages. The court declined to award Mattel its attorneys' fees.

Mayflower Transit, LLC v. Dr. Brett Prince
Civ. Act. No. 00-5354 (D.N.J., March 30, 2004)
Court holds that defendant's use of plaintiff's service mark in the domain names of noncommercial web sites critical of plaintiff does not constitute a violation of the Anticybersquatting Consumer Protection Act ("ACPA") because this was a "bona fide noncommercial" use of the mark which defendant had reasonable grounds to believe was lawful. In reaching this result, the Court determined that defendant was motivated not by an intent to use his critical web site to extract money from plaintiff, but instead by a desire to express his dissatisfaction with plaintiff's alleged conduct. The Court accordingly granted defendant's motion for partial summary judgment, and dismissed plaintiff's ACPA claim. Left for another day were libel and trade libel claims arising out of the sites' content, as well as a Federal Dilution Act claim under 15 U.S.C. § 1125(c) arising out of the defendant's use of plaintiff's service mark.

People for the Ethical Treatment of Animals v. Doughney
No. 00-1918 (4th Cir., August 23, 2001)
The Fourth Circuit, affirming the decision of the district court below, held that defendant was guilty of service mark infringement and unfair competition, and had violated the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of his creation and operation of a web site at the domain www.peta.org, which contained plaintiff's federally registered service mark "peta." In reaching this conclusion, the Fourth Circuit rejected defendant's defense that his site, titled "People Eating Tasty Animals," was a parody of plaintiff's "People for the Ethical Treatment of Animals" organization because the domain name containing plaintiff's mark did not appear simultaneously with that aspect of the web site containing the parody of plaintiff's organization.

The Toronto-Dominion Bank v. Boris Karpachev
188 F. Supp. 2d 110 (D. Mass., Mar. 6, 2002)
Court holds that defendant violated the Anticybersquatting Consumer Protection Act by registering sixteen domain names containing misspellings of plaintiff’s trademark, at which domains defendant operated web sites that voiced his complaints about plaintiff’s business practices. Defendant did not offer any goods or services for sale at these web sites, and there is no mention in the record of any attempts by defendant to try and sell the domain names to the plaintiff.

Virtual Works, Inc. v. Volkswagen of America, Inc., et al.
238 F.3d 262 (4th Cir., January 22, 2001)
The Fourth Circuit, affirming the determination of the district court below, held that plaintiff violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering and offering to sell to defendant the domain name vw.net, which contains defendant Volkswagen's famous "vw" mark.

See this site for some great case links

On June 15, 2001, the United States Court of Appeals for the 3rd Circuit, in the case of Shields v. Zuccarini, upheld a federal district court award of statutory damages of $50,000 plus attorneys' fees of $39,109 in the court's first case involving the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d) (the "Act"). This case is good news for trade mark owners, but very bad news for typosquatters and cybersquatters. It provides a lot of ammunition for owners of famous trade marks who desire to obtain infringing domain names plus obtain money damages and attorneys' fees from cybersquatters and typosquatters.
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