Trademarks, Domain Names & Cybersquatting: The Do's and Dont's of Passive Domain Holding

If you register a domain name incorporating someone else's trademark in bad faith, you could be liable for much more than trademark infringement under the Lanham Act. 

In this Cybersquatting Law Radio Interview, Attorney John Di Giacomo discusses the passive holding of domain names and how it relates to bad faith registration, trademark infringement, cybersquatting and ways in which you can limit your risk.

Welcome to Cybersquatting Law Radio brought to you by Traverse Cybersquatting Law, internet lawyers specializing in domain name dispute resolutions and all other domaining issues.

Damien Allen:  Good morning, and welcome to Cybersquatting Law Radio.  My name is Damien Allen, and joining me today on the telephone is John Di Giacomo of Traverse Legal, PLC.  Good morning and welcome to the program, John.

John Di Giacomo:  Hi, Damien. Thanks for having me.

Damien Allen:  Pleasure to have you today, sir.  Today, we are going to be discussing the passive holding of domain names.  John, could you give us a little bit of an overview of what is passive holding of a domain name?

John Di Giacomo:  Damien, the passive holding of a domain name is essentially the registration of a domain name for later use.  Passive holding in the context of internet law really means the registration of a domain name for later use that also contains the registered trademark of another party.  And, really, passive holding has a negative connotation in the sense of internet law in the sense that passive holding really is a type of a particular form of cybersquatting.

Damien Allen:   Now is this the same as parking a domain?

John Di Giacomo:  It really depends.  Parking a domain name, if it incorporates the registered trademark of another person, can be considered passive holding.  It really depends on how the parking works.  If the parking page that displays ads contains ads that are competitors of the registered trademark holder and the domain name contains the registered trademark, then it may be, in fact, cybersquatting.  So, it really depends on the circumstances of the case.

Damien Allen:  What are some of the problems a person can face if they register a domain name and then hang on to it without using it?

John Di Giacomo:  There are two major areas of law that apply to this type of situation.  The first is obviously the Uniform Domain Name Dispute Resolution Policy.  And the Uniform Domain Name Dispute Resolution Policy, which we affectionately call the UDRP, is essentially a contract that all registrants of domain names agree to when they register their domain names.  That contract prohibits the abuse of registration of a domain name.  Under the UDRP, passive holding can be a sign of cybersquatting.  In order to make a case under the UDRP, one must prove that a registrant has registered a domain name in bad faith, and then use a domain name in bad faith as well.  But one of the factors of Section 4 of the UDRP states that a registrant that has registered a domain name in order to prevent the owner of a trademark or service mark from reflecting that mark in a corresponding domain name may be evidence of cybersquatting.  So, under the UDRP, if you do register a domain name that incorporates the trademark of another, and you hang on to it, that itself may be evidence of cybersquatting.  The second body of law that applies to this situation is really the Anticybersquatting Consumer Protection Act.  That Act, which is a Federal Law, a Federal Statute and a component of the Lanham Act, which is essentially Federal Trademark Law, states that it’s bad faith to register a domain name for the purpose of warehousing it to prevent another person from using the mark.  The actual effective language in that statute is the bad faith intent to profit.  So, if in fact a person registers a domain name to prevent a competitor from using it, and to not have that intent to profit, then it may not actually be cybersquatting.  But with that said, the registrant is ultimately responsible for what they do with the domain name.  So, if they do offer to sell goods under the domain name that reflects a registered trademark, then they may be liable for cybersquatting under the Anticybersquatting Consumer Protection Act, which we call the ACPA.  One of the factors that courts look at is whether or not a party has offered to sell the domain name without having used it,  and warehousing under that Section is also a piece evidence that relates to bad faith intent to profit under the ACPA.  So, if a person warehouses multiple domain names that are known to be identical or confusingly similar to the distinctive trademarks or if their dilutive of a famous trademark without regard to the goods or services, the court may say that that is in fact cybersquatting.

Damien Allen:  What can person do to limit their risks in passively holding domain names?

John Di Giacomo:  Well, there are a couple ways you can limit your risk in this situation.  Number one is simply do not register the registered trademark of another party in domain name.  There are a number of situations where that is considered fair use, but in the majority of cases, it’s not.  Another way to mitigate your risk in this situation is to perform a trademark search prior to registering the domain name that you intend to register.  Trademarks are limited to both geographical scope and goods and services that they’re associated with, so, if, in fact, you intend to use a mark that may be similar to a registered trademark, it makes sense to do a trademark search and to find out whether or not your mark is going to be considered confusing similar because it’s used in association with similar goods or services.  The other option that I typically advise domainers to do is to limit the display of pay-per-click ads on your site if you intend to park a domain name.  If you intend to park a domain, pay-per-click ads are contextual, so they may actually display ads that are in competition to a registered trademark holder’s mark or goods or services.  So, really, if you can limit the display of those ads, through your pay-per-click provider, then you may be able to mitigate your risk from that sense.  Finally, I would say don’t offer to sell the domain name without an attorney.  An offer to sell a domain name is a piece of evidence of bad faith, both under the Anticybersquatting Consumer Protection Act and under the Uniform Domain Name Dispute Resolution Policy.  So, before you send a note or an email out to sell that domain name, I would say consult with an attorney and determine whether or not you’re doing a disservice to yourself and to your legal position.

Damien Allen:  Thank you very much for joining us today, John, and discussing passive holding of domain names with us.

John Di Giacomo:  Thanks a lot, Damien.

Damien Allen:  You’ve been listening to Cybersquatting Law Radio.  My name is Damien Allen.  Everybody have a great afternoon.

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