The Three Views of Trademark Cybersquatting

We all know the formal definition of cybersquatting under the Uniform Domain-Name Dispute-Resolution Policy (UDRP) and the Anticybersquatting Consumer Protection Act (ACPA).  But in the blogosphere, people use the word cybersquatting to mean a variety of different things.  The good news for both, trademark holders and domainers, is that both the courts under the ACPA and Arbitration Panels at WIPO and NAF under the UDRP continue to become more consistent in their definition and application of cybersquatting principles in their decisions.  As an attorney, consistency is the one element which allows us to advise our clients and allows clients to make informed business decisions based on a risk/reward analysis.

One of the challenges for internet attorneys working on cybersquatting issues is the relative inconsistency and how the word “cybersquatting” is used in on-line discussions on the internet.  The same is true for related terms such as “reverse domain hijacking”, a concept wherein a trademark holder attempts to use the UDRP or ACPA to essentially steal a domain away from a legitimate domain registrant who did not register the disputed domain in bad faith, or is using an otherwise trademarked protected domain in a non-infringing way.

There is tension between trademark holders and domainers on the cybersquatting issue.  Trademark holders want their brands protected, as they often have large financial investments in their brand and online presence.  Domainers don’t want their generic or descriptive domain names taken from them without compensation, as these domains are sometimes worth tens or hundreds of thousands of dollars.  In some instances, domainers may have purchased a domain name for substantial sums and still find themselves named as a Respondent under the UDRP by a trademark holder seeking to obtain a transfer order.  As an internet lawyer practicing cyber-law, we see both ends of the game.  Again, we believe that it is important for a consistent definition of cybersquatting to continue to evolve so that both trademark holders and domainers, as businesspeople, can understand the system and make intelligent decisions based on established principles and guidelines.  The ironic thing is that both trademark holders and domainers agree that cybersquatting is bad for everyone.  Cybersquatting certainly hurts trademark holders.  Cybersquatting also hurts domainers, in that it affects their ability to achieve legitimacy.  Legitimacy in the domain name market is critical in order for the monetization of domain names, either by sale, PPC revenue or development, to evolve and mature. 

So both, domainers and trademark holders, believe that cybersquatting is bad, where does the tension between the two communities come from?  Again, the answer is because of divergent views of cybersquatting.  When someone registers a domain as a typographical error of a famous person’s name or trademark, nearly everyone agrees that this is cybersquatting and is bad for both the trademark and domainer markets.  When someone registers a two-word descriptive domain and puts up a pay per click (PPC) parking page, problems arise when the two-word descriptive mark has previously achieved trademark status.  Domainers sometimes argue that one-word or two-word generic or descriptive words should be exempt from allegations of cybersquatting.  This is ridiculous since one-word generic and two-word descriptive word combinations often attain powerful trademark rights because those words are being used in a non-descriptive sense.  The easiest example is Apple Computers.  “Apple” is a one-word generic.  However, it is being used to describe computers, which haves nothing to do with produce.  Virtually every two-word combination which might be considered descriptive, has common law or registered trademark rights somewhere in the world since it is being used in a non-descriptive way by a company which expects to protect its mark as an indicator of source and origin of its goods and/or services. When a domainer puts a parking page up on that two-word descriptive domain, or even one-word generic domain, problems sometimes arise.  This is because the parking page software offered by parking companies used by domainers contains an algorithm which will optimize the PPC links towards those links which are most often clicked.  If a two-word descriptive domain is similar to a two-word trademark, that software will typically optimize the PPC links towards the trademark holders market.  In our example above, and assuming that Apple Computers didn’t already own the domain apple.com, a parking page on apple.com would start showing PPC links related to computers in addition to, or to the exclusion of, produce.  Our domain name dispute lawyers often advise domainers that they must be extremely careful about their parking pages for this very reason.  A parked page displaying ads which compete with a trademark holders defined market will inevitably be Exhibit A to any UDRP or ACPA proceeding.

So what are the three definitions floating around cyberspace on the word “cybersquatting?” 

1. Narrow Cybersquatting Use:  Some domainers and commentators only use the word cybersquatting to mean the most obvious typosquatting activities.  This would include a domain registrant who registers Microsft.com.  They would also include in this definition people who register known trademarks such as www.dellcomputers.com (again completely hypothetical) in order to divert traffic.

2. Established Cybersquatting Definition:  This is the definition of cybersquatting which most UDRP arbitrators and courts in the United States abide by.  It includes not only the obvious and habitual cybersquatters included in the definition above, but also some of the more challenging circumstances that arise when a one-word generic or two-word descriptive domain is registered by a domainer and there are overlapping pre-existing trademark rights on a variation of that domain.  This definition looks closely at the “intent” of the domain registrant in determining whether or not cybersquatting exists.

3. Broad Use of the Word Cybersquatting:  There is a broad use of the word cybersquatting often used by trademark holders to include any domain which arguably infringes their trademark, irrespective of whether or not the domain was registered in bad faith or whether it is being used in a non-infringing way.  People who ascribe to this definition of cybersquatting never look beyond the question of whether trademark rights exist in the words at issue.

Both domainers and trademark holders would be much better off abandoning definitions one and three above and dealing with the realities of the definition used under the UDRP and ACPA as they discuss the challenges and problems of cybersquatting on blogs, bulletin boards and the like.  It still surprises many of our trademark lawyers and domain name dispute attorneys that confusion still exists surrounding the definition of cybersquatting.  Both trademark holders and domainers must to continue to educate themselves as to the definition which will affect their property interest and monetary investment so that they can make intelligent business decisions.  Hyperbole simply leads to misinformation and irrational business decision making.

Some domain name dispute attorneys continue to pound their fist and gripe about the current definition of cybersquatting being used under the UDRP and ACPA.  That doesn’t do much good since the definitions are not likely to change substantially anytime soon.  Domainers need solid legal advice about managing their domain portfolios given the current state of law, not the law as they wish it to be.  Trademark holders need to solid legal advice from their trademark attorneys which acknowledges the legitimacy of the domainer market, the fact that many domains are not registered in bad faith and that there are many non-infringing uses for a domain in cyberspace.  Trademark holders who simply use the UDRP to obtain free domain names are abusing the system to everyone’s detriment.  Misinformation on the Internet about what is, and what is not, cybersquatting serves no one.  Both trademark holders and domainers are well-served by rational and intelligent dialog about cybersquatting and both sides have an interest in weeding the obvious cybersquatters and typosquatters out of the market. 

Comments

[Uniform Domain-Name Dispute-Resolution Policy (UDRP)]

It doesn't do domainers any good to complain about he UDRP. They need to avoid risky behaviors and figure out new ways to monetize domains. Domain parking can be risky.

[Domain name cybersquatting]

Since it all comes down to bad faith intent, I would think proving cybersquatting would be pretty hard to do.