Enrico: You've been accused of cybersquatting, and they're saying that you're a cybersquatter. Essentially, a trademark owner has decided that they're going to come after you, and they are going to try and show that you registered your domain name with a bad faith intent to profit from their trademark. Cybersquatting is serious business, and cybersquatting law is still relatively undeveloped.
The Anticybersquatting Consumer Protection Act or ACPA defines cybersquatting in a very loose way, and in order to be found guilty of unlawful cybersquatting, in order that they show that you've engaged in bad faith cybersquatting with a bad faith intent to profit from their trademark, they're going to have to show that you intentionally targeted their trademark. Of course, many domainers use this bad faith intent to profit element as their defensive shield, because a domainer will say, "I didn't know about the trademark," or that, "I registered so many domains that I can't possibly determine what is trademarked."
Another defense that I hear to a charge of cybersquatting is that everything has got a registered trademark associated with it--every word in the dictionary--virtually every made up word has some sort of trademark issues, and so there's no way to register virtually any domain without some sort of trademark problem, so you really can't look. Many domainers essentially say, until they have specific notice from the trademark owner that there is an allegedly infringing trademarker out there, that they can't be guilty of cybersquatting because they didn't have the bad faith intent to profit at the time they registered, initially used, or potentially even trafficked in the domain, as defined under ACPA.
So, here's what you need to know if you're a domainer who's registering domains as part of your business, buying and selling domains as part of your business, and generally qualify as a "domainer". Most courts really look hard at the rest of your portfolio in order to gauge whether or not you are a bad faith cybersquatter. And here's what I mean. In the ACPA world, under the Federal Anti-Cybersquatting Consumer Protection Act, one of the bad faith elements is whether or not you've registered other domains which incorporate third-party trademarks in order to profit off of those marks. Well, what that does is it brings your domain portfolio directly into play, and in discovery, a good cybersquatting law attorney is going to ask for your entire domain portfolio. And you might fight that on relevance grounds, but in all likelihood, the court is going force you to produce your entire portfolio of domain names.
Now, that's either good news or bad news, depending on what's in that portfolio. If the portfolio contains a large number--and I'm not talking about a large percentage--but a large number of clearly infringing domain names on third-party trademarks of well-known companies, you've got a big problem. No one is going to believe that you didn't register the subject domain-the one that someone's complaining about right now-with a bad faith intent to profit, if you've got clearly obvious infringing domains in your portfolio.
Now, just a second ago, I said something that I think is very important, which is, it's not the percentage of your entire portfolio that is going to become important. Let's say that you've got 100,000 domains and only 2% infringe obvious trademarks. Well, that's going to be a very difficult thing to establish by way of evidence. So you're probably not going to be able to say anything like that at trial. So what that leaves the court, the jury, and the other attorney to deal with is whether or not they can generate a list of, say, 100 or 200 or 500 other clearly infringing domain names on third-party trademarks. And even if that's a small percentage of the portfolio, it really makes you look bad. And the reason why it's so bad is because no one has to look up to see if Microsoft has a trademark on Microsoft, in order to know whether or not you've engaged in bad faith cybersquatting on a Microsoft trademark. If you have a domain name that incorporates all or part of the word Microsoft in it, everyone is going to believe that the reason you registered that domain was to siphon off traffic from Microsoft.com.
It's different if it's a third-party company that's relatively unknown, that may or may not have a registered trademark, that a consumer may or may not recognize, that a juror may or may not recognize. In order to establish that those particular domains are problematic, the plaintiff's attorney, representing the trademark owner, is going to have to show that there's a trademark there, that it's got a substantial amount of traffic, that the trademark is still valid, and that's a very challenging thing to do when you've got, say, more than ten third-party companies that you're trying to put into proof.
So, it's really the well-known brands that you need to avoid, under the Anti-Cybersquatting Consumer Protection Act, bad faith element of registration of third-party domains that infringes trademarks. And if you can avoid the well-known brands, it's going to make it much more difficult for the plaintiff's attorney to use that particular factor, under the ACPA, as a primary piece of evidence in establishing that you were cybersquatting and that you have violated the Anti-Cybersquatting Consumer Protection Act.
So what do you need to do? If you're a domainer, you should be auditing your domain portfolio regularly. Even if you don't pay a lot of attention to the domains you registered because you're registering them in bulk, you need to go back and have a process for culling out, very quickly, any problematic domains. Once you get sued, it will be too late. Once someone files a lawsuit against you and your company, claiming that you violated the ACPA, you are going to be stuck with your portfolio as it exists at that point. Why? Because any culling you do at that point to remove domains is going to make it look like you're guilty, it's going to make it look like you're now trying to clean up your portfolio. Any juror and judge are going to think that you are really trying to make it look like you are not a cybersquatter, and that's essentially an admission that you are.
So the first thing you need to do is make sure you audit. The second thing you need to do is you need to understand that your portfolio of domain names is a primary piece of evidence, and it can be used on offense as opposed to defense. The other piece of evidence which is going to buttress right up against your portfolio is whether or not you've received trademark infringement threat letters from third-party trademark owners and their lawyers. So, if you have relatively few trademark infringement threat letters in your materials--in your company documents--that's a pretty good thing. They're probably still going to be used against you in an ACPA lawsuit, but you'll be able to show that it's a small number compared to the size of your portfolio.
If, however, you regularly receive trademark infringement threat letters from lawyers representing trademark owners, then chances are that's going to come into evidence. In every ACPA case that was filed as a lawsuit by a plaintiff against a defendant, those threat letters, in whole or in part, have come into evidence. So you need to deal with those. Now, you can't just throw them out. You can't just get rid of them--that's destroying evidence--and that's going to come back to haunt you real fast. If you are receiving a high number of threat letters, then you know you've already got a problem with your portfolio, and you really need to rethink your business model.
My name is Cybersquatting Law Attorney, Enrico Schaefer. We'll see you next time.
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