Welcome to the Internet: Bad Faith Domain Name Registration and Cybersquatting – Part 2 | Dunlap Bennett and Ludwig PLLC

Part 2

Welcome back to Part 2 of “Welcome to the Internet,” where we review some of the general legal issues related to domain names.

Remember that domain names are user-friendly names given to websites to reflect your unique IP address, a complex string of numbers.
For example, ‘www.google.com’ or ‘www.amazon.com’ are the respective domain names of Google and Amazon, while ‘www.dbllawyers.com’ is the domain name of this law firm, Dunlap Bennett & Ludwig PLLC. . Domain registries manage domain names, often using reputable domain registrars to sell domain name reservations to the public.

Once reserved, the person or entity that ‘purchases’ the domain name is called the registrant and has the exclusive right to use the domain name during the reservation period. But what happens if you register a domain name and then don’t use it? In a typical setup, nothing: you remain the registrant and have exclusive rights to use the domain name if and when you want. However, there are scenarios where the registrant registers a domain name in bad faith with the intention of holding a company hostage when trying to secure their domain name, which has consequences.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) defines “cybersquatting” as a bad faith registration of another person’s trademarked term or phrase in a domain name. More specifically, cyber squatting, that is, bad faith domain name registration, occurs when an individual or entity registers a domain name that incorporates or is closely similar to a registered word or phrase. For example, a local clothing store, QuickStream T-Shirts, LLC, recently opened its doors and is achieving phenomenal sales at its physical location. “John”, who lives in the area, reckons the QuickStream t-shirts will be a big hit, he has trademarked his name and logo, but doesn’t have a website yet. He immediately registers a number of domain names that the principals may want to use in the future: ‘quickstreamtshirts.com’, ‘qstshirt.com’, ‘quickstreamshirts.com’, etc. John is not using the domain names, nor does he have any plans to use them in the future; however, he plans to profit from selling one or more of the domains to the directors of QuickStream T-Shirt once they decide they would like to create a website.

Various methods exist to combat cyber squatters, both under US federal law and ICANN’s dispute procedures. Congress enacted the Cybersquatting Consumer Protection Act (“ACPA”) in 1999, in the midst of the dot-com boom, to prevent cybersquatters from registering well-known, distinctive trademark domain names just to benefit from their resale. to the brand owner.

As a cousin of the Lanham Act (which deals with traditional trademark/trade dress infringement), the ACPA gives rise to a civil action when an individual registers a domain name that (i) is identical or confusingly similar to a trademark distinctive; (ii) that is identical or confusingly similar to a famous brand; or (iii) refers to a name, seal, or emblem specifically excluded from public use by the US government. See 15 USC § 1125(d). When a plaintiff wins their bad faith cybersquatting claim, they may receive ownership of the domain name, statutory damages, and attorneys’ fees and costs as a remedy. In other words, the ACPA was specifically intended to avoid the scenario we described above (albeit on a much larger scale with much larger organizations).

The second popular method of combating illegal cyber squatters is to file a complaint under ICANN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”). Under the UDRP, a complainant can file a complaint alleging cybersquatting with various ICANN-approved dispute resolution service providers. UDRP proceedings are a popular method of filing a complaint because they are significantly cheaper to litigate, typically well under $10,000.

However, UDRP disputes are quite limited in scope and only allow the claimant to receive ownership of the disputed domain name without recovering any fees, costs, or other monetary damages.

In particular, while both the ACPA and the UDRP are popular methods for defeating cybersquatting, they are not exhaustive. While the ACPA was designed to prevent cybersquatters from taking over popular domain names and trademarks, serial cybersquatters often register hundreds or thousands of domain names that are not trademarked or popular. These cybersquatters do so in bad faith, with no legitimate use of the domains other than their hope that a legitimate business will emerge and seek to use the domain name already registered.

Unfortunately, they are then subject to price increases to purchase the desired domain. Known as “anticipatory cybersquatting,” this practice severely hampers a business owner’s ability to strategically market their products and services to their customers and impedes their business. As such, it is a wise decision to not only quickly register your business name, logo, etc., but also to ensure that a viable domain name is available for registration.

Read Part 1 of Welcome to the Internet: What is a Domain Name and how does it work?

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