Focus On

spring 2003 vol. 8 no. 4
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Cyberpiracy: Its Effect on You and Your Clients

By Pamela B. Huff and Kristi F. Nickel

It’s a Saturday afternoon. You log onto the Internet in the hopes of cruising the web site of your favorite travel agency. As usual, you direct your curser to the address line of the screen and type in the name of the travel agency expecting to be met with their home page inviting you to shop their travel specials. Instead, you find yourself in the midst of a porn site. Unusual? Unfortunately not.
In order to attract web users to its site, a business typically registers or attempts to register as its domain name, a word, phrase or trademark that is related to the company. As consumers, we know this. So, in order to locate information about a business or to shop on line, we usually type the trademark of that business on the address line with expectations that we will be directed to that business’ website. Cybersquatters or cyberpirates feed off this typical practice. Cybersquatters register a domain name that is similar or the same as an existing trademark for the purpose of unfairly profiting from the good will associated with such mark. BUDGETRENTALCAR.COM and AMERICANAIRLINES.COM were both registered by cybersquatters who attempted to ransom these domain names to the rightful owners. While some cyberpirates register domain names in an attempt to ransom them to the rightful owner, other cyberpirates seek to divert business by registering misspellings of well known marks as domain names knowing that customers will mistakenly come to their site and perhaps purchase a similar good at their website. Examples of this practice, known as typosquatting, includes domain names such as WALLSTREETJOURNEL.COM, LLLBEAN.COM, SPEIGALS.COM and BETTYCROKER.COM. Other cyberpirates lay in wait for the unsuspecting domain name registrant to forget to renew its domain name. When the clock tolls, they snap up the domain name and direct all future web users to their site. The common theme of cyberpiracy, however, is that it effects businesses of all kinds.

Until 1999, when the Antiycybersquatting Consumer Protection Act (“ACPA”) became law, trademark owners who found themselves at the receiving end of cyberpiracy were limited to filing a claim based on trademark infringement or trademark dilution under traditional trademark law. When a cyberpirate traded off the good will of another by confusing the consumer as to the source of the goods or services, traditional trademark law was easily applied. When a cyberpirate or cybersquatter had no intent to provide goods or services through the domain name but was simply holding the domain name for ransom, traditional trademark law was not as easily applied.

The Federal Trademark Dilution Act (the “FTDA”) was enacted in 1995 to provide further protection in the area of trademarks and domain names. See 15 U.S.C. §1125(c) (2001). The FTDA labeled the cybersquatters’s attempt to sell a domain name to the trademark owner as commercial use, subjecting the cybersquatter to liability for trademark dilution. The FTDA proved to be limiting, however, in that it was only effective against cybersquatters who had registered “famous” or “truly prominent and renowned” marks. See Dennis Corp. v. Sumpton, 189 F. 3d 868, 871 (9th Cir. 1999) citing I.P. Lund Trading ApS v. Kohler Co., 163 F. 3d 27, 46 (1st Cir. 1998). This high standard was nearly impossible to meet.

The Courts were equally ineffective when applying traditional trademark law. Clue Computing, Inc. provided computer consulting services under the mark CLUE while Hasbro used the mark to identify a board game. Clue Computing registered the domain name www.clue.com and began providing computer consulting services at that site. Hasbro filed suit stating that their mark was much stronger than that of Clue Computing and Hasbro should therefore be given the rights in and to the domain name. The Court held that the strength of the mark alone was not decisive in an infringement inquiry but rather the trademark owner would still have to prove that that there was a realistic likelihood of confusion. Hasbro, Inc. v. Clue Computing, Inc. 994 F. Supp. 34 (D. Mass. 1997). The Court stated that Hasbro did not show a likelihood of confusion, and Clue Computing was entitled to retain the domain name.
Likewise, Porsche filed suit against hundreds of defendants who owned websites using the Porsche name or variations thereof for sites which promoted goods and services ranging anywhere from adult entertainment to “fans” selling products that would enhance the Porsche experience. See Porshe Cars N. Am., Inc. v. Porsch.com, 51 F. Supp. 2d 707 (E.D. Va. 1999), vacated sub. nom. Porsche Cars N. Am., Inc. v. Allporsche.com, 215 F. 3d 1320 (4th Cir. 2000). Each user profited from the goodwill of the Porsche mark. Porsche tried to obtain jurisdiction over the defendants but was unsuccessful. The Court dismissed the case.
In order to remedy the inadequacy of the application of traditional trademark law to these situations, Congress passed the Anti Cybersquatting Consumer Protection Act (“ACPA”). See 15 U.S.C. §1125(d)(Supp. V 2000)(enacted on Nov. 29, 1999). The ACPA states:
A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person—
(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and
(ii) registers, traffics in, or uses a domain name that-
(I) in the case of a mark that is distinctive at the time of the 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 section 706 of title 18, United States Code, or section 220506 of title 36, United States Code.

See 15 U.S.C. §1125(d)(1)(2000).
Significantly, the ACPA gives the ability to bring an action against an individual even when the domain name owner is not using the site in connection with goods and services. Traditional trademark law required that the domain name owner be using the site in connection with the sale of goods and services. Under the ACPA, Congress eliminated such requirement and focused on the bad faith intent to profit from registration or use of a domain name that is the same or confusingly similar to a trademark, word, or name.

In that regard, the ACPA sets forth a list of nine non-exclusive bad faith factors. The most common “bad faith” factors encountered include: the attempted sale of the domain name for an unreasonable price; an attempt to divert consumers so as to cause a likelihood of confusion; a domain name that is not associated with the offering of legitimate goods or services, and; misleading contact information provided to the registrar by the registrant. Another common factor indicating bad faith is the “warehousing” of domain names; an individual registers hundreds, sometimes thousands of domain names that are similar to the marks of others and waits to be contacted regarding the sale of the domain name(s).

Remedies now available under the ACPA include the ability of the court to order the forfeiture, cancellation, or transfer of the domain name as well as allowing that in lieu of actual damages, the plaintiff elect statutory damages. The Court has discretion to award statutory damages of between $1,000 and $100,000 per domain name.

Beware - cyberpiracy effects your clients. Your client’s mark may already be registered by a cybersquatter as a domain name. Your client’s competitor may be setting up a web site using a variation of your client’s domain name in order to lure customers away. A cybersquatter may be watching and waiting for your client to fail to timely renew its domain name. Being one day late to renew a domain name can result in that domain name now directing your client’s consumers to a porn site. Why is this so common? Operators of some adult web sites are paid by advertisers based on the number of visits to their website, be it a mistake or not. Any of these practices could be deadly to the good will associated with your client’s trademark.
In order to protect your client from cyberpiracy it is import to docket expiration dates, register a full series of domain names (including typical typos), search and watch for cybersquatters (WhoIs, BetterWhois, Google, Watch Services), and be sure to immediately alert clients to any potential cybersquatters. Hire a reputable trademark search firm to monitor the use of a mark. If your client does not want to pay a search service, you can use the internet to search for infringing domain name use. There are a number of web sites that provide a comprehensive search of domain names. Two of the more popular domain name search sites can be found at www.domainsurfer.com and www.betterwhois.com.

Warn your clients about these dangers and the importance of obtaining and maintaining its domain name(s). Watch for cybersquatters. Do you represent the travel agency you were trying to locate on the Internet that Saturday afternoon? If so, notify them immediately and recommend they seek trademark counsel so that appropriate legal action can be initiated
Warn, watch, and act. It could truly save your client from the perils of cyberpiracy.

Texas Paralegal Journal © Copyright 2003 by the Legal Assistants Division, State Bar of Texas.

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