By Charles Kulkarni

Cybersquatting is a constant problem for established businesses and trademark owners. Often, substantial Internet traffic is diverted to a web site having a similar domain name. Other times, offensive material appears on a website that appears to be related to or is sponsored by a trademark owner. The business or trademark owner must then begin the uncertain process of trying to stop the cybersquatter.

In February 2008, the well-known publication The Economist lost in its effort to gain control of the domain name www.theeconomist.com. The magazine’s opponent successfully defended its use of the domain name as a tribute site to the prominent economist Alan Greenspan. Other stories abound of individuals registering domain names that are similar to or are variations of trademarks owned by others.

In addition, numerous consumer complaint web sites and employee complaint websites have domain names that follow the general form of www.ABCcompanysucks.com. Examples include homedepotsucks.com, www.dishsucks.com, www.starbucked.com, and untied.com (a misspelling of United.com). Indeed, the site www.webgripesites.com catalogs a long list of popular Internet “gripe sites.”

Fighting Cybersquatters

If you believe that you have been victimized by a cybersquatter, your remedies are fairly straightforward. However, formal proceedings can be expensive and uncertain. You have little chance of succeeding with formal measures unless the cybersquatter is trading on the goodwill of one of your strong, registered trademarks. In certain situations, formal measures also require that you show that the cybersquatter is acting in bad faith.

Therefore, your best course may be before-the-fact preventive measures, and your next-best-course is some form of informal resolution.

Preventive Measures: Register Variations of Your Domain Name

The best way to fight a cybersquatter is to beat the squatter to registration. Registration of domain names is cheap. It is far better to prevent foreseeable cybersquatting than to wait until you have a cybersquatter problem. Therefore, if you want to protect your trademarks, you should register obvious and common variations of your marks as domain names. Such preventive measures are inexpensive “insurance” against cybersquatters.

Informal Reactive Measures: Use an Intermediary to Purchase the Domain Name

If you have been victimized by a cybersquatter, you should first consider informal measures.

Before resorting to costly legal action, and before sending a cease and desist letter, you should consider using an intermediary to purchase the domain name for a nominal fee.

The worst that could happen is that the cybersquatter says, “No.”

However, you could also have very good results. The squatter may sell the site to you at an acceptable price or the squatter may demand an excessive price. This does not solve your problem, but it does give you some helpful evidence. You can later argue that the cybersquatters excessive price demand is evidence of “bad faith.” Bad faith is an important issue – a necessary fact – in some proceedings against a cybersquatter.

Informal Reactive Measures: A Cease-and-Desist Letter and Settlement

If other informal measures have failed, are unavailable, or are dragging on, you should send the squatter a cease-and-desist letter and try to settle.

You should never delay too long before sending a cease-and-desist letter. Delaying can cost you valuable rights. Because a cease-and-desist letter does not preclude other informal measures, you can send the cease-and-desist letter and still try to resolve the matter by other means.

Formal Reactive Measures: A UDRP Proceeding or a Court Action

If informal measures fail, you have two primary vehicles to combat the cybersquatter: a court action or a proceeding under the Uniform Domain-Name Dispute-Resolution Policy (a UDRP proceeding). Each has its advantages and disadvantages, and you may be able to use both proceedings.

A UDRP proceeding is a relatively inexpensive, streamlined arbitration designed to quickly resolve disputes over domain names. A UDRP proceeding is available against any cybersquatter because submission to a UDRP proceeding is a condition of domain name registration. Further, when any registrant chooses a domain name, the registrant represents that the registered domain name “will not infringe upon or otherwise violate the rights of any third party.”

Compared to court action, a UDRP proceeding offers less cost and speedier relief. A UDRP proceeding can often be completed in about 50 to 60 days from the initial filing.

Note, however, that the remedies in a UDRP proceeding are very limited. The only relief available in a UDRP proceeding is transfer or cancellation of the domain name. You can only obtain that relief by successfully proving three things:

1. 1. the defendant registrant’s domain name is identical or confusingly similar to a trademark in which you have rights
   2. the defendant has no rights or legitimate interests in the name
   3. the defendant registered and is using the name in bad faith

Occasionally, proving all three of the UDRP prongs may be difficult in an abbreviated UDRP proceeding, particularly with respect to the “bad faith” prong. Accordingly, in some instances, beginning with a court action may be preferable.

Even if you lose a UDRP proceeding, you may then file a court action. A suit in federal or state court allows wider discovery from the adverse party and is not limited by the narrow three-prong standard of the UDRP proceedings. One of many claims that you may assert in a court action is a claim under the Anticybersquatting Consumer Protection Act (ACPA), or you may proceed under existing trademark infringement and dilution law. Remedies available under the ACPA include (1) forfeiture or cancellation of the domain name, (2) transfer of the domain name, (3) actual damages, (4) statutory damages between $1,000 and $100,000 per domain name, and (5) increased damages for bad faith actions. 15 U.S.C. § 1117(d). One court, under the ACPA, ordered a cybersquatter to pay statutory damages of $500,000 for each of five domain names plus attorneys’ fees of more than $30,000. (See Electronics Boutique Holdings Corp. v. Zuccarini, No. 00-4055 (E.D.Pa. Oct. 30, 2000)).

Final Words

Protecting trademarks is extremely important. The increasing frequency of online domain name disputes underscores the growing need to protect trademarks in the online arena. Protecting trademarks in the online arena requires a thorough consideration of both preemptive measures (beating the cybersquatter to registration), and reactive measures (purchases, settlement, formal proceedings, or court actions). The Jackson Walker Intellectual Property group is well-versed in all of these protective measures, and we are prepared to help you in this area.

Intellectual Property e-Alert is published by the law firm of Jackson Walker LLP to inform readers of relevant information in intellectual property law and related areas. It is not intended nor should it be used as a substitute for legal advice or opinion which can be rendered only when related to specific fact situations.