A Closer Look at Cybersquatting

2 February 2000
Lawyers and businesses throughout the United States are getting plenty of mileage out of the Anti-Cybersquatting Protection Act (ACPA). A recent dispute between several Las Vegas casinos--Mirage Resorts Inc., Mandalay Resort Group, the Stardust, Aladdin, Palace Station and MGM Grand hotel/casinos--and the operator of an online hotel reservation service--Nicholas Stirpe--has resulted in the filing of yet another lawsuit centered around the newly passed legislation.
The land-based casino operators are suing Stirpe for trademark infringement and using possibly as many as 15 domain names in what the plaintiffs consider an effort to mislead customers. The companies have sought an injunction to stop Stirpe from appropriating the businesses' trademarks and domain names by
allegedly using them to funnel traffic to his online hotel reservation service.

It's not the first time most of these hotel/casinos have been involved in a cybersquatting case. Rob Stillwell of Boyd Gaming said that Boyd (which owns several of the hotel/casinos named in the case) is involved in numerous such cases, so many, in fact, that he had difficulty remembering the individual cases by casual reference.

Attorney Whitney Thier of Quirk & Tratos, a Las Vegas law firm, is handling the Stirpe suit for the hotel/casinos. "We have filed a number of lawsuits under the Lanham Act alleging trademark infringement, dilution and unfair competition based on the registration and use of domain names containing our clients' names and trademarks, many of which are also linked to online gaming sites operating under our clients' casino names," she explained. "Use of the trademarks for online gaming is most common, but we have filed suits, among others, involving the use of the marks for porn sites and reservation services sites."

Two recent suits have just been amended to state a cause of action under the new anti-cybersquatting legislation, the Stirpe case and another--Bellagio v. International Lotteries--involving the operator of an online casino.

IGN reported another cybersquatting case late last year in which several hotel/casinos that sued John Dunn, owner of Stardust Company and the administrator of numerous Web addresses, claiming dilution, copyright and trademark infringement.

Regarding the case, Dunn told IGN, "The word 'cybersquatting' is a joke. If the law was more clearly defined, I would have advised my clients it was a bad idea to use the names in question. The Net is like the Wild West. Reserve all the names yourself if you are worried about anyone else taking them. That would be the advice to anyone that has something like this to protect. It would be also the most cost-effective way, that is for sure."

Judging by the steady flow of lawsuits emerging since the bill was passed, not everyone considers cybersquatting a joke. And in the online gaming industry, the law has already made an impact. In this article, we'll take a closer look at the implications of the law and some of the lawsuits that have been filed since its passing.

First, a Little Background

Formally, as defined at www.PCWebopaedia.com, cybersquatting is the act of registering a popular Internet address--usually a company name--with the intent of selling it to its rightful owner.

Businesses originally combated cybersquatting, also called "cyberpiracy," in court by citing the
Lanham Act, a handy law intended to protect against trademark infringement and similar legal quandaries. The law was written before the Internet became popular and doesn't clearly protect businesses from cybersquatting, so trademark owners sought relief through the use of in rem1 proceedings. Unfortunately for the trademark owner, it was often impossible to find the owner of the infringing site, which again left no remedy.

Congress heard the cries of these companies and wrote tougher new legislation to fight cybersquatting. The ACPA was enacted in late 1999. It's intended specifically to make it easier for trademark owners to enforce their rights against cybersquatters who act in bad faith, intending to profit at the expense of the
trademark owner, as explained by Debevoise & Plimpton, on its web site (www.debevoise.com).

Not all cybersquatting cases are handled under the ACPA. Some businesses have chosen the
consensual resolution process offered under the World Intellectual Property Organization ("WIPO"). This can be a quicker and cheaper process, according to Bruce Keller, a partner with the New York law firm Debevoise & Plimpton. Keller is one of the lawyers involved in the current NFL cybersquatting case, and supervises the law firm's intellectual property litigation practice. (He declined commenting on the NFL case, other than to say that the National Football League had applied for injunctive relief.) The firm is currently involved in about four cybersquatting cases.

(Some readers might recognize Keller as the author of "The Game's The Same: Why Gambling In Cyberspace Violates Federal Law," an article published in the Yale Law Review last year. Additionally, he anticipates being subpoenaed for the upcoming Jay Cohen trial in New York.)

It's an Internet-wide Problem

A handful of high-profile cybersquatting cases, both within the online gambling industry and beyond, have already grabbed headlines in the U.S. (You may recall IGN has covered some of these cases, such as the battle between the National Football League and the operator of a websites at NFLtoday.com, NFLtoday.org and NFLtoday.net.)

Critics of the new law say it protects big businesses at the expense of smaller businesses and
individuals. In the NFL case, the websites in question are purportedly fan sites with links to officially sanctioned sports sites. They also feature banner ads for link to Net betting sites, which consequetnly ruffled a few more feathers.

The NFL objects to the site on the grounds that surfers will be fooled into believing NFLToday.com is the National Football League official site. It should be pointed out, however, that at the bottom of the splash page, NFLToday informs users that it is not an officially sanctioned site. (although we couldn't confirm whether the waiver was added before or after the lawsuit was filed).

Some would argue that it should be tough luck for the NFL, and that, despite the fact that the NFLToday site probably confuses some surfers, it's owner purchased the Web address in good faith; he was just lucky enough to purchase it before the NFL did.

The ACPA provides, among other things, statutory damages of up to $100,000 per domain name, or the
payment of damages. Additionally, ownership of the URL could be canceled or handed over to the NFL, in which case the current owner would lose all rights to the use of the URL. All the money and time the owner spent developing the site would be lost.

Another cybersquatting case involves Harvard University.

The school is suing Michael Rhys in Massachusetts for "willfully adopting, registering, maintaining and offering to sell or license numerous Internet domain names incorporating these marks, including www.harvard-lawschool.com, www.harvarddivinity.com, www.harvardgraduateschool.com and www.radcliffecollege.com." Specifically, the plaintiff is accusing Rhys of federal trademark cyberpiracy, federal trademark infringement, federal unfair competition and federal trademark dilution under the Lanham Act as well as unfair methods of competition and deceptive practices and unfair competition under state law. (Click here to view a copy of the Harvard v. Rhys lawsuit.)

Jeff Donohue, a Boston attorney who specializes in software and Web-based businesses regarding financing, intellectual property and executive compensation matters, believes that the Harvard case bears watching. "It's what I would call a classic cybersquatting case. It's probably the highest profile, but it'll probably settle," he suggested.

Donohue says that the ACPA, while not defining "bad faith," provides a non-exhaustive list of factors used to weigh whether bad faith is part of the case. The list includes:

  1. the domain name registrant's trademark or other intellectual property rights in the domain name;

  2. the extent to which the domain name consists of the registrant's legal name and or a name that is "used to identify that person";

  3. the registrant's prior use of the domain name in bona fide offerings of goods or services;

  4. the registrant's bona fide non-commercial or fair use of the mark on a site accessible under the
    domain name;

  5. the registrant's intent to divert consumers from the mark owner's Internet presence to a site accessible
    under the domain name that could harm the goodwill represented by the mark (for commercial gain, with the intent to tarnish or disparage the mark, or by creating a likelihood of confusion as to the source, sponsorship, or affiliation of the site);

  6. any offers by the registrant to transfer the domain name to the owner of the mark without having used, or having an intent to use, the domain anime in the bona fide offering of any goods or services (or a prior pattern of such conduct);

  7. the provision of false or misleading contact information when applying for the registration of the domain name or the registrant's intentional failure to maintain such contact information (or a pattern of such conduct);

  8. the registration of multiple domain names that the registrant knows are identical to or confusingly similar to the marks of others or that dilute the famous marks of others without regard to the goods or services of the parties; and

  9. the extent to which the mark is or is not distinctive or famous.

    Donohue further explains, "'Bad faith' may be negated if the registrant has reasonable grounds to believe that the use of a particular domain name is a fair use of a particular domain name is fair use or is otherwise lawful."

    Donohue has written several informative pieces, for his law office and clients, on the legal issues regarding the ACPA. His firm recently handled the highly publicized cybersquatting case involving the World Wrestling Federation. Visit www.kl.com for more information on Donohue or his firm, Kirkpatrick & Lockhart, LLP.

    Steps to Prevent Cybersquatting

    A corporate cybersquatting shield is available to protect its users from being targeted by cybersquatters.
    The new service is available from Register.com, a domain registrar, and is available to clients who have 30
    or more domain names. NASDAQ, eBay and Readers Digest have already signed up for the service, which
    promises to monitor nearly 300 top-level domains internationally. Additionally, the company promises to register for these clients domain names that end in other extensions when they become available.

    For all companies, there are some preventative measures to protect your site from being targeted for
    cybersquatting. Most measures are undertaken early in the web development stage, but it's never too late to
    protect your Web address from cybersquatting.

    Donohue suggests that the first step is having your company name trademarked. Unfortunately, there's no worldwide uniform trademark registry. There are, however, intellectual treaties between various nations to help protect trademarks. In the U.S., it usually takes several months to obtain a trademark, while regulations to obtain trademarks vary in other countries.

    Most of the necessary work involves researching the Web address you already have or want to use.
    Donohue recommends researching your company name, variants on it and even potentially misspelled variations on the name to see whether any of them are currently being used for a Web address or a company name .

    You can also take your research to an attorney, who can draft a letter stating that you have no reason to be concerned about potential cybersquatting suits. This will protect you somewhat in the event that a case crops up later on.

    What About Gaming Sites?

    It's reasonable to wonder whether online casinos have cause to worry. After all, several cybersquatting
    lawsuits have already been filed against such sites. It turns out that some sites do have reason to worry, according to Thier.

    "I really can't give specific names," Thier said. "In our experience, the cybersquatters have ranged from individuals who think that they will profit through the ownership of one of our client's domain names by selling the name back but who are not in business to online casinos to room reservation sites to portal sites. Our clients only target the clearly violative domain names and web sites where there is no doubt that target has been our client, for example.

    "I think the sites that need to worry know exactly who they are, especially in the online
    gaming arena. It has been my experience that the infringing online gaming companies who name casinos after Las Vegas, Atlantic City and occasionally riverboat casinos pick more than one known casino. Often they have a long list of casinos and domain names, including Las Vegas (or other) casino names (many of which are really just shell pages which link to one central online casino).

    "Some of the casino operators are more clever and register the domain names to different registrants,
    so it takes some investigative work to figure out that various registrants and the online casinos are related.
    Often the link is the actual casino operator. If we check out five different domain names with different
    registrants all of which link to a common casino, or casinos which are obviously commonly programmed, all on the same server, we know that the registrants are related. The patterns become obvious after a while."

    Although Thier isn't exactly forthcoming with a clear glimpse of lawsuits to come, it appears that the writing's on the wall for owners of "questionable" domains. Bet on the trend of cybersquatting lawsuits to continue, and bet on Net betting sites to remain in the thick of it.

    1in rem - a term used to describe a legal proceeding that is against a thing as opposed to a person. In rem proceedings often occur when various parties quibble over title (i.e. ownership) of a particular property. Basically, it occurs when you sue the property itself (e.g. Tom Smith v. A parcel of land located at 123 Main Street.) In rem is Latin for "against the thing."

    Supplementary Research Material:

    Mirage, Bellagio, et al. v. Stirpe (plaintiff's motion for preliminary injunction)

    Mirage, Bellagio, et al. v. Stirpe (first amended complaint for damages and injunctive relief)

    Bellagio v. International Lotteries et al. (plaintiff's motion for preliminary injunction)

    Bellagio v. International Lotteries et al. (first amended complaint)

    President & Fellows of Harvard v. Michael Rhys et al.

    Click here for additional cybersquatting lawsuits.

Vicky Nolan joined the IGN staff in October 1999. She's best known for inventing fire, the wheel and swiss cheese. She can be reached at vicky@igamingnews.com.