Cybersquatting

The Trademark Cyberpiracy Prevention Act became law only a short time after the Internet Corporation for Assigned Names and Numbers (ICANN) implemented the Uniform Domain Name Dispute Resolution Policy ("Policy"). Both the Act and the Policy are attempts at broadening traditional trademark laws to prevent Cybersquatting.

Critics claim that President Clinton signed the new Act prematurely--zotentially hampering the fast-paced development of the Internet and dwarfing the new Policy that ICANN implemented for similar reasons.

The Trademark Cyberpiracy Prevention Act

The Act creates a cause of action for a trademark owner whose trademark has been infringed upon by the registration of a domain name. To prove a case of Cybersquatting under the Act, a trademark owner would have to prove that the person who registered the domain name had a bad faith intent to profit from the registration, traffic-in, or use of the domain name.

Bad Faith under the Act

What's "bad faith"? In determining whether a person has a bad faith intent, the Act states that a court may consider several factors. For example, the Act considers it bad faith to acquire famous name domain names for the purpose of selling them at inflated prices or falsely attaching a celebrity to a product.

Right now, you can buy www.SlyStallone.com-but you can't buy it from Rocky himself. Or, you could buy www.BradPitt.com--but not from Brad. If you had an extra $1,000,000 (yes, six zeros), you could spread peace on earth by buying www.MotherTeresa.com--just not from her estate.

Registrants looking for a sometimes seven-digit windfall from selling these domain names took these three domain names. Congress considered these acts to be extortion and drafted the Act to put a stop to these types of demands.

Another example of bad faith under the Act is intentionally directing you to a site where you didn't expect to go. For example, until recently, when you went to www.SharonStone.com, you were steered to an adult site unrelated to the actress. Under the Act, this is probably a no-no.

The Act includes nine factors to consider in determining bad faith, but allows courts to look to things that aren't listed. One example of a listed factor is the extent to which the trademark incorporated in the domain name registration is or is not distinctive or famous. Another example would be giving material and misleading false contact information when applying for the registration of the domain name, failing to maintain accurate contact information or a pattern of not maintaining accurate information in the past.

Others include the trademark or other intellectual property rights of the person registering the domain name and the person's prior use of the domain name in connection with selling something.

While these examples are pretty clear cut, the Act may consider certain things "Cybersquatting" that are less clear. Critics feel that this brings into question the fundamental fairness and utility of the Act itself.

Reverse Domain Name Hijackers

The Act also seems as if it may have been developed to protect the "reverse domain name hijackers." This is when an individual user has a perfectly legitimately registered domain name and receives a note from a BIG BAD ATTORNEY TELLING HIM TO STOP USE OF THE DOMAIN OR RISK EXPOSURE TO $100,000 IN FINES AND BIG BAD ATTORNEY'S FEES. (Yes, five zeros.)

This is exactly what happened when the makers of Gumby and Pokey toys threatened a 12 year old kid who registered his nickname, Pokey. Little Veronica registered her name only to be intimidated by Archie Comics. While both of these kids were approached before the Act was passed, the Act may very well encourage this behavior from industry giants with behemoth Intellectual Property Departments.

Hey, I'd surely need some Alka Seltzer if I was threatened with damages of between $1,000 and $100,000 for the registration of my own personal web page.

The name of the Act, "Anticybersquatting Consumer Protection Act" is surely a bad political satire. The Act has little to do with "consumer protection," (ask the 12 year old) and more to do with protecting behemoth companies who want to protect every conceivable variation of their name.

What the Act will lead to is brazen intimidation by lawyers. It'll be like a one BIG club. It's going to be up to the courts to curb this activity.

Imagine companies with at best arguable trademarks in generic names like "Computer Partners" going after somebody who registered "computerpartners.org." The Act will encourage this type of corporate bullying.

Legal Questions Remain Unanswered

The new law leaves many questions unanswered. New businesses that warehouse domains for future use where the domains are identical or confusingly similar to the trademarks of an existing business are left not knowing what the consequences may be.

Additionally, unlike traditional trademark law, there exists potential liability without regard to the goods or services of the parties involved in a lawsuit. Therefore, The Pit Stop in Florida, a garage that sells exotic car parts, and The Pit Stop on the California coast, a gourmet seedless grape shop--two entities that would unlikely cause confusion with one another's business under traditional trademark law, now may have a means to beat each other out of the most global market of all... the World Wide Web.

The Uniform Domain Name Dispute Resolution Policy

ICANN implemented its new Policy approximately two months ago. Since the Cybersquatting Act quickly followed it, many consider it dead on arrival. Although the Policy contemplates that most domain-name disputes will be resolved by the courts, it also calls for an administrative dispute-resolution proceeding to attempt to enable a streamlined, economical resolution of disputes arising from the allegedly abusive registrations of domain names.

A complaint filed under the Policy must allege that a domain name was registered and is being used in bad faith. A complaint may be heard by a single-member or a three-member panel.

To date, only one dispute has been filed with the WIPO Arbitration and Mediation Centre. This dispute was filed in early December concerning the domain name "worldwrestlingfederation.com." This domain was registered with Melborne IT, one of the first five registrars accredited by the ICANN to accept domain name registrations.

As an aside, just in case you thought that the domain name business wasn't booming, on December 21, 1999, ICANN announced the addition of ten additional domain registrars to its current list of 88. Now, there are almost one hundred companies competing in the market for domain name registration services by participating in the Shared Registry System which allows multiple ICANN-accredited registrars to register domains ending in .com, .net, and .org.

Just eight months ago, only one company registered domain names in the .com, .net, and .org top-level domains--Network Solutions, Inc.

International Implications

On the one hand, many believe that Congress scrambled to get a domestic domain name dispute resolution policy on the books to prevent the shifting of control over Internet trademark disputes to an international tribunal. The concern with the international tribunal was that it would include members with whom the United States competes on an economic level.

On the other hand, proponents of an international dispute resolution policy point to the utility in having a means to establish an international trademark database and resolve trademark disputes containing recognized trademarks from organizations around the world.

Still others worry that Congress has now set a bad example for other countries. How many countries will now pass their own domain name laws? How long will it take until this results in a patchwork of legislation governing the Internet?

Time will tell whether domain name disputes will gravitate toward resolution under the new Act or Policy. For now, all eyes are on ICANN to see whether it will resolve the "WWF" dispute as smoothly as promised.