Cybersquatting: What It Is and What Can Be Done About It

From the Nolo eCommerce Center

A 1999 law and an international arbitration procedure crack down on people looking to profit from other people’s trademarks.

If you own a trademark and find that someone is holding it hostage as a domain name until you pay a large sum for it, you may be the victim of cybersquatting. You can either sue to get your domain name – and possibly some money damages – under a 1999 federal law known as the Anti-Cybersquatting Consumer Protection Act, or you can initiate arbitration proceedings under the authority of the Internet Corporation of Assigned Names and Numbers (ICANN) and win the name back without the expense and aggravation of a lawsuit.

Generally, cybersquatting means registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else. It refers to the practice of buying up domain names reflecting the names of existing businesses, intending to sell the names for a profit back to the businesses when they go to put up their websites.

The Origins Of Cybersquatting

The practice that’s come to be known as cybersquatting originated at a time when most businesses were not savvy about the commercial opportunities on the Internet. Some entrepreneurial souls registered the names of well-known companies as domain names, with the intent of selling the names back to the companies when they finally woke up. Panasonic, Fry’s Electronics, Hertz and Avon were among the “victims” of cybersquatters. Opportunities for cybersquatters are rapidly diminishing, because most businesses now know that nailing down domain names is a high priority.

Recognizing Cybersquatting

How do you know if a cybersquatter has your name? As a general rule, you should first see whether your proposed but unavailable domain name takes you to a legitimate website. Simply open your browser and enter www. followed by the domain name.

If the domain name takes you to a website that appears to be functional and reasonably related in its subject matter to the domain name, you probably aren’t facing a case of cybersquatting. However, you may have a case of trademark infringement.

But if your browser produces any of the following results, and you are a famous individual or are using your existing business name as your proposed domain name, you may have a case of cybersquatting on your hands:

  • you get a “can’t find server” message
  • you get an “under construction” page, or
  • you get a page that appears to have no relationship to the meaning of the domain name.

Although each of these results suggests the possibility of cybersquatting, there may also be an innocent explanation, especially if the website is still under construction. It’s very easy and inexpensive to register or reserve domain names, but more difficult to put up the actual website. You can reserve a domain name for two years, so the fact that a website is not up, even months after the name was reserved or registered, does not necessarily mean that the registrant doesn’t have perfectly legitimate plans to have a website in the future.

Before jumping to any conclusions about a proposed domain name that is not available, contact the registrant. (You can get contact information through the domain name registry.) Find out whether there is a reasonable explanation for the use of the name, or if the registrant is willing to sell you the name at a price you are willing to pay.

Sometimes, you may find that paying the cybersquatter is the easiest choice. It may be a lot cheaper and quicker for you to come to terms with a squatter than filing a lawsuit or initiating an arbitration hearing. Although you may be able to recover your costs and attorney fees if you win, there is no guarantee; it’s completely up to the judge.

What You Can Do to Fight a Cybersquatter

A victim of cybersquatting in the U.S. can now sue under the provisions of the Anticybersquatting Consumer Protection Act (ACPA) or can fight the cybersquatter using an international arbitration system created by the Internet Corporation of Assigned Names and Numbers (ICANN). The ACPA defines cybersquatting as registering, trafficking in, or using a domain name with the intent to profit in bad faith from the goodwill of a trademark belonging to someone else. The ICANN arbitration system is considered by trademark experts to be faster and less expensive than suing under the ACPA and the procedure does not require an attorney.

Fighting Under the ACPA

The Anticybersquatting Consumer Protection Act (ACPA) authorizes a trademark owner to sue an alleged cybersquatter in federal court and obtain a court order transferring the domain name back to the mark’s owner. In some cases, the cybersquatter must pay money damages. In order to stop a cybersquatter, the mark’s true owner must prove all of the following:

  • the domain name registrant had a bad-faith intent to profit from the mark
  • the mark was distinctive at the time the domain name was first registered
  • the domain name is identical or confusingly similar to the mark, and
  • the mark qualifies for protection under federal trademark laws – that is, the mark is distinctive and its owner was the first to use the mark in commerce.

If the person or company who registered the domain name had reasonable grounds to believe that the use of the domain name was fair and lawful, they would avoid a court decision that they acted in bad faith. In other words, if the accused cybersquatter can show a judge that he had reason to register the domain name other than to sell it back to the trademark owner for a profit, then a court will probably allow him to keep the domain name because the name was not acquired in bad faith.

Using the ICANN Procedure

In 1999, after assuming control of domain name registration, ICANN adopted and began implementing the Uniform Domain Name Dispute Resolution Policy ( UDNDRP) a policy for resolution of domain name disputes. This international policy results in an arbitration of the dispute, not litigation. An action can be brought by any person who complains (referred to by ICANN as the “complainant”) that:

  • a domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights
  • the domain name owner has no rights or legitimate interests in respect of the domain name, and
  • the domain name has been registered and is being used in bad faith.

All of these elements must be established in order for the complainant to prevail. If the complainant prevails, the domain name will be canceled or transferred to the complainant. Financial remedies are not available under the UDNDRP. Information about initiating a complaint is provided at the ICANN website.

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