Editors Note: John Lindsey is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.Your company has a product that you think will be a blockbuster! You trademark the product’s name and decide to get a domain name matching that trademark–great for marketing your product, you think. You then may experience what several of our clients have experienced recently. The domain name is taken, and when you check out the web site to see who got the domain name first, you are linked to a site offering domain names for sale, including the one you want to use. How on earth can this happen, you ask? After all, you have the trademark on the name, right?
If this happens to you, you may be a victim of “cybersquatting.”
The practice of registering someone else’s trademark as a domain name with the intention to profit from the trademark, usually through subsequent sale of the domain name, is known as cybersquatting. Not all domain names offered for sale are trademarks, and not all registrations of trademarks as domain names will fall within the practice of cybersquatting. However, if you have a trademark and find that mark for sale as a domain name (rather than being legitimately used by someone else), it is likely that a cybersquatter is trying to profit from your trademark.
A number of entities market domain names over the web. You may see one or more of your coveted domain names on sites such as greatdomains.com, buydomains.com, downtowner.com, dotcomagency.com or choicenames.com. Some domain names are being offered for relatively low prices, while others are being offered for top dollar. CNN recently carried a story about the sale of a domain name for six figures. Because registrations of domain names continue to be on a first come, first served basis, speculators in domain names — cybersquatters – are continuing to profit from such trade.
If you are a victim of cybersquatting, what can you do?
If your trademark has been registered by a cybersquatter as a domain name, you have several alternatives. Obviously, you can pay the price being asked for the domain name, or try to negotiate a lower price. While this is a distasteful alternative, depending on the price being asked (or the price you can negotiate) and the value of your time, it may also be the most practical alternative. Before payment is made, however, be sure there is signed documentation assigning the domain name to your company.
Another alternative is to send a letter to the cybersquatter demonstrating your trademark rights and demanding that the domain name be assigned to your company. This approach sometimes works, but a true cybersquatter wants some compensation for its efforts.
If you can’t convince the cybersquatter to turn over its rights to the domain name at a price you wish to pay, you can sue the cybersquatter under the Anticybersquatting Consumer Protection Act (ACPA) or file a complaint against the cybersquatter under the Uniform Dispute Resolution Procedure (UDRP) adopted by the Internet Corporation for Assigned Names and Numbers (ICANN).
If you elect to sue under the ACPA, you essentially need to prove that the cybersquatter had a bad faith intent to profit from registration of your trademark as a domain name, that the trademark was distinctive or famous at the time of registration of the domain name, and that the domain name is identical or confusingly similar to the trademark. Offering to sell you the domain name is likely to be viewed by the courts as showing the cybersquatter acted in bad faith, unless the owner of the domain name can show other rights in the domain name or prior use of the name in commerce.
The ACPA authorizes remedies that include cancellation of the domain name registration or transfer of it to your company, and, under certain circumstances, either actual damages (which you will need to prove and which may be tripled) or statutory damages of not less than $1,000 and not more than $100,000 per domain name, with the actual amount to be awarded within the discretion of the court. The downside of bringing such a case is, as you may have guessed, proving that your trademark was distinctive and famous, the expense of preparing the case and going through the litigation, with no certainty of a favorable outcome, and the time it can take to resolve the matter, during which you are unable to use the domain name.
Appealing to ICANN
Instead of going to court, you can proceed under the UDRP, which provides for arbitration of such disputes before one of the arbitral organizations approved by ICANN. All domain name owners who registered through a registrar accredited by ICANN are subject to the UDRP. These proceedings are cheaper and less formal than the court proceedings under the ACPA, and usually result in a decision within two months. You will be required to prove that the contested domain name is identical or confusingly similar to a trademark in which you have rights, the domain name registrant has no rights or legitimate interests in the domain name (selling the name for profit is not such an interest or right), and the domain name has been registered and is being used in bad faith. Offering to sell you the domain name can demonstrate bad faith, absent a bona fide use of the domain name. Remedies under the UDRP are limited to having the domain name cancelled or transferred to your company. A downside of proceeding under the UDRP is that the proceeding and the decision can be appealed to the courts–but of course any decision of a court under an ACPA complaint can also be appealed.
How do you know what remedy to pursue?
If you think you are a victim of cybersquatting, before contacting the owner of the domain name, you may want to call your attorney to have him or her help you evaluate whether it really is a case of cybersquatting, and if it is, your likelihood of success from your possible alternatives for obtaining the domain name for your company, as well as what strategy to pursue to try and obtain rights to the domain name. Remember that in these cases, you will not only need to show the bad faith of the cybersquatter, but also that you have rights in a trademark that is identical to or confusingly similar to the domain name. Although complainants win more cases against cybersquatters than they lose, a number of cases brought against cybersquatters have been lost because the complainant failed to prove its rights in the trademark or failed to prove its trademark was identical to or confusingly similar to the domain name. These lost cases have even occurred when the cybersquatter failed to participate in the proceeding.
What if it is not a case of cybersquatting?
As noted, not every instance of a domain name being for sale is cybersquatting. If the owner has used the domain name in commerce for legitimate purposes, for example, and for whatever reason now wishes to sell the domain name, the offer to sell the domain name is unlikely to constitute cybersquatting.
If during the consultation with your attorney you are able to determine that use of the domain name by a legitimate owner (as opposed to a cybersquatter) has infringed or is infringing your trademark rights, then you may be able to pursue the matter by convincing the owner through a letter that it is better to give up the domain name than to go through a costly court proceeding resulting in the loss of the domain name..
If it turns out the owner also has trademark rights in a term that is identical to or similar to the domain name and no infringement of your trademark has occurred, your only recourse is likely to be to purchase the domain name or select another domain name.
How can someone else have your trademark, you may ask?
The same term can be a trademark for multiple owners provided the customers of those owners are not likely to be confused as to the source of the products or services being offered under the trademark. For example, the term “blue velvet” is a registered trademark owned by DiMarzio, Inc. (for sound transducers), by Soft Sheen/Carson, Inc. (for hair care products), by PM Company (for printing paper), by J. Morita USA, Inc. (for dental impression material), by Amatech Corp. (for orthotics), by Varn Products Co., Inc. (for hand cleaner) and by Kerr-McGee Corporation (for lubricating oils).
By issuing registrations for these marks, the US Trademark Office has concluded that customers of the various owners are not going to be confused as to the source of the products offered under the marks. Each of these owners would have a legitimate right to a domain name using that trademark, “blue velvet”, as the domain name.
It is interesting to note that the domain name “bluevelvet.com” is for sale on buydomains.com for $6,000. Any takers?
Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. John Lindsey concentrates his practice in the areas of copyright, trademark, immigration, international trade and corporate law. Questions or Comments can be sent to email@example.com.