Welcome to the Internet: Bad Faith Domain Name Registration and Cybersquatting – Part 2 | Dunlap Bennett & Ludwig LLC

Part 2

Welcome back to Part 2 of “Welcome to the Internet”, where we review some of the great legal topics regarding domain names.

Remember that domain names are friendly names given to websites to reflect their unique IP address, a complex string of numbers.
For example, “www.google.com” or “www.amazon.com” are the respective domain names of Google and Amazon, while “www.dbllawyers.com” is the domain name of this law firm. attorneys, Dunlap Bennett & Ludwig PLLC. . Domain registries manage domain names, often using accredited domain registrars to sell domain name reservations to the public.

Once reserved, the person or entity that “purchases” the domain name is called the Registrant and has the exclusive right to use the domain name for the reservation period. But what if you register a domain name and don’t use it? In a typical setting, nothing – you remain the registrant and have exclusive rights to use the domain name if and when you wish. However, there are scenarios where the registrant registers a domain name in bad faith with the intention of holding a company hostage when trying to secure their domain name, which has consequences.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) defines “cybersquatting” as the bad faith registration of a third-party trademarked term or phrase in a domain name. Specifically, cybersquatting, or bad faith domain name registration, occurs when an individual or entity registers a domain name that incorporates or is very similar to a word or a brand expression. For example, a local clothing store, QuickStream T-Shirts, LLC, recently opened and is doing phenomenal sales from its physical location. ‘John’, who lives in the area, agrees the QuickStream T-shirts will be a huge hit, has trademarked his name and logo, but doesn’t yet have a website. It immediately registers a number of domain names that principals may want to use in the future: “quickstreamtshirts.com”, “qstshirt.com”, “quickstreamshirts.com”, etc. John does not use the domain names, nor does he intend to use them in the future, but he plans to profit from the sale of one or more of the domains to the directors of QuickStream T-Shirt once they will have decided to create a website.

There are several methods of combating cybersquatters, both under US federal law and ICANN’s dispute resolution procedures. Congress enacted the anti-cybersquatting Consumer Protection Act (“ACPA”) in 1999, amid the dot-com boom, to prevent registered cybersquatters from registering well-known distinctive brand domain names solely to profit by reselling them. to the trademark owner.

As a cousin of the Lanham Act (which concerns traditional trademark/trade dress infringement), the ACPA gives rise to a civil action when an individual registers a domain name that (i) is identical or similar to a trademark distinctive; (ii) which is identical or similar to a famous mark; or (iii) relates to a name, seal, or emblem specifically excluded from public use by the United States Government. See 15 USC § 1125(d). Where a plaintiff is successful in their bad faith cybersquatting claim, they may receive ownership of the domain name, statutory damages, and attorneys’ fees and costs as remedies. In other words, APAC was specifically aimed at preventing the scenario we described above (albeit on a much larger scale with much larger organizations).

The second popular method of combating illegal cybersquatters is to file a complaint under ICANN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”). Under the UDRP, a claimant may file a complaint alleging cybersquatting with multiple ICANN-approved dispute resolution service providers. UDRP proceedings are a popular method of filing a lawsuit because they are much cheaper to litigate – typically well under $10,000.

However, UDRP disputes are fairly narrow in scope and only allow the plaintiff to receive ownership of the disputed domain name without recovering any fees, costs, or other monetary damages.

In particular, although APAC and UDRP are popular methods for defeating cybersquatting, they are not exhaustive. While the ACPA was designed to prevent cybersquatters from taking over popular domain names and trademarks, serial cybersquatters often register hundreds or thousands of domain names that are neither registered nor popular. These cybersquatters do so in bad faith, without any legitimate use of the domains other than their hope that a legitimate company will pop up and seek to use the domain name already registered.

Unfortunately, they are then subject to price gouging in order to purchase the desired domain. Called “early cybersquatting,” this practice severely hampers a business owner’s ability to strategically market their products and services to their customers and hampers their business. As such, it’s a wise move not only to file your business name, logo, etc. quickly, but also to ensure that a viable domain name is available for registration.

Read Part 1 of Welcome to the Internet: What is a domain name and how does it work?

[View source.]