Domain Names And Cybersquatting

Most successful businesses have a website on which they advertise or sell their products or services. Having a website where consumers can learn about, and potentially purchase products or services, can be extremely valuable to any business. Part of the value of having a website is in the domain name itself. For example, if a business is able to obtain a domain name that is identical or very similar to their business name, product name, or service name, then the domain name itself serves as advertising for the business. When potential customers search for particular products and services using internet search engines, a business’s website is more likely to appear earlier in the search results if the particular product or service is somehow incorporated into the domain name. Having a domain name that matches the name of a business, product, or service also gives the appearance of professionalism and helps to assure potential customers that the company, product, or service is legitimate.
The act of purchasing and using a domain name is fairly simple. However, it is possible that the particular domain name a business wishes to purchase may already be owned by another entity. In some instances, the domain name is being used for a legitimate business purpose. Most domain names that are not currently in use can be purchased for a reasonable price. However, some entities purchase many domain names in an effort to monetize them in the future. In this case, when a business looks up a domain name they wish to purchase, they will be redirected to another webpage telling them they can pay the current owner of the domain name a fee for them to transfer ownership to the inquiring party. This fee is often exorbitant and sometimes downright extortionary. This act of registering or using an internet domain name with the bad faith intent to profit from the goodwill of a trademark belonging to someone else is known as “cybersquatting”. While cybersquatting is a nuisance that must often be dealt with when obtaining a domain name, there are various ways you can protect yourself and possibly bring legal action against cybersquatters.

The first step to protect yourself from cybersquatters is to obtain at least one registered trademark. When you register a trademark for your company name, brand, product, or service, you can enforce that trademark against competitors in the marketplace who are profiting off of your trademark. Additionally, A US law called the Anticybersquatting Consumer Protection Act (ACPA) provides a legal cause of action for trademark owners. Under the ACPA, a trademark owner may bring suit against the owner of a domain name that is identical, confusingly similar, or dilutive of a registered trademark, where it can be shown that the domain name owner has a bad faith intent to profit from the mark in question. One important thing to note is that in order to benefit from the ACPA, the trademark in question must be “distinctive” at the time of registration. This means that the trademark in question must be a “strong” trademark, in that it has been deemed to be a fanciful, arbitrary or suggestive mark, which is a requirement to obtain an initial registration on the principal trademark register.

Courts consider many factors when determining whether the cybersquatter is acting in bad faith. These factors include:

  • whether the cybersquatter has trademark or other intellectual property rights in the domain name,
  • whether the domain name contains the cybersquatter’s legal or common name,
  • whether there is prior use of the domain name in connection with the bona fide offering of goods or services,
  • whether the cybersquatter made a bona fide non-commercial or fair use of the mark in a site accessible by the domain name,
  • whether the cybersquatter intends to divert customers from the trademark owner’s online location that could harm the goodwill represented by the mark, for commercial gain or with the intent to tarnish or disparage the mark,
  • whether the cybersquatter is attempting to transfer, sell, or otherwise assign the domain name to the trademark owner or a third party for financial gain, without having used the mark in a legitimate site,
  • whether the cybersquatter provides misleading false contact information when applying for registration of the domain name, and
  • whether the cybersquatter owns multiple domain names that are identical or confusingly similar to trademarks of others, and the extent to
  • which the trademark in question is distinctive or famous.

See 15 U.S.C. § 1125(d)(1)(B).

Trademark owners can also file a complaint with the Internet Corporation for Assigned Names and Numbers (ICANN) under the Uniform Domain-Name Dispute-Resolution Policy (UDRP). The UDRP provides a mechanism for resolving domain name disputes through legally binding arbitration. This process is more streamlined and less costly than filing a lawsuit under ACPA. It also allows you to appeal a negative decision using the ACPA should the outcome of arbitration be unfavorable. Similar factors are considered under the UDRP as with the ACPA when determining bad faith on the part of the domain name owner.

In view of the above, it is important that a business owner registers a trademark for their business, brand, product, or service prior to searching for that perfect domain name. If your desired domain name is taken by a cybersquatter who is not using the domain name for legitimate purposes and who wishes to charge an extortionary sum for the rights to the domain name, having a registered trademark allows you to take legal action and potentially obtain your domain name for a reasonable price. Sometimes, the mere knowledge of the existence of a registered trademark is enough to convince the cybersquatters to sell the domain name rights at a reasonable price. Consider acquiring trademark protection during the early stages of your business and product development so that you will be able to obtain the perfect domain name for your business.