ACPA

Anti-Cybersquatting Consumer Protection Act


In 1999 Congress enacted “The Anti-cybersquatting Consumer Protection Act,” (known as the “ACPA”) which was directed at preventing the cybersquatting on the Internet by the use of domain names that are confusingly similar to trademarks and person's names. This Act was codified as Lanham Act § 43(c), 15 U.S.C. 1125(c). The trademark related portions of the Act outlawed the act of registering, with the bad faith intent to profit, a domain name that is confusingly similar to a registered or unregistered mark or dilutive of a famous mark.. As the Sixth Circuit observed: “Registering a famous trademark as a domain name and then offering it for sale to the trademark owner is exactly the wrong Congress intended to remedy when it passed the ACPA.”.

The trademark aspects are discussed in this section. The in rem jurisdictional authorization of the Act permits court disposition of a domain name when the owner cannot be found or cannot be served in the United States.. Also part of the Act were special protections against the cybersquatting of a person's non-trademarked name, which were not included as a part of the Lanham Act.. In addition, the 1999 Act immunized a domain name registrar from monetary and injunctive relief for most actions in the implementation of a reasonable policy of the registrar prohibiting the registration of an infringing domain name.. Some other nations have laws similar to the U.S. ACPA..

Trademark Related Aspects of the 1999 Anti- cyber squatting Consumer Protection Act. In this legislation, Congress added a new Lanham Act section 43(d), which is aimed at stopping the conduct of cybersquatters or cyberpirates.. In short, the Act defines the outlawed conduct of cybersquatting as registering, with the bad faith intent to profit, a domain name that is confusingly similar to a registered or unregistered mark or dilutive of a famous mark. As the Fourth Circuit observed: "Cybersquatting is considered wrong because a person can reap windfall profits by laying claim to a domain name that he has no legitimate interest in or relationship to.. Similarly, the Ninth Circuit noted the primary wrong that is committed in the prototypical type of cybersquatting:

Cybersquatting is the Internet version of a land grab. Cybersquatters register well-known brand names as Internet domain names in order to force the rightful owners of the marks to pay for the right to engage in electronic commerce under their own name..

Mark Protected. The kind of intellectual property protected by the trademark portion of the Anti-cybersquatting Act is a “mark.” The Lanham Act defines “mark” as including “any trademark, service mark, collective mark, or certification mark.”. Thus, there is no requirement that the protected “mark” be registered: unregistered common law marks are protected by the Act. In addition, in a redundant phrase, the Anti-cybersquatting Act states that “mark” includes “a personal name which is protected as a mark under this section.”. Protected in addition to traditional trademarks are marks and names covered by special legislation, namely, the Olympic names and the Red Cross.. The Act also prohibits in an entirely separate section which is not a part of the Lanham Act the registration as a domain name of a name of a living person with intent to profit by selling the domain name to the named person..

Effective Date. The trademark portions of the Act apply to all domain names reserved or registered before, on or after the Novem ber 29, 1999 enactment date. Prospective injunctive relief which orders the transfer of an offending domain name that was obtained and used prior to the enactment of the ACPA is appropriate and is not an impermissible retroactive application of the law.. However, damages under Lanham Act 35(a) or (d) are not available as to the actions of registration or use of a domain name before November 29, 1999.. But a domain name registered prior to the ACPA can be subject to damages if the domain name was continued to be used in violation of the Act after November 29, 1999.. Registration, trafficking and use of a domain name are separate acts which trigger liability. Thus, the continued trafficking or use of a domain name registered before November 29, 1999 can give rise to an award of damages..

The Second Circuit has even applied the Act to a case that had gone to trial and been decided before the ACPA was enacted into law..

Elements of Cybersquatting of any Trademark. The Act creates civil liability for the cybersquatting of any mark, requiring the plaintiff to plead and prove the following four elements:
1. The defendant has registered, trafficked in or used a domain name;
2. Which is identical to or confusingly similar to a mark owned by the plaintiff;
3. The mark was distinctive. at the time of the defendant's registration of the domain name;
4. The defendant has committed the acts with a bad faith intent to profit from the plaintiff's mark.

Confusingly Similar. In the cybersquatting context, “confusingly similar” must simply mean that the plaintiff's mark and the defendant's domain name are so similar in sight, sound or meaning. that they could be confused. The addition in the accused domain name of generic or descriptive matter to the mark will usually not prevent a finding of confusing similarity.. The issue under the ACPA is not whether the accused domain name is confusingly similar to the plaintiff's domain name, but whether it is confusingly similar to the plaintiff's trademark or service mark. For example, while the domain name fordtrucks.com would be confusingly similar to the FORD mark of the Ford Motor Co., the domain name fordstheatre.org used for a web page of Ford's Theatre in Washington, D.C. would probably not be confusingly similar because it would convey a differ ent meaning.. It is irrelevant under the ACPA that confusion about a website's source or sponsorship could be resolved by visiting the website identified by the accused domain name..

Typo-squatting and the Truth in Domain Names Act of 2003. A slight spelling variation will not prevent a finding of confusing similarity. For example, the Third Circuit found that accused domain names used by John Zuccarini were confusingly similar to plaintiffs' trademark where defendant registered thousands of domain names which were misspellings of trademarks and celebrities' names. A web user who mis-spelled or mis-entered a desired mark or name reached one of defendant's web sites, was “mousetrapped” in the site and unable to exit without clicking on a succession of ads, with defendant receiving between ten and twenty-five cents from advertisers for each click.. This behavior has been labeled as "typo-squatting" and was the method used by John Zuccarini, who registered hundreds of mis-spellings of famous marks and names. Zuccarini was the subject of numerous civil lawsuits, an injunction obtained by the Federal Trade Commission and over 50 UDRP proceedings.. Finally, in 2004, Zuccarini was sentenced to 2 ½ years in prison for registering misleading domain names on the Internet that guided children searching for popular sites like Disneyland to pornography instead..

Prosecutors said the charges in the Zuccarini case were the first brought under the 2003 Truth in Domain Names Act, which makes it a crime to use a misleading Web address to draw children to pornography..

Product or Service Line is Not Considered. Because the Act states that liability is “without regard to the goods or services of the parties,” the analysis is a truncated one compared to the usual likelihood of confusion analysis of the typical trademark dispute, which factors in differences between the goods or services of the disputing parties.. But in the cybersquatting context, the typical cybersquatter makes no actual use of the domain name on an active web site or to identify goods or services.. Thus, Congress stipulated that the product or service line dimension was not to be considered in determining the existence of cyberpiracy. It is only the challenged domain name and the plaintiff's mark that are to be compared.. The traditional multi-factor test of a likelihood of confusion is not to be used.. Thus, if a hypothetical cybersquatter registers the domain name jester.com and makes no use of it except to offer to sell it for $10,000 to the plaintiff who owns the hypothetical MY JESTER mark for children's toys, this would probably be adjudged to satisfy the “confusingly similar” requirement of the Act.

Defendant's Acts that Trigger Liability. The Act defines an illegal trilogy of actions. The illegal conduct is that of one who “registers, traffics in or uses” an offending domain name. Registration, trafficking and use of a domain name are separate acts upon which liability may be based.. “Registers” seems to clearly point to the action of reserving or registering a domain name with a domain name registrar. The Act provides no limitation on the type of domain name, so that it could be a name registered either in a global top level domain or a country code domain. The Act defines the term “traffics in” as referring to “transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.”. In the cybersquatting context, the term “traffics in” denotes the buying, selling or otherwise trading or dealing in an offend ing domain name.. A domain name registrar who allegedly registers a domain name that infringes another's trademark does not "traffic in" an offending domain name and does not violate the ACPA.. The scope of “uses,” the third member of the trilogy, is considerably narrowed by § 43(d)(1)(D), which confines the scope of liability for “using” a domain name to the “domain name registrant or that registrant's authorized licensee.” There is no doubt that using the accused domain name to identify a web site constitutes a statutory “use” of the domain name..

No Commercial Use Requirement. The Ninth Circuit has held that notwithstanding the literal language of § 43(c)(4), part (B), all noncommercial uses are not exempt from the prohibitions of the ACPA.. That is there is no "commercial use" requirement in the ACPA. Any other reading would be in conflict with Factor IV of the nine factors to weigh in determining bad faith. Factor IV requires weighing whether defendant has made a bona fide noncommercial use of the mark in a site identified by the accused domain name. This factor would be meaningless if another part of the Lanham Act exempted all noncommercial uses.

What Is a “Domain Name”? Part of the Anti-cybersquatting Act inserted in Lanham Act § 45 a relatively narrow definition of “domain name.” The term “Domain Name” is defined as “any alphanumeric designation which is registered with or assigned by any domain name registrar, domain name registry, or other domain name registration authority as part of an electronic address on the Internet.” Congress stated that it intended this definition to exclude such things as “screen names, file names and other identifiers not assigned by a domain name registrar or registry.”. It has been held that the Anti-Cybersquatting Protection Act (ACPA) only relates to domain names and does not apply to metatags..

The “Reasonable Belief” Defense. Lanham Act § 43(d)(1)(B)(ii) creates an unusual defense to cybersquatting liability if the court determines that the defendant “believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” This might be dubbed the “pure heart and empty head defense” because it might appear to reward the cybersquatter who intended no harm and mistakenly thought that his or her conduct was lawful. This defense has the potential to reward both ignorance of the law and unawareness of the fact that cybersquatting violates widely accepted standards of fair competition. Therefore, a court should, in the author's view, make use of this “reasonable belief” defense very sparingly and only in the most unusual cases. That is, the court should place emphasis on the phrase “had reasonable grounds to believe” that the conduct was lawful, focusing primarily upon the objective reasonableness and credibility of the defendant's professed ignorance of the fact that its conduct was unlawful. Otherwise, every cybersquatter would solemnly aver that it was entitled to this defense because it believed that its conduct was lawful.. The courts could borrow from the law of trademark counterfeiting, where willful blindness is no defense to a charge of either civil or criminal counterfeiting.. For example, Lanham Act § 35(b) imposes mandatory treble damages for a violation that consists of intentionally using a mark “knowing such mark or designation is a counterfeit mark.” The courts have held that: “Will ful blindness is knowledge enough.”.

One court has suggested that the reasonable belief defense might apply when a defendant registers a domain name which has both generic and trademark meanings and defendant offers to sell it to several companies. This is illustrated by a hypothetical where defendant registers the domain name apple.com and then offers to sell it to a number of companies ranging from apple orchards, food processors, the Beatles' company “Apple Corps Ltd.” and the makers of the APPLE brand computer. The court suggested of this hypothetical that because “apple” has generic significance and is used as a mark by more than one company, such a defendant might be able to successfully assert as a defense its reasonable belief that its use of the domain name was a fair use or otherwise lawful..

Similarly, if both parties are using the same designation as a mark but in different product lines, then the defendant may have an objectively reasonable belief that it has a legitimate claim to using that designation as its domain name to sell its products..

The Fourth Circuit has held that a defendant is precluded from the “reasonable belief” safe harbor even when the defendant has dual motives: one good, one bad. The court of appeals said that defendant Virtual Works, Inc. had a dual intent: (1) to use vw.net as its domain name for its ISP business; and (2) to profit from the association of the domain name with Volkswagen. Since the second motive was in bad faith, defendant could not have had reasonable grounds to believe that its use of the domain name was lawful.. The court noted that the "reasonable belief" safe harbor had to be interpreted with common sense or else it could swallow up any and all liability:
[W]e decline to construe the safe harbor so broadly as to undermine the rest of the statute. All but the most blatant cybersquatters will be able to put forth at least some lawful motives for their behavior. To hold that all such individuals may qualify for the safe harbor would frustrate Congress' purpose by artificially limiting the statute's reach..

A reasonable belief defense must rest on a good faith intention and motivation that existed at the time the challenged domain name was obtained. It cannot be founded upon some purported good faith use of the domain name undertaken only after the dispute arose and motivated by a desire to fabricate a good faith defense. For example, in one case, a defendant who was making a bad faith use of plaintiff's mark, upon being sued opened a web page criticizing the trademark owner's product. The court rejected the reasonable belief defense: “[W]e conclude that [defendant's] claim of good faith and fair use is a spurious explanation cooked up purely for this suit and we reject it out of hand.”.

A defendant's continually changing explanations for its domain name is evidence that these explanations are pretexts and disqualify defendant from the good faith safe harbor..

Other Defenses to a Charge of Cybersquatting. Section 3008 of the overall bill which contained Title III (“Anti-cybersquatting Consumer Protection Act”). consists of a “saving clause” which reads:
Savings Clause: Nothing in this title shall affect any defense available to a defendant under the Trademark Act of 1946 (including any defense under section 43(c)(4) of such Act or relating to fair use) or a person's right of free speech or expression under the first amendment of the United States Constitution.

Thus, any defense available under the Lanham Act is also available to a defendant to a charge of cybersquatting under Lanham Act § 43(d). The savings clause specifically mentions by example “fair use,” which apparently refers to the defense of use of another's mark only in its non-trademark, descriptive sense.. The savings clause also specifically mentions as an example the defenses in Lanham Act § 43(c)(4), which provides:
(4) The following shall not be actionable under this section: (A) Fair use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark. (B) Noncommercial use of a mark.(C) All forms of news reporting and news commentary.

However, the Ninth Circuit has held that notwithstanding the literal language of § 43(c)(4), part (B), all noncommercial uses are not exempt from the prohibitions of the ACPA.. That is there is no "commercial use" requirement in the ACPA. Any other reading would be in conflict with Factor IV of the nine factors to weigh in determining bad faith. Factor IV requires weighing whether defendant has made a bona fide noncommercial use of the mark in a site identified by the accused domain name. This factor would be meaningless if another part of the Lanham Act exempted all noncommercial uses.

It has been held that laches can be a defense in an ACPA case..

Elements of Cybersquatting of a Famous Trademark. The Act also creates civil liability for the cybersquatting of a famous mark, requiring the plaintiff to plead and prove the following four elements:
1. The defendant has registered, trafficked in or used a domain name;
2. Which is identical to or confusingly similar to or “dilutive of” a “famous”. mark;
3. The mark was famous at the time of the defendant's registration of the domain name;
4. The defendant has committed the acts with a bad faith intent to profit from the plaintiff's mark.

“Dilutive of” is a new legal term not previously used in trademark law. In the author's view, it denotes a domain name which is so similar to the famous mark that in a case brought under the anti-dilution provisions of Lanham Act § 43(c), there would be dilution. This provision may prove useful when a domain name similar to a famous mark has been used on a web site that dilutes by tarnishing the positive associations triggered by the famous mark, such as use of the domain name to identify a pornographic web site.. The degree of similarity required by the courts in a federal anti-dilution case has generally been one of identity or near-identity.. The importation of the likelihood of confusion test into what otherwise appears to be an anti-dilution test is a melange of two different fields of law. The inclusion of the “confusingly similar” test as an alternative presents the somewhat bizarre possibility that the owner of a famous mark could prove that a challenged domain name violates the dilution portion of the Anti-cybersquatting Act because the domain name is not so similar that it is “dilutive of” (almost identical to) the famous mark but the domain name is similar enough that it is “confusingly similar to” the famous mark. However, in the author's view, such a situation is unlikely to arise..

Proof of Bad Faith Intent. Once the trademark owner has established its ownership of a valid mark and that the challenged domain name is sufficiently similar to that mark, the most crucial and difficult issue in a cybersquatting case under Lanham Act § 43(d) is whether the defendant had a “bad faith intent to profit from that mark.” Bad faith need not be proven by a clear and convincing standard of burden of proof: the normal preponderance of the evidence standard is sufficient.. "Bad faith" can arise either at the time of registration or at any time thereafter. Thus, a domain name initially registered legally can become illegal though bad faith actions which follow..

The Nine Factors Relevant to Proof of Bad Faith. To guide courts in determining this critical issue, Congress set out in Lanham Act § 43(d)(1)(B) a list of nine non-exhaustive factors relevant to determining whether defendant acted in bad faith. The House Report stated the Congressional purpose: “These factors are designed to balance the property interests of trademark owners with the legitimate interests of Internet users and others who seek to make lawful uses of others' marks, including for purposes such as comparative advertising, comment, criticism, parody, news reporting, fair use, etc.”. The first four factors suggest circumstances tending to indicate an absence of bad faith intent to profit from the goodwill of the mark, the next four tend to indicate that such bad faith does exist and the last factor points in either direction, depending on the degree of distinctiveness and fame of the mark. Those nine statutory factors are as follows.

Factor (I): The trademark or other intellectual property rights of the person, if any, in the domain name.

This factor takes account of the fact that the same or similar marks can peacefully coexist in the marketplace without a likelihood of confusion when used in widely differing product or service lines or in remote geographic markets. The House Report gave the example of the use of DELTA as a mark by both an airlines and a maker of faucets. The first to register the domain name delta.com is the legitimate owner of the domain name and is certainly not a cybersquatter. The House Report in a further example stated that the registration of the domain name deltaforce.com by a movie studio that has released a motion picture entitled DELTA FORCE would not indicate a bad faith intent to trade on the valid service mark and trademark rights of either DELTA airlines or DELTA faucets.. Such proof of legitimate trademark or service mark use by the domain name holder takes it out of the category of “cybersquatter” and into the category of a being legitimate owner of the domain name. In the author's opinion, this factor should also point in the direction of good faith even if a domain name holder has not yet used the domain name designation as a mark but can prove it has a bona fide intent to use as evidenced by the filing of an ITU application to register the designation as a mark with the USPTO or similar office of another nation.

The fact that a company might have used its initials or an acronym as an identifier is not controlling. If in fact it has not done so, it has no trademark claim to those initials and cannot claim the benefit of Factor I for a domain name with those initials. Thus, the fact that a company named “Virtual Works, Inc.” might have used “VW” as a mark is not relevant to defend its use of the domain name vw.net as against a challenge from Volkswagen, which has used the initials “VW” as its mark.. The court of appeals said that defendant had a dual intent: (1) to use vw.net as its domain name for its ISP business; and (2) to profit from the association of the domain name with Volkswagen. Since the second motive was in bad faith, defen dant was properly found to be a cybersquatter.. Here, the terms of defendant' s offer to sell the domain name to Volkswagen were what made the offer evidence of bad faith. Defendant told Volkswagen's trademark attorney that unless Volkswagen bought the domain name within 24 hours, defendant would sell the name to the highest bidder, pointing out that others would jump at the chance to have a domain name linked in buyers' minds with Volkswagen..

Factor (II): The extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person.

This factor recognizes that with the growing use of personal web sites, a person should be permitted to register their legal name or widely recognized nickname as the domain name of their website.. Thus, if hypothetically, the individual Adam Adamson reserved the domain name adam.com, this factor allows a court to permit him to retain the domain name as against a challenge from a hypothetical restaurant chain using the service mark ADAM's EDEN..

In the Nissan litigation, the Nissan auto manufacturer sued a company run by a man named Uzi Nissan who was first to register and use the domain names nissan.com and nissan.net to identify web sites promoting defendant's computer sales and service business. The court found that because the challenged domain name consisted of defendant's legal name, defendant was not a cybersquatter and was not in violation of the ACPA..

Some difficulty may be encountered with individuals who register as a domain name a word that they claim as a “nickname” which is allegedly “commonly used” to refer to them, but which is very similar to that of a well-known trademark. In the author's view, a high degree of proof should be required to establish such a “nickname” usage defense. For example, consider the hypothetical Roberto Wayne who registers the domain name sonywalkman.net and who claims that this is justified because his friends call him “sony” and that he is a man who walks a lot. In the author's opinion, most judges would not spend much time considering such a farfetched claim.. Thus, the House Report cautions:
This factor is not intended to suggest that domain name registrants may evade the application of this act by merely adopting Exxon, Ford, Bugs Bunny, or other well-known marks as their nicknames. It merely provides a court with the appropriate discretion to determine whether or not the fact that a person bears a nickname similar to a mark at issue is an indication of an absence of bad-faith on the part of the registrant..

Factor (III): The person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services.

This factor is similar to Factor (I) and recognizes that the legitimate use of the domain name in commerce is a good indicator of a good faith intent. A person might use a term in good faith in commerce without having trademark rights in that term. For example, if a hypothetical company has an on-line magazine of news about power generation and reserves and uses the domain name powerplant.com, in the author's view it is making a good faith use of the generic name and is not trying to trade on the goodwill of a hypothetical clothing manufacturer using the word POWERPLANT as a trademark. The House Report notes of this factor that: “A defendant should have the burden of introducing evidence of lawful use to assist the court in evaluating this factor.”.

For example, a court found that an internet service provider serving Swiss citizens and using the domain name www.swix.com was not in violation of the ACPA and was not cybersquatting on the trademark SWIX for ski wax owned by a Norwegian company with substantial sales in the U.S. Defendant was held to be "a legitimate businessman" using the domain name in good faith in his business..

The factor refers to a person's bona fide “prior” use in connection with goods or services. Thus, this good faith factor cannot be founded upon a purported good faith use of the domain name undertaken only after the dispute arose and motivated by a desire to fabricate a good faith defense. Thus, the Second Circuit found that while a defendant used the contested domain name in connection with the offering of goods, it was a contrived attempt and did not occur until after the litigation began, negating the claim of a “prior” and “bona fide” offering of goods for sale..

Factor (IV): The person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name.

The House Report explains Congressional intent in enacting this factor:
This factor is intended to balance the interests of trademark owners with the interests of those who would make lawful noncommercial or fair uses of others' marks online, such as in comparative advertising, comment, criticism, parody, news reporting, etc. Under the bill, the use of a domain name for purposes of comparative advertising, comment, criticism, parody, news reporting, etc., even where done for profit, would not alone satisfy the bad-faith intent requirement..

Pre-Anti-cybersquatting Act case law indicates that the non-confusing use of a company name or mark in a domain name on a web site used solely to criticize the goods or policies of that company is a fair use that does not constitute infringement.. This factor affirms that principle and tends to permit the use of another's mark in a domain name where the use is solely in the exercise of valid free speech rights to criticize a target product or company symbolized by the mark.. For example, as the Sixth Circuit pointed out, the disgruntled customer who opens a "gripe site" under the domain name of a business that is complained about is not a "cybersquatter" and is not violating the ACPA. As that court observed:
The paradigmatic harm that the ACPA was enacted to eradicate—the practice of cybersquatters registering several hundred domain names in an effort to sell them to the legitimate owner of the mark—is simply not present [in a disgruntled customer's web site.] One of the ACPA's main objectives is the protection of consumers from slick internet peddlers who trade on the names and reputations of established brands. The practice of informing fellow consumers of one's experience with a particular service provider is surely not inconsistent with this ideal..

However, such a good faith factor cannot be founded upon a purported good faith “critical web site” use of the domain name undertaken only after the dispute arose and motivated by a desire to fabricate a good faith defense. For example, in one case, a defendant who was making a bad faith use of plaintiff's mark, upon being sued opened a web page criticizing the trademark owner's product. The court rejected the reasonable belief defense: “[W]e conclude that [defendant's] claim of good faith and fair use is a spurious explanation cooked up purely for this suit and we reject it out of hand.”.

The Ninth Circuit found that defendant's use of www.epix.com to identify a web site displaying electronic pictures of a local theater group was a good faith use and was not cybersquatting on plaintiff's trademark EPIX for electronic imaging products..

The Ninth Circuit has held that notwithstanding the lit eral language of § 43(c)(4), part (B), all noncommercial uses are not except from the prohibitions of the ACPA.. That is there is no "commercial use" requirement in the ACPA. Such a reading would be in conflict with Factor IV of the nine factors to weigh in determining bad faith. This factor would be meaningless if another part of the Lanham Act exempted all noncommercial uses.

The references in the legislative history to “news reporting” and “comment” are troubling. This is because, in the author's opinion, a person should not necessarily be allowed to use a domain name incorporating the mark of another in a web site and claim “news reporting” and “comment” as indicators of good faith. For example, an entrepreneur who runs a web site reporting on news about professional football using the domain name nflnews.com in competition with web sites sponsored by the National Football League should not necessarily find shelter under this factor. Such news or commentary sites might be very likely to cause confusion as to sponsorship, affiliation or connection with the NFL.

Congress cautioned that this factor is not intended to create a loophole that could “swallow” the Act by allowing a domain name holder to evade liability merely by putting up a seemingly innocent site under an infringing domain name. Congress gave the example of famous cybersquatter Dennis Toeppen, who, among hundreds of other domain names, reserved panavision.com and at that web site displayed a map of Pana, Illinois and reserved panaflex.com and at that site displayed the single word “hello.” This was not the conduct typical of many cybersquatters, who merely warehouse domain names and make no use of them to identify web sites. Toeppen's conduct was held to be illegal dilution by cybersquatting of the famous marks PANAVISION and PANAFLEX prior to the Anti-Cybersquatting Act.. Congress said that it did not intend this factor to allow someone to evade liability under the Anti-Cybersquatting Act by opening a non-competing and non-commercial web site under an otherwise infringing domain name.. For example, in the author's view, one who otherwise exhibits the behavior of a cybersquatter should not be permitted to avoid the Anti-Cybersquatting Act merely by using the challenged domain name to identify a website on which the person has posted a picture of the trademarked product with vapid text, such as “I like it” or “It's cool.”

In connection with this factor, Congress also noted that this determinant does not change the traditional balance between trademark law and the free speech principles of the First Amendment.. “Rather, the Act gives courts the flexibility to weigh appropriate factors in determining whether the name was registered or used in bad faith and it recognizes that one such factor may be the use the domain name registrant makes of the mark.”.

Factor (V): The person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.

The motivations for such intentional acts of diversion can include:
• the political or religious zealot desiring to intercept and convert unbelievers.. For example in one case, a person angry at lawyers registered variations of the names of many law firms, hoping to intercept potential clients in order to tell them his angry diatribe.. In another example, held to be an infringer was an anti-abortion zealot who intended to mislead web users to an anti-abortion site. He registered several domain names which included famous trademarks (e.g. "drinkcoke.org" and "mymcdonalds.com"), the names linked to the web site " abortionismurder.com," which displayed anti-abortion materials and gruesome images of aborted and dismembered fetuses..
• the intent of a newcomer to free ride on the name recognition of an established company.. For example, a registrant was found to have registered several domain names like venetiangold.com, linked to an on-line casino-type gambling website, with the intent to divert gamblers away from the online location of Las Vegas-based Venetian Casino Resort..
• the intent of a business to divert customers or harm its competitor.. For example, company A discovered that competitor F had included two of A's trademarks as metatags in F's website. In retaliation, A registered one of F's trademarks as a domain name for a web site that automatically bounced the web user to A's own website.. In another example, after a soured business relationship, A and B left company Z and started a consulting business using the domain name www.davincitek.com. The parties were engaged in litigation over the split and company Z then registered the domain name www.davinci-tek.com and used the site to offer competing services. A preliminary injunction was granted..

This factor embodies the traditional rule of trademark law that when there is proof that the junior user has done something to intentionally divert or confuse customers, the courts will use this, either via a presumption or as relevant evidence, that defendant was successful and that a likeli hood of confusion exists..

If the trademark owner has no online location or website, then this factor cannot point to bad faith, because the statute requires an intent to divert consumers from the mark owner's "online location.".

This factor may also trigger ACPA liability for one who uses another's trademark to identify a parody web site. The Fourth Circuit said held that an intent to divert web users looking for the trademark owner's site can trigger liability if the challenged site contains information “antithetical and therefore harmful to the goodwill represented by” the plaintiff's trademark..

This factor also mentions damage to the mark by use in a domain name identifying a site with a content that could cause tarnishment or disparagement of the mark and its goodwill.. Case law prior to the Anti-Cybersquatting Act under the anti-dilution provisions of the Lanham Act illustrate this type of case..

Factor (VI): The person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct.

This factor embodies the conduct of the prototypical cybersquatter who registers a domain name with no intent to use it and offers to sell it to the legitimate trademark owner. As Congress noted: “In practice, the offer to sell domain names for exorbitant amounts to the rightful mark owner has been one of the most common threads in abusive domain name registrations.”. The Sixth Circuit observed: "Registering a famous trademark as a domain name and then offering it for sale to the trademark owner is exactly the wrong Congress intended to remedy when it passed the ACPA.". For example, the domain name owner's attempt to hold the trademark owner “hostage” until it either pays an exorbitant amount of money or shares use of the name for use in a related product line was held to constitute evidence of bad faith and a violation of § 43(d)..

An offer to buy a domain name which is made as part of negotiations to settle a dispute is inadmissible into evidence under Federal Rule of Evidence 408.. Additionally, an offer in settlement negotiations made by an attorney for the domain name owner to sell the domain name to the plaintiff trademark owner does not evidence bad faith..

However, this factor must be applied with care, because the mere offer to sell a domain name to another without having used it on a web site does not per se point to cybersquatting. As Congress noted:
[This factor] does not suggest that a court should consider the mere offer to sell a domain name to a mark owner or the failure to use a name in the bona fide offering of goods or services as sufficient to indicate bad faith. Indeed, there are cases in which a person registers a name in anticipation of a business venture that simply never pans out. And someone who has a legitimate registration of a domain name that mirrors someone else's domain name, such as a trademark owner that is a lawful concurrent user of that name with another trademark owner, may, in fact, wish to sell that name to the other trademark owner. This bill does not imply that these facts are an indication of bad-faith..

Recognizing the above legislative history, the Fourth Circuit observed: “It is true that a mere offer to sell a domain name is not itself evidence of unlawful trafficking… The ACPA was not enacted to put an end to the sale of all domain names. This case, however, involves much more than a plain vanilla offer to sell a domain name… [T]he evidence establishes that at the time Virtual Works proposed to sell vw.net to Volkswagen, it was motivated by a bad faith intent to profit from the famousness of the VW mark.” Defendant told Volkswagen's trademark attorney that unless Volkswagen bought the domain name within 24 hours, defendant would sell the name to the highest bidder, pointing out that others would jump at the chance to have a domain name linked in buyers' minds with Volkswagen..

The Fifth Circuit took a stricter view and held that one who registers a domain name identical to a famous mark is a cybersquatter even if defendant did not contact the mark owner and did not try to sell the domain name to the mark owner. Rather, the inevitable inference was that defendant knew it owned a domain name consisting of a famous mark and it hoped to profit by waiting for the mark owner to contact defendant to make a deal..

This factor would also encompass cases in which a defendant reserves a domain name and threatens to or actually offers to sell it to a competitor of the legitimate trademark owner..

Factor (VII): The person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct.

This factor enables a court to weigh the significance of a domain name holder obtaining one or more names using material and misleading false contact information. This conduct points in the direction of bad faith because the provision of false contact information to a registrar is a hallmark of the cybersquatter, who wants to profit without being easily identifiable and served with process. A mere honest mistake in identification has no such import..

The "Intellectual Property Protection and Courts Amendment Act of 2004" added subsection (e) to Lanham Act § 35, creating a presumption of a willful violation if the violator provided false contact information to a domain name registrar in connection with the violation..

Factor (VIII): The person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties.

This factor recognizes as a marker of one type of cybersquatting the warehousing of many domain names (sometimes hundreds or thousands) consisting of various identical or similar combinations of the marks of others.. For example, the famous cybersquatter Den nis Toeppen reserved about 240 domain names consisting of a who's who of trademarks, such as deltaairlines.com, britishairways.com, crateandbarrel.com, and ussteel.com.. This factor could also capture the actions of the type of cybersquatter who reserves multiple domain names consisting of the marks of others and does nothing, awaiting an enquiry from the legitimate owner..

Applying this factor, the First Circuit said that the practice of a defendant to register thousands of domain names that were often identical or similar to famous trademarks or names of celebrities was evidence of bad faith: “Although defendants are correct in asserting that their multiple registrations alone are not dispositive of the bad faith issue, their well-established pattern of registering multiple domain names containing famous trademarks, such as rollingstones.com, evinrude.com and givenchy.com has been made highly relevant to the determination of bad faith by the list of factors in ACPA.”.

This factor may also mark as a cyberpirate the person who registers multitudes of variations of others' trademarks, not for the purpose of selling the names to the trademark owners, but for the purpose of selling web advertising by intercepting web users looking for the trademark owner's site and making them click through advertising pages in order to escape..

However, caution must be exercised, for the mere registration of multiple domain names for resale does not per se mark one as a cybersquatter. One may be in a justifiable business of reserving many domain names. For example, in one case defendant legitimately registered thousands of domain names for resale as “vanity” e-mail addresses which consisted of common surnames, names of hobbies, careers, pets, sports interests, and music. The fact that some of these resembled prominent trademarks did not make defendant a cybersquatter..

Factor (IX): The extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of section 43.

This factor simply directs the court's attention to the strength of the plaintiff's mark. In a likelihood of confusion analysis, the stronger and more distinctive the senior mark, the greater the chance that there will be a likelihood of confusion.. In anti-dilution cases, a mark must achieve that degree of strength that it can be dubbed “famous.”. The House Report said that the stronger the mark, the more likely that the mark owner would prevail: ” The more distinctive or famous a mark has become, the more likely the owner of that mark is deserving of the relief available under this act.”. The Senate analysis added the observation that the reverse is an indicator of the absence of bad faith: ” At the same time, the fact that a mark is not well-known may also suggest a lack of bad-faith.”. This observation is apparently based on the assumption that the typical cybersquatter does not waste time with obscure marks for low-volume niche goods or with those of small, local businesses.

Case Law Applying the Bad Faith Factors. In the first appellate decision under the Cyberpiracy Act, the Second Circuit found in the Sporty's Farm case a violation where a competitor reserved and used the domain name sportys.com with a bad faith intent to profit by preventing the senior user “Sporty's” catalog business from utilizing that domain name.. The junior user's later attempt to legitimatize the use by creating a subsidiary called “Sporty's Farm” that sold Christmas trees at a web site located at sportys.com was found to be transparently contrived.. The court found that the following § 43(d)(1)(B) factors sup ported a finding of bad faith: under Factors I and II, the critical date is the time the domain name was registered. Here, defendant did not have any intellectual property rights in the domain name at the time it reserved the domain name and the domain name did not consist of the legal name of defendant at that time;. similarly, under Factor III, while defendant used the domain name in connection with the offering of goods (Christmas trees), it did not do so until after the litigation began, negating its claim of a “bona fide” offering of goods for sale. The court emphasized that “the most important” basis for a finding of bad faith was the finding that defendant registered the domain name “for the primary purpose of keeping [plaintiff] from using that domain name.”.

The Fifth Circuit held that one who registers a domain name identical to a famous mark is a cybersquatter even if defendant did not contact the mark owner and did not try to sell the domain name to the mark owner. Rather, the inevitable inference was that defendant knew it owned a domain name consisting of a famous mark and it hoped to profit by waiting for the mark owner to contact defendant to make a deal. .

It is a form of bad faith intent to profit for a person to register variations of another's trademark, not for the purpose of selling the names to the trademark owner, but for the purpose of selling web advertising by intercepting web users looking for the trademark owner's site and making them click through advertising pages in order to escape..

In the Harrods case the plaintiff prevailed on five of the nine factors, the defendant on three factors and one factor was inapplicable. The court found that the plaintiff proved bad faith and prevailed.. In that case, while the domain name owner had the legal right to use the trademark HAR RODS in South America, its registration of dozens of domain names in English (e.g. www.harrodsshopping.com indicated a use targeted at English speakers. This exceeded the domain name owner's territorially limited South American rights and meant that it was profiting from a connection with the famous HARRODS mark used to identify a well-known store in London. The Fourth Circuit said that the South American user sought to use the domain names "to profit by deliberately confusing and diverting non-South American customers seeking to shop at [the Internet site of] Harrods UK.".

Gripe Sites. Some courts have held that a disgruntled customer who uses the mark of the target company as the domain name of a gripe site is not a "cybersquatter" who is caught by the Anti-cybersquatting Consumer Protection Act.. Also, one who operates a political or religiously motivated gripe site under the name or mark of the target is not a cybersquatter if there is no commercial aspect and no offer to sell the domain name to the target..

However, other decisions have found an ACPA violation when angry people use the name of the target of their wrath as a domain name for a site to vent their rage.. Similarly, there can be ACPA liability for the political or religious zealot who uses a confusingly similar domain name to deceive web users in order to intercept and convert unbelievers. For example, the Eight Circuit found that the Anti-Cybersquatting Protection Act was violated by an anti-abortion zealot who intended to mislead web users to an anti-abortion site. He registered several domain names which included famous trademarks (e.g. "drinkcoke.org" and "mymcdonalds.com"), the names linked to the web site "abortionismurder.com," which displayed anti-abortion materials and gruesome images of aborted and dismembered fetuses. Defendant's use of the domain names was found to be commercial in that the web site solicited monetary contributions and offered various anti-abortion merchandise for sale. .

If the gripe site owner seeks to use transfer of the contested domain name as leverage to settle his gripe with the trademark owner, this can constitute bad faith and a violation of the ACPA.. The Fourth Circuit upheld a finding of a ACPA violation based on a weighing of the factors, including a finding that defendant made statements on his web site and in the press recommending that the trademark owner “settle” with him and “make him an offer.”. Such evidence indicates an intent to financially profit from the contested domain name..

In Personam Remedies. Damages under the Lanham Act are not available as to the actions of registration or use of a domain name before the enactment date of November 29, 1999.. But a domain name registered prior to the ACPA can be subject to damages if the domain name was continued to be used in violation of the Act after November 29, 1999.. Registration, trafficking and use of a domain name are separate acts which trigger liability. Thus, the continued trafficking or use of a domain name registered before November 29, 1999, can give rise to an award of damages..

For the typical in personam jurisdiction case where the court has jurisdiction over the owner or owners of the domain name, the Anti-Cybersquatting Act incorporates by reference the injunctive remedies of Lanham Act § 34(a) and the monetary remedies of Lanham Act § 35(a).. In one case, the court not only ordered defendant to transfer the registration of the accused domain name barbiesplaypen.com to plaintiff Mattel, but also entered a permanent injunction barring defendant from use of any of Mattel's BARBIE trademarks.. Similarly, a defendant found cybersquatting on www.ernestandjuliogallo was enjoined from registering any domain name that contained the words "Gallo," or any name that contains the words "Ernest" and "Julio" in combination.. A plaintiff is entitled to an injunction that is broader than the scope of the ACPA in order to protect the reputation and goodwill of its mark..

Statutory Damages. In addition, the Act offers a form of statutory damages as an alternative. Statutory damages between the statutory floor of $1000 per infringing domain name and the ceiling of $100,000 may be elected by plaintiff at any time before final judgment instead of actual damages and profits. The court is given discretion to set the appropriate amount of statutory damages within the statutory minimum and maximum per domain name.. The body of case law developed to interpret the similar statutory damages provision in copyright law should prove helpful in applying the cybersquatting statutory damages option..

In a case of egregious cybersquatting where defendant registered the accused domain names after being preliminarily enjoined from using similar domain names, the court said that: “[Defendant] Mr. Zuccarini boldly thumbs his nose at the rulings of this court and the laws of our country.” The court assessed statutory damages of $100,000. for five infringing names for a total of $1/2 million and awarded plaintiff $31,000. in attorney fees..

Attorney Fees. The fact that a defendant has been found to have acted in “bad faith” in order to trigger the ACPA does not mean that this also automatically satisfies proof of the kind of willful or deliberate behavior required to award attorney fees..

Where to File an In Personam Lawsuit? When an in personam ACPA case is filed, the normal rules of personal jurisdiction apply.. Personal jurisdiction is not proper in the state of the registrar merely because the registrar is located there. Thus, a mark owner could not base personal jurisdiction in the Eastern District of Virginia merely because the registrar NSI was located there.. Plaintiff is not limiting to bringing an ACPA case in the jurisdiction in which it submitted for purposes of a UDRP proceeding..

It has been held that a trademark owner cannot pursue a suit resting on both in personam and in rem grounds. The case must proceed on one or the other.. If in personam jurisdiction is lacking, in rem jurisdiction can be sought..

In Rem Remedies. If jurisdiction is in rem,. the power of the court is limited to the res of the accused domain name or names. The Anti-cybersquatting Act expressly limits remedies in in rem cases to a court order for the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark..

Remedy for Abuse of a Dispute Resolution Procedure. The Anti-Cybersquatting Act specifically provides for the liability of a person who makes a bad faith challenge to a domain name under a dispute resolution procedure such as the ICANN UDRP now used by all global top level domain name registrars.. Lanham Act § 32(2)(D)(iv) provides that if a registrar refuses to register or cancels or transfers a domain name based on a “knowing and material misrepresentation by any other person that a domain name is identical to, confusingly similar to, or dilutive of a mark,” then the challenger “shall be” liable for any damages incurred by the domain name registrant. In addition, the bad faith challenger “shall be liable” for costs and attorney fees and the court is authorized to order the registrar to reactivate or transfer the domain name. The purpose of imposing this liability is obviously to prevent a mark owner from misusing a dispute resolution procedure by knowingly and falsely alleging that a challenged domain name infringes or dilutes the mark.. In that sense, Lanham Act § 32(2)(D)(iv) creates a kind of “abuse of process” or “malicious prosecution” claim specific to the domain name dispute resolution process now used by all global top level domain registrars. However, the burden on proving such a claim is heavy, requiring proof that the mark owner made a “knowing and material misrepresentation.” The mark owner's rebuttal to such a charge could be that whether the challenged domain name was or was not confusingly similar to or dilutive of its mark was a matter of opinion and that the mark owner held a reasonable and good faith belief that its challenge to the domain name was a valid one.

The collective action by trademark owners to enforce their rights against an alleged cybersquatter will generally not be found to be an antitrust violation..

Rights and Remedies are Cumulative. The rights and remedies made available under the Lanham Act § 43(d) anti-cybersquatting provisions are in addition to, not in lieu of, any other civil action or remedy..

Effect of UDRP Proceeding. Proceeding under the UDRP does not preclude a trademark owner from filing a lawsuit under the ACPA, either before, during or after the UDRP proceeding.. The precedential effect of a UDRP award is discussed elsewhere in this treatise..

No Communications Act Immunity. While the Communications Decency Act, 47 U.S.C.A. 230(c)(1) provides that no provider or user of an interactive computer service shall be treated as a publisher or speaker of any information, 47 U.S.C.A. § 230(e)(2) provides an exception for any intellectual property law. Thus, an alleged cybersquatter cannot escape to the safe harbor of the Communications Decency Act..

Constitutionality. It has been held that the federal ACPA does not constitute an unconstitutional unlawful taking of the accused domain name by the federal government in violation of the Fifth Amendment..

 

 

 

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