Bigfoot and the Cybersquatters
March 2001
Although the anti-cybersquatting provisions
of the trademark laws are powerful weapons, prying your rightful domain name
from the fingers of a greedy cybersquatter remains a messy and expensive undertaking.
This article explains what you can do to protect your firm and yourself.
by Sanford
E. Warren Jr. and Kenneth T. Emanuelson
Winstead Sechrest
& Minick
MEMORANDUM
To: You, CEO, Concenity, Inc.
From: Dave, General Counsel, Concenity,
Inc.
Re: Trademarks
Good News! Those federal trademark applications we filed have been
approved by the Trademark Office. We've got legal protection for all
the trademarks we're using and plan to use, including the company name
and logo, and the name of all our products. In real terms, that means
that we have a nationwide monopoly on the use of those trademarks in
connection with the products we sell. I know you weren't sold on spending
the money to get the registrations, but it will pay off.
On a related note, there is some not-so-good news. Our IT folks recommended
that we acquire "Concenity.com" for
our Web site. I asked them to look into it, and it turns out that that
domain name is already owned by someone else. They called him a "cybersquatter."
They put me in touch with the fellow. The good news is that he's willing
to sell it to us. The bad news is he wants TEN GRAND for it. It turns
out that Concenity.net and Concenity.org are also taken. Even
worse, ConcenitySucks.com is owned
by one of our disgruntled former employees, and he's planning to set
up a Web site slamming everything we do. He wants "one MILLION dollars" for it.
Under the law, it looks like we're on very solid ground and can probably
pry the registrations away from these jokers. A few federal lawsuits
and a year or two, and we can get it all taken care of. The one fellow
living in Taiwan may be a little bit of a tough nut to crack, but one
of the partners over at Stotts and Beavis told me he's always wanted
to see China, so maybe they'll cut us a deal on fees.
Just let me know what you want to do,
Dave
|
The Problem of Cybersquatters
What a nightmare! You think back to the meeting 6 months ago when that skinny
kid from Stotts and Beavis, L.L.P., asked if you were interested in securing
domain name registrations on the company name. Money was tight, and the IT folks
assured you that the Web site wouldn't be up and running for a few months, at
least. Besides, who else would want "Concenity.com"
anyway?
If you're responsible for your company's online presence, and you haven't
run into a cybersquatter yet, it's almost certain that you will sooner or later.
A visible, easy-to-find online presence can be one of your company's greatest
marketing assets. Cybersquatters are well aware of the value of an appropriate
domain name. The fights over Panazonic.com, Ford-Quality.com, JPMorganonline.com, and the scandal of WhiteHouse.com (a porn site) are several of
the more well-known stories, but the situation has been repeated countless times
as one company after another has been forced to pony up wads of cash to the
domain name pirates.
The Anti-Cybersquatter Consumer Protection Act
In late 1999, the problem of misappropriated domain names finally became
serious enough to spur congressional action. In the "Anti-Cybersquatter Consumer
Protection Act," Congress provided for a new set of protections and tools available
to trademark holders for securing their rights against cybersquatting. In general,
this new law provided many of the options that had previously been available
to holders of "famous" trademarks (i.e., Coca-Cola, McDonald's) to the holders
of non-famous marks. These provisions provide a powerful legal arsenal to the
trademark holder whose company name or tag line has been absconded by a cybersquatter,
including:
- Injunction against use of the domain name;
- Cancellation or transfer of the domain name to the mark's owner; and
- Monetary damages, including actual damages, profits, and statutory damages.
Of course, not every domain name dispute equates to a case of cybersquatting.
Accordingly, in order to punish a cybersquatter, the trademark holder must show
that the cybersquatter is holding the domain name in "bad faith" and that the
domain name is confusingly similar to a distinctive mark. Bad faith can be shown
by, for example, the following:
- No offering of goods or services in connection with the domain name;
- The acquisition or registration of multiple domain names that are confusingly
or substantially similar to famous or distinctive ones;
- No legitimate Web site accessible through the domain name;
- Any offers to transfer or sell the domain name for profit;
- No trademark rights in the domain name owned by the domain name holder;
- Evidence of an intent to divert consumers from the trademark owner's
site, either for profit or to disparage the owner's mark; or
- Misrepresentation of contact information or a failure to keep contact
information current.
Fighting the Cybersquatter
These provisions have certainly shifted the balance of power to the benefit
of trademark holders, but what do they mean in the real world? In reality, there
is no doubt that cybersquatting continues to occur every day. In reality, even
in the wake of the Anti-Cybersquatter Act, a powerful, well-capitalized multinational
corporation with an army of attorneys will pay thousands of dollars in tribute
to a 16-year-old cybersquatter for a domain name.
It is simply a fact that, the holder of a domain name registration holds
a fair hand in the domain game. Sometimes the cybersquatters cave upon receipt
of the "bigfoot" letter from a big law firm threatening all sorts of nastiness
if the domain name is not surrendered post-haste. Then again, sometimes they
don't. The reasons are obvious. Faced with waiting years and spending tens of
thousands of dollars to pry the domain name from the squatter's greedy little
fingers in federal court, companies often choose to pay a few grand and avoid
the hassle. This happens despite the fact that, legally, the companies are fully
entitled to the registrations.
The upshot is that all of this—the extortion, the greedy little 16-year-old,
the army of attorneys, and, most importantly, the years of time and thousands
of dollars—can generally be avoided with just a little bit of foresight. Although
domain names routinely change hands for large chunks of money, an unreserved
domain name is available for literally pocket change. A standard.com-type domain name can be filed
for $35 in filing fees. At that rate, there's absolutely no reason not to capture
your company name in its various forms, including, at the least, the .com, .net,
and .org domains.
In regard to costs, it is important to recognize the distinction between
a Web site and a domain name. Although a
full-function Web site can cost tens of thousands of dollars to put together,
there is no real limit on the number of domain
names that can be pointed to the same Web site. In most cases, the domain
name registrations represent only a small fraction of the cost of a Web site.
In addition to the standard form of your company's mark, there are a few
other types of domains you should definitely consider reserving. The "generic,"
"typo," "punctuated," "online," and, for lack of a better term, "sucks" domain
names should be given very careful consideration. These are discussed below.
Generic Domain Names
The "generic" domain names are exactly what their name would suggest. While
generic terms cannot function as trademarks in the normal world, there is nothing
stopping you from capturing the generic name of your product as a domain name.
As an example, a plastic film manufacturing company here in Dallas holds the
domain name "Trashbags.Com." As another example,
1-800-Flowers owns "Flowers.Com." Although
most generic terms are already owned by someone, it never hurts to check.
Typo Domain Names
The "typo" domain names are those that represent a misspelling of your company
or domain name. For example, "Mcrosoft.Com"
is not owned by Microsoft, and "Flwers.Com"
is not owned by 1-800-Flowers. They are owned, instead, by individuals known
as "typosquatters." The idea here, of course, is that customers make typos,
and if your customer makes a typo, he may end up in the wrong place. If you
own the right "typo" domain name, your customer will end up on your site. Of
course, a customer can make any number of typos, and it isn't practical to try
to anticipate all of them. If there are a few common typos or misspellings of
your company name, however, you should consider reserving them.
Punctuated Domain Names
"Punctuated" domain names are those in which the words of a multi-word name
are separated by punctuation. For example, "Concenitywidgets.Com"
could be confused with "Concenity_Widgets.Com"
or "Concenity-Widgets.Com." In this case,
it might be prudent to capture them all. Similarly, you may want to consider
reserving "ConcenityOnline.Com," and "Econcenity.Com,"
especially if your preferred domain is taken.
"Sucks" Domain Names
Last but certainly not least, you may, counter-intuitively, want to seriously
consider purchasing "Concenitysucks.Com."
It seems a bit strange, but it's a little bit like buying a nuclear weapon on
eBay—you may not want it, but do you really want someone else having it? You
may be fortunate enough to have no disgruntled ex-employees or unhappy customers
who would want to slam your company on the "sucks" version of your domain name.
On the other hand, you can bet that anyone who does want it won't have your
best interests at heart. For the same reasons, you may want to get your hands
on "IHateConcenity.Com" while you're at it.
Timing Is Everything
Finally, a word on timing. I have had at least one client who had to wrestle
its own name from a cybersquatter who had reserved the domain name after seeing
the announcement of its new name on the AP newswire. The cybersquatter had reserved
it within hours of the press release. This type of cybersquatter can be cut
off at the pass if your domain names are reserved before your marketing team
is unleashed to spread the word.
Conclusion
In summary, although the anti-cybersquatting provisions of the trademark
laws are powerful weapons in the fight against cybersquatting, prying your rightful
domain name from the fingers of a greedy cybersquatter remains a messy and expensive
undertaking. We can all learn from the experience of others and benefit from
the inexpensive cost of filing domain names. In general, if you're fairly sure
that you might want to use a domain name and you would care if someone else
uses that domain name, reserve it, and reserve it now. The $35 you pay today
is pocket change compared to the thousands you may have to pay to retrieve it
later.
For more information on the law in this area, including the Lanham Act (15
U.S.C. 1125(d)), check out this site: http://www4.law.cornell.edu/uscode/html/.
Ken Emanuelson is an associate with the intellectual property section of Gardere & Wynne, LLP.
His clients range in size from small startups to established Fortune 500 companies,
in various areas of technology, from online commerce to aerospace. His regular
practice includes client counseling in all areas of intellectual property law,
patent and trademark drafting and prosecution, litigation, licensing negotiation,
and infringement analysis. In his prior career as an engineer, Mr. Emanuelson
worked for Texas Instruments and Ford Motor Company. His engineering experience
included work in semiconductor processing, factory automation, microwave communications,
aerospace materials, automotive technology, and superconductive ceramics. Mr.
Emanuelson is a graduate of the University of Texas School of Law, where his
course of study focused primarily on patent, trademark, and copyright law. He
also holds a BS degree in mechanical engineering from the University of Arkansas.
He can be reached by email at Kemanuelson@gardere.com.
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