Expert Commentary

Bigfoot and the Cybersquatters

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.


Intellectual Property
March 2001

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 website. 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 website 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 website 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 website 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 website and a domain name. Although a full-function website 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 website. In most cases, the domain name registrations represent only a small fraction of the cost of a website.

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.

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://www.cybersecuritieslaw.com/.


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


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