Consider the following scenario: You’re a successful business owner, and you have a customer base that’s expanding daily. Recently, you decided it’s time to start a website to continue growing your business, but when you try to register your trademark as your domain name, you find out someone else already owns it. Without warning, you may have just become the victim of cybersquatting.

What Is Cybersquatting?

Cybersquatting is the bad faith registration, trafficking in, or use of a domain name that is identical to, or confusingly similar to a distinctive mark, or dilutive of a famous mark, without regard to the goods or services of the parties. In other words, cybersquatting is when someone beats a company to the punch by reserving the company’s name or trademark as a domain name with the bad faith intent to profit from it. Cybersquatters perpetrate this act because they expect the company will buy the domain name back at an exorbitant price or pay a licensing fee to use it instead.

Cybersquatting is prohibited by federal law under the Anticybersquatting Consumer Protection Act (ACPA), but remains problematic because reserving domain names is primarily done on a first-come, first-served basis. However, if a trademark owner shows: (1) that it owns a distinctive or famous mark; (2) that the defendant registers, uses, or traffics in a domain name that is identical to or confusingly similar to the distinctive or famous mark; and (3) that the defendant had a “bad faith intent to profit” from the mark, then a court can award as much as $100,000 in statutory damages for each domain name, cancel or transfer the domain name to the rightful trademark owner, and even award the plaintiff attorney fees.

Domain Name Basics

Websites are identified by their Internet Protocol (IP) addresses, which consist of a series of numbers. A domain name is simply a more intuitive representation of the IP address that’s easier to remember. For instance, the numbers 68.71.212.158 likely have no initial meaning to most people, but virtually everyone recognizes the domain name that represents them: www.espn.com. For this reason, companies prefer to use their trademarks as their domain names because the public can locate them easily online. Cybersquatters capitalize off this fact and reserve domain names knowing how valuable they are to trademark owners.

Cybersquatting in Michigan

Federal courts in Michigan have handled a number of cybersquatting lawsuits. One case in particular, Audi AG v. D’Amato, even made its way to the United States Court of Appeals for the Sixth Circuit.

In that case, Volkswagen and Audi sued an alleged cybersquatter in federal district court for registering the domain name www.audisport.com. The district court found that the website owner violated the ACPA, and he appealed. The Sixth Circuit upheld the ruling, reasoning that even though the website provided information and goods to Audi enthusiasts, the owner of the domain name had no intellectual property rights in the “Audi” mark, and the owner of the domain name diverted consumers from purchasing goods and services from Audi’s legitimate website. Therefore, even though the domain name owner wasn’t trying to coerce Audi into purchasing the domain name from him, he still violated the ACPA because the court found that he intended to capitalize off Audi’s mark; in other words, the defendant still had a bad faith intent to profit.

What If You’re the Cybersquatting Defendant?

An important aspect of cybersquatting liability hinges on the plaintiff proving that the defendant acted with the bad faith intent to profit. The ACPA has a so-called “safe harbor” provision that protects a domain name owner who “believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” It is entirely possible that one can be sued for cybersquatting and not be found liable because she truly believed that her use of the domain name was legitimate.

If you think you’re the victim of cybersquatting, or if you believe that someone has wrongfully accused you of cybersquatting, contact our experienced Internet attorneys here or call 855-473-8474.

The ACPA’s Statutory Framework in Detail

The Anticybersquatting Consumer Protection Act, enacted in 1999 and codified at 15 U.S.C. § 1125(d), was Congress’s direct response to a wave of domain speculation that followed the commercialization of the internet. Prior to the ACPA, trademark owners had to rely on dilution and unfair competition theories that were ill-suited to domain disputes. The ACPA created a targeted cause of action with specific elements, defined remedies, and a unique in rem jurisdiction provision designed to address the international nature of domain registration.

To establish an ACPA claim, the trademark owner must prove that: (1) it has a distinctive or famous mark; (2) the defendant registered, trafficked in, or used a domain name that is identical or confusingly similar to a distinctive mark, or dilutive of a famous mark; and (3) the defendant did so with bad faith intent to profit from the mark. All three elements must be established. A defendant who registered a domain that is similar to a trademark but did so with a legitimate business purpose—and can document that purpose—does not violate the ACPA even if the trademark owner finds the domain objectionable.

The UDRP as an Alternative to ACPA Litigation

Trademark owners who do not want to bear the expense of federal litigation have an alternative: the Uniform Domain Name Dispute Resolution Policy (UDRP), administered by ICANN-approved providers including WIPO and the National Arbitration Forum. UDRP proceedings are faster and cheaper than federal court—typically 45-60 days and $1,500-$4,000 in fees—and the only available remedy is transfer or cancellation of the domain name, not damages.

The UDRP’s three-element test closely parallels the ACPA’s framework: the complainant must show the domain is identical or confusingly similar to a mark in which it has rights, that the registrant has no rights or legitimate interests in the domain, and that the domain was registered and used in bad faith. Despite the parallel structure, UDRP decisions are not binding on federal courts—a registrant who loses a UDRP proceeding can file a lawsuit in federal court under the ACPA to reverse the transfer, and vice versa.

Typosquatting: A Variant of Cybersquatting

Typosquatting—registering domain names that are common misspellings or typographical variants of famous marks—is a well-established form of cybersquatting addressed by both the ACPA and the UDRP. Courts have consistently found that domains like “gogle.com,” “facebok.com,” or “amazzon.com” are confusingly similar to the corresponding famous marks and that registering them with intent to capture diverted traffic constitutes bad faith. WIPO has a particularly robust line of decisions addressing typosquatting, and the bad faith element is often easily established when the registrant has no other plausible reason to register the misspelled variant.

Reverse Domain Name Hijacking

The ACPA also provides a defense for legitimate domain registrants who are falsely accused of cybersquatting. Under § 1114(2)(D)(v), a domain registrant may sue a trademark owner who uses the UDRP or ACPA to improperly seize a domain to which the trademark owner has no right. This reverse domain name hijacking claim provides relief for registrants who legitimately registered their domain names before the trademark owner’s mark became distinctive, or who registered domains that happen to match existing trademarks but had no intent to profit from those marks.

Whether you are a trademark owner confronting cybersquatters or a domain registrant facing an unjustified ACPA claim, the internet attorneys at Revision Legal can help. Contact us at 855-473-8474 or complete the contact form on this page to discuss your situation.