Cybersquatting is bad for your business. Cybersquatting is prohibited by the federal Anticybersquatting Consumer Protection Act (“ACPA”). See 15 U.S.C. § 1125. But, cybersquatting is still common. Cybersquatters register a domain name for a website using a trademarked name, word or phrase that they do not own. Revision Legal recommends two solutions to this problem — register domain names when your business creates trademarks and make sure that your domain registrations are up-to-date.

Cybersquatting is bad for business for many reasons. First, the owner of the trademark is prevented from registering that domain name since it is already in use. Second, often, the purpose of cybersquatting is to seek “ransom” from the trademark owner and sometimes the ransom demanded is quite substantial. Third, a website domain name featuring your company’s trademark creates a high risk that sales and internet traffic are being diverted from your legitimate website.

Finally, resolving a cybersquatting dispute can be time-consuming and expensive. One mechanism is to initiate an arbitration proceeding under the Uniform Domain Name Dispute Resolution (“UDRP”) policies created by the Internet Corporation for Assigned Names and Numbers (“ICANN”). ICANN is the main private, non-profit organization that controls web domain name registration and disputes. A second mechanism is to file a federal lawsuit under the ACPA referenced above. In either type of proceeding, the court or the arbitrators will examine several factual questions to determine whether cybersquatting is occurring and to resolve who should have ownership of the domain name. Among the factors are:

• Is there a registered trademark?
• What was the main purpose for which the domain name was registered?
• Does the current owner of the domain name use it for commercial purposes?
• Was any effort made to “ransom” the domain name?
• Was the domain registered in a transparent manner or were efforts made to hide the ownership of the domain name?
• Does the owner have a pattern of registering domain names that are the same as or similar to registered trademarks?
• Are internet traffic and sales being actually diverted?
• Is the current owner of the domain name obtaining some commercial gain or benefit from using a domain name that is the same as or similar to a registered trademark?
• And more

One can see these factors at play in a famous cybersquatting case from the late 1990s/early 2000s involving the singer Madonna. Madonna had been using the famous name for decades and had officially registered “Madonna” as a trademark. In the mid-1990s, a cybersquatter from New York named Dan Parisi registered the domain name Madonna.com without permission from the signer. The singer claimed that the website infringed upon her trademarks. The singer filed arbitration against Parisi and eventually won. Parisi was ordered to turn over the domain name to the singer. The arbitration panel ruled that Parisi had been involved in other cybersquatting cases including one involving wallstreetjournal.com. The arbitration panel held registration was done in bad faith. See news report here. Other famous cybersquatting cases involved Paris Hilton, Jerry Falwell, Microsoft, Chanel, and DreamWorks.

As one can probably see, a UDRP arbitration or a federal lawsuit will involve an intensive examination of the facts related to the alleged cybersquatting. This creates an enormous disadvantage for both types of proceedings in that, while proceedings are ongoing, the cybersquatter still has control of the domain name that contains your trademarked word, name, or phrase.

As noted above, the best solutions are to register domain names when your company or business creates new trademarks and to ensure that registration remains up-to-date. Domain name registrations do not continue automatically. They must be renewed annually. If your business misses the deadline, an opening is given to a cybersquatter to snatch up the domain name when it lapses. For more information or if you have questions about cybersquatting and/or about protecting your trademarks, contact the trademark lawyers at Revision Legal at 231-714-0100.

The Anti-Cybersquatting Consumer Protection Act (ACPA)

The primary federal statute addressing cybersquatting is the Anti-Cybersquatting Consumer Protection Act, codified at 15 U.S.C. § 1125(d). The ACPA creates liability for any person who, with a bad faith intent to profit from a mark, registers, traffics in, or uses a domain name that is identical or confusingly similar to a distinctive trademark, or identical or dilutive of a famous trademark. The ACPA provides for statutory damages between $1,000 and $100,000 per domain name, plus attorneys’ fees, and allows courts to order cancellation or transfer of the offending domain.

The “bad faith intent to profit” element is evaluated using a non-exhaustive list of factors, including: whether the registrant has legitimate trademark or other IP rights in the domain; whether the domain name consists of the registrant’s legal name; whether the registrant has used the domain name for a legitimate noncommercial or fair use site; and whether the registrant offered to sell the domain to the trademark owner for financial gain without having used or intended to use the domain.

UDRP: The Faster, Cheaper Alternative to Federal Court

The Uniform Domain-Name Dispute-Resolution Policy (UDRP), administered by ICANN, provides an alternative to federal court litigation for domain name disputes. A complainant must prove three elements:

• The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights
• The registrant has no rights or legitimate interests in the domain name
• The domain name was registered and is being used in bad faith

UDRP proceedings are adjudicated by one or three-member panels at approved dispute resolution providers such as WIPO or the Forum. The process typically takes 45–60 days and costs significantly less than federal litigation, with fees ranging from $1,500 to $5,000 depending on the number of panelists and domain names involved. Remedies are limited to cancellation or transfer of the domain—monetary damages are not available through UDRP.

Proactive Domain Portfolio Management

The best cybersquatting protection is a proactive domain portfolio strategy. Practical steps include:

• Register the primary .com, .net, .org, and .io versions of the brand name at the time of brand launch
• Register obvious typosquatting variants (common misspellings, missing letters, common transpositions)
• Register country-code TLDs (ccTLDs) for all current and target markets—particularly important for first-to-file countries where trademark rights may not prevent registration by a third party
• Set domain registrations to auto-renew with current payment information
• Maintain WHOIS records with current contact information—ICANN’s Whois Accuracy Program can flag inaccurate records

Recovering a Lapsed Domain

When a domain lapses due to a missed renewal, it typically enters a “redemption grace period” during which the original registrant can reclaim it for a premium fee. If the redemption period expires, the domain enters “pending delete” status before returning to general availability. Cybersquatters often use automated tools to register domains the moment they become available. Once a domain is registered by a cybersquatter, the options are to file a UDRP proceeding, pursue ACPA litigation, or negotiate a purchase—each option involves time and expense that could have been avoided with automatic renewal.

Contact the trademark lawyers at Revision Legal at 231-714-0100 for assistance with cybersquatting disputes or domain recovery.