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Cybersquatting Bad Faith Factors

By Eric Misterovich

The Anti-Cybersquatting Consumer Protection Act allows victims of cybersquatters to bring claims in federal court and recover damages. Plaintiffs must show, among other things, bad faith on the part of the cybersquatter to use Plaintiff’s mark in order to profit. Such a showing is even required in in rem cases where the defendant may not be known.[1] The Second Circuit described the finding of bad faith mainly as that the defendant registered the name “for the primary purpose of keeping [plaintiff] from using that domain name.”[2]

The ACPA provides courts with 9 non-exclusive cybersquatting bad faith factors to consider. None of the factors are dispositive, and they should not be added up against one another (i.e. a party “winning” 5 of the factors does not win the argument per se). Also, not all factors apply in every case. The first four factors focus on determining if good faith exited, factors five through eight attempt to uncover bad faith, and factor nine does both. The factors are listed below and explained in more depth.

Bad Faith Factor 1: “the trademark or other intellectual property rights of the person, if any, in the domain name”

This factor focuses on the defendant’s IP rights in the name. For instance, if a company named MGM Lumber secured the domain name before MGM studios or MGM Grand Casino did, this factor would swing towards good faith because MGM Lumber would have a TM right in their name, and would not, presumably, be using the mgm domain name in order to intentionally direct unwarranted traffic to its site that should have gone to the production company or the casino. Because of this, timing matters: securing a domain name before securing IP rights in the name will swing towards bad faith, because the domain name holder in such a case did not have an interest in the name to begin with.[3]

Bad Faith Factor 2: “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 finds good faith if the defendant registered a domain name featuring his or her legal name. One example comes from a case where Nissan sued a man named Uzi Nissan who was the first to register The court held that because it was his legal name, there was no bad faith to profit off of Nissan the automobile manufacturer.[4] If a defendant uses a nickname, as opposed to a legal name, his or her burden of proof is higher to prove no bad faith existed.

Bad Faith Factor 3: “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 very similar to Factor 1, and timing is similarly important. If the defendant used the name commercially in the past, good faith can be established, even if the defendant does not have a trademark in the name. However, if the defendant significantly changed the nature of the website in order to profit from a more well-known mark, bad faith can be found.[5]

Bad Faith Factor 4: “the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name”

This factor was enacted to protect websites that use domain names similar to popular trademarks for the purpose of criticism, parody, comment, etc. The “fair use” term of art from the factor’s language accurately reflects the similar priorities of the “fair use” defense for copyright infringement. Under this factor, a court will first look for commerciality, and if it finds it, the defendant website cannot be confusing for good faith to be established. If no commerciality is found then confusion can exist, justified by the fact that the free speech rights of the defendant outweigh any confusion that may impair the popular mark owner.[6] Commerciality can be found if the website deals in commercial goods, or even if the website makes money off of advertising.

This factor has its limits, though. One famous case featured a defendant acquiring the domain name and using the webpage to display a map of Pana, IL. The court held that even though the website was noncommercial and non-competitive, Factor 4 was not written to provide a loophole for clear cybersquatters.[7]

Bad Faith Factor 5: “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”

This factor protects websites from political attacks, “free-riders,” competitors, and those seeking to redirect traffic to another revenue generating website. Evidence of an intent to confuse will lead a reviewing court to assume that confusion existed. This factor does require, however, that the plaintiff trademark-owner actually operate a website.

Bad Faith Factor 6: “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 is the codification of the stereotypical “hostage taker” cybersquatter. It considers the acquisition of a domain name featuring a trademark and then trying to sell that name to the mark owner bad faith. Such a sale is not per se bad faith, however, as a legitimate domain name holder might see the sale of their name to the mark holder instead of continued operation under their control as a more desirable move.

Bad Faith Factor 7: “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 allows a court to view evidence of a person who registers multiple domain names using different combinations of names, addresses, and contact information as bad faith. The reason for this is that cybersquatters will typically lie to the domain name registrar so they cannot be easily found.

Bad Faith Factor 8: “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 also addresses a hallmark of classic cybersquatting: warehousing. Some cybersquatters obtain hundreds or even thousands of domain names, each slightly different variations that are similar to famous trademarks. One of the more famous cases featured a man who bought domain names for many major airlines (e.g.,[8] Of course, this can go too far. For instance, obtaining thousands of domain names made up of common surnames in order to sell them to individuals who might want them, even though some resembled trademarked names, did not constitute bad faith.[9]

Bad Faith Factor 9: “the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous . . . ”

The final factor can show good faith or bad faith and that showing is directly related to the strength of the mark. The stronger the mark, the more likely it is that the defendant knew of the mark and acted in bad faith. Also, the stronger the mark, the more deserving the mark owner is of protection under the ACPA.[10]

But the reverse is true as well: the weaker the mark, the more likely it is that the defendant did not know of the mark and thus made a good faith acquisition of the domain name. This is partly justified by the idea that cybersquatters do not waste their time with weak marks.

Cybersquatting cases are complex cases that require experienced Internet and trademark law experience. If you have questions about ACPA liability, please contact our office.

[1] See BroadBridge Media, L.L.C. v., 106 F. Supp. 2d 505, 511 (S.D. N.Y. 2000).

[2] See Sporty’s Farm L.L.C. v. Sportsman’s Market, Inc., 202 F.3d 489, 499 (2d Cir. 2000).

[3] See e.g., Sporty’s Farm L.L.C. v. Sportsman’s Market, Inc., 202 F.3d 489, 499 (2d Cir. 2000).

[4] See Nissan Motor Co., Ltd. v. Nissan Computer Corp., 2002 WL 32006514 (C.D. Cal. 2002).

[5] See Newport News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423, 437 (4th Cir. 2011).

[6] See e.g., Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003).

[7] See Panavision Intern., L.P. v. Toeppen, 945 F. Supp. 1296 (C.D. Cal. 1996).

[8] See Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996).

[9] See Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999).

[10] See House Judiciary Committee Report on H.R. 3028, H.R. Rep. No. 106-412 p. 13 (October 25, 1999) (“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.”).

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