To drive sales and market share, trademark owners create websites that use their trademarked words or phrases as the internet domain name. However, many times some third person or business has already registered a domain name that is the same as or is very similar to the trademarked word/phrase. If this is done in bad faith and without a legitimate business purpose, this is called cybersquatting. Cybersquatting is banned by the federal Anticybersquatting Consumer Protection Act (“ACPA”) and violates policies established by the international body that governs domain name registrations.

A trademark owner facing this situation has two alternatives — begin litigation in federal court under the ACPA or file a proceeding under the Uniform Domain Name Dispute Resolution Policy (“UDRP”). Filing in federal court has the advantage of allowing a trademark owner to recover money damages, but the process can be slow, cumbersome and expensive. By contrast, a UDRP proceeding can be completed quickly, in as few as 60 days. However, no money damages are allowed.

This article provides information on how to resolve a domain name dispute through a UDRP proceeding. Challenging an infringing domain name registration is almost mandatory under trademark law. Trademark law requires that a trademark owner monitor and police use of the trademark. Allowing another to possess and use an infringing domain name creates a risk that the trademark can be challenged in court and lost. If you are a trademark owner involved in a domain name dispute, you will need to retain an attorney with deep experience in trademark and internet law.

Domain name assignment is accomplished through a private international organization called the Internet Corporation for Assigned Names and Numbers (“ICANN”). For disputes over who has the right to possess and use a domain name, ICANN established dispute resolution procedures. As noted above, these are called the Uniform Domain Name Dispute Resolution Policies. UDRP is applicable to all top level domains (.com, .net, .org, etc.) and to many country code top-level domain names.

Dispute resolution under UDRP is a form of arbitration. This is the reason that a dispute can be resolved quickly. A trademark owner files a written complaint with a UDRP service provider such as the National Arbitration Forum or the World Intellectual Property Organization. ICANN has a list of approved providers here.

When initiating a UDRP complaint, a trademark owner can choose from one to three arbitration panelists and must pay filing fees and some costs upfront. Fees depend on how many panelists are selected. To win its UDRP proceeding, the complainant must prove three legal elements:

• Ownership of a trademark that is the same as the third-party’s domain name or confusingly similar to the domain name
• That the third party has no legitimate interests or rights to the domain name and
• That the domain name was registered and/or used in bad faith

The procedures involve a limited exchange of information between the parties and presentation of evidence before the panel on one or more days. Some of the facts that might be used to prevail in a UDRP proceeding include the following:

• When was the infringing domain name registered?
• Whether the third party made efforts to “blackmail” the trademark owner — offering to sell the domain name to the trademark owner in exchange for money or value
• Extent of the domain name’s use (if any use at all) — non-use is the essence of cybersquatting
• Extent of the legitimate business use of the domain name
• The registration by the infringer of multiple domain names that are similar to the trademark
• Any pattern of similar conduct by the alleged infringer
• And more

If successful, the arbitration panel has the power to cancel or transfer a domain name registration to the claimant. However, as noted, the panel does not have the power to award any sort of money damages or attorneys’ fees. 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.

UDRP Three-Element Test in Detail

To prevail in a UDRP proceeding, a trademark owner must prove three elements by a preponderance of the evidence: first, the disputed domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; second, the registrant has no rights or legitimate interests in respect of the domain name; and third, the domain name has been registered and is being used in bad faith. All three elements are required; failure on any one results in dismissal of the complaint.

The first element is typically straightforward when the domain name incorporates the trademark verbatim. Confusing similarity is established when the domain name differs from the mark only in ways that are unlikely to reduce consumer confusion—adding or subtracting generic words, misspelling the mark (typosquatting), adding a country code or generic top-level domain, or hyphenating the mark. Panels have consistently held that the .com extension is ignored when assessing similarity.

Establishing Bad Faith Registration and Use

Bad faith under the UDRP is defined non-exhaustively in paragraph 4(b) of the Policy, which lists four circumstances that constitute bad faith: registering the domain to sell it to the trademark owner at a price exceeding out-of-pocket registration costs; registering the domain to prevent the trademark owner from registering it, as part of a pattern of such conduct; registering the domain primarily to disrupt the business of a competitor; and using the domain to intentionally attract consumers for commercial gain by creating confusion as to the source or affiliation of the website.

Panels have expanded the concept of bad faith beyond these four categories. Passive holding—maintaining a domain name that incorporates a well-known trademark without actively using it for any legitimate purpose—can constitute bad faith if the respondent could not have been unaware of the complainant’s mark at the time of registration. This theory has been applied frequently against registrants who register famous marks with no plausible legitimate use.

Respondent Defenses: Rights and Legitimate Interests

The second UDRP element—absence of rights or legitimate interests—is one area where respondents frequently mount successful defenses. The Policy identifies three safe harbors: using the domain in connection with a bona fide offering of goods or services before receiving notice of the dispute; being commonly known by the domain name; and making legitimate noncommercial or fair use without intent to mislead consumers or tarnish the trademark. An authorized dealer, a reseller who operates a genuine service center, or a critic who runs a gripe site using the brand name may have a legitimate interest that defeats the complaint.

UDRP panels do not have authority to determine whether a respondent’s use constitutes trademark infringement under applicable national law. A complainant who loses a UDRP proceeding because the panel finds a colorable legitimate interest must then pursue litigation in the relevant national court. Courts in the United States can also review UDRP decisions and are not bound by the panel’s findings.

ACPA Litigation as an Alternative or Supplement

The Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), allows trademark owners to sue domain registrants in federal court or to file an in rem action against the domain name itself in the district where the registrar is located if the registrant cannot be located or served. ACPA remedies include transfer or cancellation of the domain name, actual damages, and statutory damages of $1,000 to $100,000 per domain name at the court’s discretion. Unlike UDRP, ACPA litigation can also address situations where the domain registrant has already transferred the domain to a third party, which a UDRP panel cannot reach.

Companies facing sophisticated or large-scale cybersquatting—registrants who hold dozens of infringing domains, criminals who use infringing domains for phishing, or foreign registrants who are difficult to reach—should evaluate whether ACPA litigation provides stronger remedies than a UDRP proceeding.

If you are a trademark owner dealing with a cybersquatter or need to protect your brand across the internet, contact the trademark and internet lawyers at Revision Legal at 231-714-0100.