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Client Alert - The Anticybersquatting Consumer Protection Act

1999

Trademark owners whose valuable Internet addresses are held for ransom by cybersquatters now can bring a U.S. federal lawsuit under the Anticybersquatting Consumer Protection Act, signed by President Clinton on November 29, 1999.

Cybersquatters have routinely registered others' trademarks as part of domain names for the minimal $70 registration fee for two years. Then, they would seek large amounts of money to turn the domain names over to the rightful owners.

Until now, the remedies available to trademark owners were unclear. However, the new U.S. anticybersquatting law, which creates a Section 43(d) to the U.S. federal trademark law known as the Lanham Act, provides trademark owners with strong rights against those who in bad faith register or traffic in domain names that are identical or confusingly similar to distinctive trademarks or dilute the distinctiveness of those marks considered famous.

In an attempt to strike a balance between cybersquatters and those who legitimately use names and marks as domain name addresses, the Act provides a list of factors, which is not all inclusive, to identify domain name owners acting in "bad faith." The most obvious among them is whether the domain name owner has offered to sell the domain name to the mark owner for financial gain without having used the domain name itself, or whether the domain name owner has a history of trafficking in domain names. Additional factors include whether the domain name owner's intent is to divert consumers from the trademark owner's online location to a site that could harm the goodwill of the trademark owner for commercial gain with the intent to tarnish or disparage the mark, or whether the domain name owner has provided material and misleading false contact information when applying for the domain name.

However, to protect those legitimately using certain domain names, the Act instructs courts to look to whether the domain name owner has its own separate trademark or other intellectual property rights in the domain name, uses a legal name or nickname identical to that registered, has used the domain name in the past in connection with a legitimate business, or has a bona fide non-commercial use, such as a First Amendment right of free speech, to keep the domain name.

Perhaps the most potent weapon contained in the new law is the provision for a trademark owner to obtain statutory damages of up to $100,000 per domain name for cybersquatting violations that occurred after enactment of the Act.

As is true in standard U.S. trademark infringement actions, the owner may obtain injunctive relief and actual damages. However, under the new law, the trademark owner may elect to forego actual damages and profits and pursue an award of not less than $1,000 and not more than $100,000 in statutory damages.

The Act further provides relief against those domain name registrants whose locations are uncertain or are not subject to the jurisdiction of any United States federal court. The Act creates an in rem action against the domain name itself in the U.S. judicial district where the domain name is registered with a registrar. A trademark owner may sue to obtain the domain name under this provision as long as the trademark owner shows that the domain name registrant is not subject to personal jurisdiction in the United States, that is, it does not do business here, or that the trademark owner has used due diligence to locate the domain name registrant by, for example, sending notice of the violation of the Act to the e-mail and postal addresses of the domain name registrant. Here, the trademark owner's remedies are limited to obtaining the domain name, and the owner cannot seek damages from the domain name registrant.

Finally, the Act provides relief to individuals whose personal names have been similarly registered by cyber pirates. An individual whose name or a confusingly similar name has been registered as a domain name by another can sue under the Act to cancel or obtain the domain name if the domain name owner intended to profit from the name by selling the domain name to the individual or a third party.

Our firm has extensive experience representing trademark owners in Internet-related intellectual property transactions, disputes and litigations. Should you have any questions regarding the new anticybersquatting law, or other Internet-related matters, please contact us.

For the full text of the Act, click here thomas.loc.gov.

Copyright 2000, Cowan, Liebowitz & Latman, P.C.

For more information, please contact Deborah K. Squiers.

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