Cybersquatting: What it is and what you can do if someone cybersquats on your trademark

Cybersquatting is the practice of registering Internet domain names that incorporate, suggest or are confusingly similar to registered trademarks owned by other companies or individuals. The purpose of cybersquatting is generally to seek a payout from the trademark owner well in excess of the cost to register the domain name, banking on the trademark owner’s eventual desire to have its website accessible through the purchased domain(s).

Since 1999, the Anti-Cybersquatting Consumer Protection Act (“ACPA”) has protected trademark owners against cybersquatting by providing express remedies against bad faith cybersquatters, including both damages and transfer of the domain name(s) in question. In addition, the international Uniform Domain Name Resolution Policy (“UDRP”) provides a less costly, more efficient cybersquatting dispute resolution platform, but it provides only for dispossession and transfer of the offending domain names. While the ACPA is a federal statute of the United States, the UDRP is binding on all domain name registrants as part of the agreement required in order to acquire a domain name from ICANN. For these and a variety of other reasons, UDRP actions are often the preferred means for trademark owners seeking to acquire domain names from cybersquatters.

Two recent high-profile cases illustrate the effectiveness of claims brought under the UDRP. In late 2009, Apple, Inc. filed UDRP complaints against an individual who had registered several domain names incorporating Apple’s trademarks, including macbookpro.us, macbook.us, macfriend.com, blueipod.com, and iphonetoys.com. Two months later, the forum assigned to arbitrate the dispute ordered that the domain names be transferred to Apple, Inc. In reaching its decision, the forum noted that the individual sold advertising to Apple’s competitors at the domain names, and thus profited from the market confusion created by his use of the domains.

A year earlier, another individual, who had registered the domain names caesarstower.com, caesarstowers.com, caesarspalacetower.com, caesarspalacetowers.com, and caesarspalacetowerslasvegas.com, lost in a UDRP action filed by the owner of the Caesar’s Palace hotel and casino in Las Vegas. In that case, the domain name registrant failed to file a response to Caesar’s Palace’s complaint, and accordingly Caesar’s Palace was entitled to a presumption that the registrant “lacked all rights and legitimate interests in the disputed domain name[s].” Conducting its own examination, the arbitration panel concluded that the registrant was not making a valid, bona fide use of the domain names, and ordered their transfer to Caesar’s Palace. The forum’s decision was rendered only three months after the original complaint was filed.

As these cases show, where a trademark owner has a strong claim for cybersquatting, UDRP actions can be efficient and straight-forward mechanisms for acquiring domain names from bad faith registrants. Aware of this fact, many cybersquatters will offer to sell their domain names to trademark owners for slightly less than the UDRP filing fee, hoping to coerce a buyout knowing full well that their conduct is illegal. In this situation, the trademark owner must decide whether to take the buyout—which has its own risks of non-delivery—or pay the marginally higher cost to seek an order under the UDRP compelling transfer of the domain.

Trademark owners must work diligently to monitor, protect and enforce their rights in their intellectual property. This includes taking action against cybersquatters. By acting swiftly to combat illegitimate uses of their brand names, trademark owners can put themselves in the best position possible to maintain their exclusive rights and control use of their trademarks on the Internet.