Article Title: Fighting Back on the Internet: a Primer on the Anticybersquatting Consumer Protection Act

• Jurisdiction: United States,Federal
• Citation: Vol. 2001 No. 11 Pg. 11-2
• Pages: 11-2
• Publication year: 2001

Utah Bar Journal Volume 11.

11-2 (2001). Article Title: Fighting Back on the Internet: A Primer on the Anticybersquatting Consumer Protection Act

November, 2001

Article Title: Fighting Back on the Internet: A Primer on the Anticybersquatting Consumer Protection Act

Author: Justin T. Toth

Article Type

Article

Article

Your client, ABC Drug Company ("ABC Drug"), a nationally recognized producer of a variety of pharmaceuticals, comes to you with peculiar problem. Several years ago, ABC Drug created a web site using the domain name "www.abcdrug.com," which provides doctors and the general public with a variety of information on diseases developments in drug therapy, and general information about ABC Drug. The web site has been quite successful, generating more than 10,000 hits per day. Several weeks ago, the General Counsel of ABC Drug received a letter from an individual in the United Kingdom stating that the individual had registered the domain names "abcdrug.net," "abcdrug.biz," "abcdrugcompany.com" and "abc-drug.com" with an U.S.-based domain name registry. In addition, ABC Drug has learned that the individual has registered the domain name "aventia.com," which just happens to be the name of ABC Drug's newest and most promising pharmaceutical drug for treating Alzheimer's disease. For a substantial fee the person is willing to transfer the domain names using "ABC Drug" back to your client. Otherwise, the individual intends to begin using some of the names for her own purposes, sell them to ABC Drug's competitors, or create an "anti-ABC Drug" web site. How can you help your client regain control of its name and rights without paying the demanded ransom?

The Internet and the Changing Nature of Trademark Protection

Stated simply, the Internet and the exploding growth of the World Wide Web (the "Web") permanently changed the nature of intellectual property law. The Web posed a series of new problems, including the nature of Web search engines, domain names, HTML code and a variety of other nuances never contemplated by prior laws. During the 1990's, the U.S. Congress and other organizations struggled to catch up with the ingenuity of those determined to profit from the wrongful exploitation of others' intellectual property on the Web.

Prior to 1995, the Lanham Act(fn1) offered the primary remedy for those whose trademarks were infringed on the Web. Under the Lanham Act, a trademark holder must show that (1) it has rights in the trademark and (2) that the unauthorized use of the trademark by another in commerce will likely cause consumer confusion, deception or mistake.(fn2) The Lanham Act's standards are not necessarily difficult to apply to another competitor using the marks to provide similar services. The Web, however, spawned the ubiquitous "cybersquatter" - an individual less interested in offering similar goods in commerce than simply extorting payments for the potential value of a domain name. Thus, the very nature of cybersquatting frequently made it impossible to prove several elements of the prima facie Lanham Act case: the cybersquatter was neither using the name in commerce nor seeking to market similar goods. Instead, he or she simply wanted payment for the domain name. Commerce and communication on the Web made application of the Lanham Act inconsistent and, to a large degree, ineffective.(fn3)

In 1995, Congress passed the Federal Trademark Dilution Act ("FTDA")(fn4) which, at the time, was regarded as a superior means to combat cybersquatting and trademark infringement.(fn5) Unfortunately, as noted by numerous commentators and courts, the FTDA suffered from its own shortcomings.(fn6) The FTDA lacked clear statutory definitions of such fundamental concepts as "dilution," leaving the circuits to engage in a conflicting set of interpretations regarding (1) which marks deserved protection and (2) what conduct constituted a violation of those marks.(fn7 )Moreover, the FTDA applies only to "famous" marks, requiring the mark holder to prove the "famous" nature of its mark.(fn8) And, perhaps most glaringly, the FTDA did not directly address "cybersquatting" or provide for any penalty for such behavior. As one commentator bluntly put it, "the once wildly celebrated FTDA turn[ed] out to lack much luster."(fn9)

The Anticybersquatting Consumer Protection Act

President Clinton signed the Intellectual Property and Communications Omnibus Reform bill (the "Bill") into law on November 29, 1999. The Bill included a new law entitled the Anticybersquatting Consumer Protection Act ("ACPA"),(fn10) which had been cosponsored, in part, by Senator Orrin Hatch.(fn11 )The legislative purpose behind the ACPA was "[t]o protect consumers and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners by prohibiting bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks - a practice commonly referred to as "cybersquatting.'"(fn12) "Cybersquatting" is the practice of registering well-known brand names as Internet domain names in order to force the rightful owners of the marks to pay for the right to engage in electronic commerce under their own brand name.(fn13) In doing so, the ACPA drafters intended to remedy "the perceived shortcomings of applying the [FTDA] to cybersquatting cases."(fn14 )The ACPA adds both a new cause of action and a new injunctive remedy against cybersquatters.(fn15)

Under the ACPA, a person is liable for civil damages if they (1) register, use or traffic in a domain name that is (2) identical or confusingly similar to (3) a distinctive or famous mark owned by the plaintiff, and (4) the person has a "bad faith intent to profit" from such activity.(fn16) As a remedy against cybersquatters, the ACPA is much better tailored than either the Lanham Act or the FTDA. Unlike the FTDA, the ACPA contains no requirement that the plaintiff prove "dilution" of an existing famous mark. The ACPA also adds a unique in rem jurisdiction provision to give domestic plaintiffs the ability to obtain control over their marks against international, or absentee, defendants who would be beyond the reach of U.S. courts. Each of these aspects of the ACPA is addressed below.

1. Register, Use or Traffic in a Domain Name

This standard broadens the traditional definition of a cybersquatter, which initially addressed the individual who simply registered domain names with trademarks for the purpose of selling them to the trademark holder (or its competitors).(fn17) The ACPA's definition includes persons who "register, use or traffic" in domain names. Thus, even the act of registering a domain name can give rise to liability if the other prima facie elements are present. For example, a person who "warehouses" the domain names of various companies (i.e. registers the domain names and pays the required registration fee), but otherwise takes no action with respect to the names, may be liable under the ACPA. Likewise, an individual who uses a domain name containing trademarks by establishing a website to compete with, or criticize, the trademark holder may also run afoul of the ACPA.(fn18 )Finally, the ACPA still includes the more traditional definition of cybersquatting - those who "traffic" in domain names containing trademarks of others. In sum, a variety of conduct using domain names containing others' trademarks can result in liability under the ACPA.

2. Identical or Confusingly Similar

Although the term "confusingly similar" is not defined by the ACPA, at least one commentator has suggested that "[t]he plain language of the statute suggests a simple, direct comparison between the trademark and the domain name."(fn19) This is a different and presumably...