Cybersquatting, you may recall, is the practice of registering domain names with the idea of selling them to interested parties. Standing alone, the practice essentially is harmless. After all, if someone thinks of a clever domain name and pounces on it, good for him. He or she has created a better mousetrap, of sorts.
When the Internet was new—the Wild, Wild West—enterprising Web geeks had the foresight to realize that some day, for example, a large hotel chain would want to utilize LargeHotelChain.com for online reservations. So, they would register domain names that matched the trade names of huge companies, engineering a sort of Internet ransom. The belief was they could sell the domain names to the companies for a handsome profit—one less than what those companies would shell out in legal fees to wrest the names from the registrants, which at that time was difficult.
If, for example, prior to 2001—when American Airlines acquired Trans World Airlines—United Airlines had secured TWA.com and redirected it to United’s reservations site, it clearly would have constituted trademark infringement (something called “initial interest confusion”) because the two airlines were competitors.
However, had someone registered TWA.com and used it for Tom’s Washington Apples, it would not be trademark infringement. Rather, it would be considered the newly emerging notion of trademark dilution, which was around in a handful of states for some years and enacted into federal law in the Federal Trademark Dilution Act of 1995. Tom would have had a fair shot at arguing that his apple business had as much right to use the acronym as the airline did—and, indeed, today he still may have an argument.
The difference rests in Tom’s motive when he registered TWA.com. If Tom’s Washington Apples was an existing mail-order apple business regularly using TWA initials and wishing to expand to the Internet, why couldn’t Tom use TWA as a domain name? On the other hand, if Tom’s intent had been to capitalize on people seeking airline reservations, then that is what trademark dilution is all about. If Tom’s apple business had been just a sham, and his real intent had been just to garner a pocketful of cash from an airline, that is considered cybersquatting. Tom may think it would be only fair for him to profit from his vision that the airline eventually would be in desperate need of TWA.com for its online reservation system. The airline and other large companies, however, think otherwise: Tom should not be allowed to capitalize on the millions they have spent on promotion.
Trademark owners won out in 1999, when Congress enacted the Anticybersquatting Consumer Protection Act. This new law gave owners of trademarks a weapon against cybersquatters. Clearly, under the act, had Tom registered TWA.com with the intent to hold it for ransom, he would be cooked. The act allows the owner of a mark to bring what is called an “in rem” action against the domain name, meaning that it is irrelevant where the cybersquatter is located. The act allows a court order either canceling the domain name or transferring it to the owner of the mark.
The act also allows relief where the registration is in “bad faith” and includes a laundry list of equitable factors to guide courts in deciding whether “bad faith” exists. Generally, the factors include what you may imagine: Does the airline have trademark rights in TWA? Does Tom? To what extent has Tom used TWA? To what extent was Tom out to divert the airline’s customers? Was Tom out to sell the name to the airline in the first place? Did Tom suspiciously register many other domain names? You get the idea.
The law has been used extensively since 1999. Perhaps the most amusing example was in People for the Ethical Treatment of Animals v. Doughney. As it boasts on its website: “Founded in 1980, [People for the Ethical Treatment of Animals] is dedicated to establishing and protecting the rights of all animals. PETA operates under the simple principle that animals are not ours to eat, wear, experiment on, or use for entertainment.” Obviously someone among the ranks of those who believe that PETA is a little off the wall, an enterprising soul named Michael T. Doughney in 1995 registered PETA.org and built a website called People Eating Tasty Animals, which he touted as a “resource for those who enjoy eating meat, wearing fur and leather, hunting, and the fruits of scientific research.” PETA, of course, was less than thrilled. Now, putting aside the obvious free speech implications of what Doughney did—which the 4th U.S. Circuit Court of Appeals, as it often does with free speech claims, rejected—it is procedurally significant that PETA was able to invoke the anticybersquatting act, notwithstanding the fact that Doughney’s registration of PETA.org predated it. The court considered all of the circumstances (such as the surfeit of other domain names Doughney also registered in 1995) and found that Doughney indeed had engaged in cybersquatting, thereby ordering PETA.org be transferred to PETA. However, Doughney was let off the hook for the more than $276,000 in attorneys’ fees sought by PETA—but apparently only because the court found that he had a good-faith belief that he had a free speech right in his registration and use of PETA.org.
The act has not entirely accomplished its purpose in doing away with cybersquatting. Just look at all the domain names that are for sale (DomainTools.com, DomainSurfer.com, and DomainSearch.com). However, the legislation certainly has given owners of trademarks a useful tool in garnering the domain names to which they are entitled. A few law firms (including this author’s) have developed a “cookbook” approach to attacking cybersquatters, so that effort can be done efficiently—even for situations in which the cybersquatters are unreachable, such as being overseas or without sufficient funds to pay attorneys’ fees.
Clyde DeWitt is a Los Angeles attorney whose practice has been focused on adult entertainment since 1980. He can be reached through AVN Online’s offices, or at [email protected]. Readers are considered a valuable source of court decisions, legal gossip, and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
