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November 16, 2017

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Cybersquatting

November 16, 2017

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Cybersquatting

November 16, 2017

Whether you call it a domain name, a URL or a web address, it’s often one of a business’s most valuable intangible assets. Domain names are bought and sold for millions of dollars. The law concerning domain names is still relatively new. While there is substantial overlap with trademark law, in some respects domain names can be regarded as a unique class of intellectual property all their own.
 

The worldwide Domain Name System (DNS) is governed by standards and protocols developed and maintained by the International Corporation for Assigned Names and Numbers (ICANN), formerly a department of the United States government but now an independent non-profit with input from a variety of global stakeholders. The Domain Name System effectively creates a directory associating certain names with server locations on the Internet. Web browsers and other software access this directory to help users find websites.
 

The Domain Name System is split into various Top-Level Domains (TLDs), which are managed by organizations called registries, licensed by ICANN. TLDs include the handful of three-letter codes that have traditionally dominated the Internet, such as the ubiquitous .com. They’ve also long included the two-letter “country code” domains like .us and .uk. A few years ago, though, the universe of TLDs was dramatically expanded and now includes a list of over 1,500 top-level codes, from industry-specific TLDs like .law (available exclusively to licensed attorneys) to more whimsical options like .ninja and .pizza.

 

Assignment of second-level domain names within a top-level domain is generally subcontracted to businesses called registrars. Website owners register their domain name(s) with an authorized registrar, who then makes sure that the TLD registry is updated accordingly. Therefore, you can think of a domain name as more of a contractual right rather than as intellectual property. It arises from a private agreement between a registrar and a registrant to keep a particular entry in the DNS pointing to a particular location on the Internet.

 

Yet, from the beginning, it was recognized that the Domain Name System had major trademark implications. In the early years of the Internet, it was commonplace for speculators to register domains incorporating well-known brands in the hopes of ransoming the registration once the brand owner woke up to the necessity of having a website. This practice, which became known as cybersquatting, didn’t fit well within the framework of traditional trademark infringement, which by definition is premised on commercial use of a mark as a designation of origin. Courts were understandably inclined to view domain names more like street addresses or phone numbers rather than as marketing materials. Registration of a name in the DNS, without more, just didn’t seem like trademark usage.
 

Still, it didn’t sit right with brand owners. In 1999, the U.S. passed an amendment to the Trademark Act called the Anticybersquatting Consumer Protection Act. This created a new cause of action allowing trademark owners to sue someone who registers a domain name incorporating their mark or a similar mark, regardless of whether there is a likelihood of confusion, if the domain registrant acted in bad faith.
 

Around the same time, ICANN decided to address the problem as well. Through its contracts and subcontracts with domain name registries, registrars and, ultimately, registrants, it created a process called the Uniform Domain-Name Dispute Resolution Policy (UDRP). The UDRP created a tribunal, which holds arbitration-like proceedings to determine whether a registrant’s domain name should be turned over to a third-party petitioner. Thus, trademark owners now have two parallel tracks on which to confront domain name issues. Each has its own advantages and disadvantages.
 

The elements of a UDRP complaint are similar to a federal cybersquatting lawsuit under the Trademark Act. The petitioner must show that they (1) have a valid trademark; (2) the registrant’s domain name is confusingly similar; (3) the registrant does not themselves have any trademark rights in the name; and (4) the domain name was registered in bad faith. It’s this “bad faith” element that differentiates a cybersquatting claim from a vanilla trademark infringement claim. The classic example, of course, is registering a domain name in order to sell it back to a brand owner at an extortionate price. However, both U.S. courts and UDRP cases have expanded it to encompass a broad variety of motives, such as redirecting traffic to a competitor’s website.
 

More recently, a similar cybersquatting problem has arisen with respect to social media accounts. Since the 1999 Trademark Act amendment dealt specifically with domain names and ICANN has no relationship with social media platforms, neither a federal cybersquatting claim nor a UDRP proceeding will resolve such brandjacking. Trademark owners can resort to traditional trademark infringement theories in these cases, but, in addition, companies such as Twitter and Facebook generally incorporate rules on use of third-party trademarks into their Terms of Service and may have internal procedures for addressing the concerns of trademark owners.
 

If you have questions about domain names, trademarks or otherwise protecting your intellectual property online, give us a call at 831-275-1401 or shoot us an email at info@knowmad.law. We’d be happy to discuss.

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