by Richard Keyt, Domain Name Law attorney
What is the ACPA?
The Anticybersquatting Consumer Protection Act is a federal law that took affect on November 29, 1999. This new domain name dispute law is intended to give trademark and service mark owners legal remedies against defendants who obtain domain names “in bad faith” that are identical or confusingly similar to a trademark or service mark. If a mark is a famous mark, the same remedies are available if the domain name is identical to, confusingly similar to or dilutive of the mark.
What Must a Mark Owner Show to Win a Case of Cybersquatting?
The plaintiff must prove the following elements:
- The defendant has a bad faith intent to profit from that mark, including a defendant name which is protected as a mark;
- The defendant registers, traffics in, or uses a domain name that — (I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark; (III) is a trademark, word, or name protected by reason of 18 U.S.C. § 706 (the Red Cross, the American National Red Cross or the Geneva cross) or 36 U.S.C. § 220506;
- (II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or
- The key element that must be proven is that the defendant has a “bad faith intent to profit from the mark.” ”Traffics in” refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.
What is Bad Faith Intent to Profit from a Mark?
The ACPA gives the court some guidance to assist it in determining if the requisite bad faith exists. In determining if the defendant has bad faith, the court may consider the following non-exclusive factors:
- the trademark or other intellectual property rights of the defendant, if any, in the domain name;
- the extent to which the domain name consists of the legal name of the defendant or a name that is otherwise commonly used to identify the defendant;
- the defendant’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
- the defendant’s bonafide noncommercial or fair use of the mark in a site accessible under the domain name;
- the defendant’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
- the defendant’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bonafide offering of any goods or services, or the defendant’s prior conduct indicating a pattern of such conduct;
- the defendant’s provision of material and misleading false contact information when applying for the registration of the domain name, the defendant’s intentional failure to maintain accurate contact information, or the defendant’s prior conduct indicating a pattern of such conduct;
- the defendant’s registration or acquisition of multiple domain names which the defendant knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and
- the extent to which the mark incorporated in the defendant’s domain name registration is or is not distinctive and famous within the meaning of Section 1125(c)(1) of the Lanham Act.
Bad faith intent will not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.
What’s the Quickest & Easiest Way for Domain Name Owner to Lose an ACPA Lawsuit?
If the domain name owner, including a domain name owner that may not otherwise be liable under the ACPA, offers at any time to sell or transfer the domain name for value, most courts will find that the owner has acted in bad faith and if the other elements of the case are proven, the plaintiff will win.
Another easy way for the plaintiff to prevail is if the domain name owner supplied material misleading contact information on the domain name registration application or if the defendant intentionally fails to maintain accurate contact information with the domain name registrar. Because of this bad faith factor, it is important for all domain name owners to check their domain name registrations at their registrars Whois database to determine if the contact information is correct. See Who Owns Your Domain Name and Who Controls Your Domain Name.
What Remedies May be Granted by the Court for Violations of the Act?
The Act authorizes a court to order the forfeiture or cancellation of a domain name or the transfer of the domain name to the owner of the mark. In lieu of actual damages, the plaintiff may elect statutory damages and the court has discretion to award damages of not less than $1,000 and not more than $100,000 per domain name, as the court considers just. 15 U.S.C. § 1117(d).
An infamous cybersquatter named John Zuccarini lost an ACPA lawsuit in October of 2000, when the court awarded the plaintiff statutory damages of $500,000 for each of five domain names that were obtained in bad faith and that were confusingly similar to the plaintiff’s trademark. The court also ordered Mr. Zuccarini to pay attorneys’ fees of more than $30,000. See Electronics Boutique Holdings Corp. v. Zuccarini.
What if the Domain Name Owner Cannot be Found
If the owner of a domain name cannot be found and served with a summons and complaint, the trade mark owner may bring an “in rem” action against a domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located if (i) the domain name violates any right of the owner of a mark registered in the Patent and Trademark Office, or protected under subsections (a) or (c) of Section 1125; and (ii) the court finds that the owner (I) is not able to obtain in personam jurisdiction over a person who would have been a defendant in a civil action; or (II) through due diligence was not able to find a person who would have been a defendant in a civil action.
What Remedies are Available in an In Rem Lawsuit?
The remedies in an in rem action for cybersquatting are limited to a court order for the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark. Money damages are not available.
Is the ACPA the only Weapon Available to Trademark Owners in the War Against Cybersquatters?
No. Trademark owners may also elect to file a complaint under ICANN’s Uniform Dispute Resolution Policy. The UDRP is a fast-track procedure under which a victorious trademark owner receives an order from an arbitration panel that the domain name be cancelled or transferred the trademark owner. See ICANN’s Uniform Domain Name Dispute Resolution Policy FAQ
When Would a Trademark Owner Sue Under the ACPA Instead of Filing a UDRP Complaint?
In general, a trademark owner will sue under the ACPA when the trademark owner seeks any remedies in addition to canceling or transferring the domain name. For example, if the trademark owner seeks money damages in addition to the domain name, the mark owner must bring an ACPA lawsuit. Another reason to use the ACPA is to avoid the time and expense of a UDRP action when the trademark owner suspects the cybersquatter would “appeal” the results of the UDRP action. After an adverse ruling in a UDRP action, the cybersquatter has ten days within which to bring a lawsuit to prevent the transfer or cancellation of the domain name. If you think the cybersquatter will challenge an adverse UDRP ruling, it makes sense to skip the procedure and go straight to court.
What’s the Downside to an ACPA Action?
An ACPA action is a lawsuit, which means that it will be costly and take a lot of time unless the defendant defaults. Whenever you litigate, there is also the risk that you may lose.