The Anticybersquatting Consumer Protection Act: two cases addressing cybersquatting before and after the act.
"No, I'm not. Nothing I've done is illegal under the federal trademark laws," replied Toeppen. "I registered the domain name `intermatic' first, and because only one person may register a domain name on the Internet, I have the right to use the domain name `intermatic' even though you have registered it as a trademark. However, I would consider selling or licensing the domain name `intermatic' to you."
Who has superior rights to the "intermatic.com'" domain name?
"Let's sue the trademark owner of `sporty's' and get a court determination that we own the domain name registration rights to `sportys.com'," said the CEO of Sporty's Farm. "After all, we were first to register `sportys.com.' Also, the Anticybersquatting Consumer Protection Act does not apply to us because our registration of the domain name took place prior to the Act's passage."
Is this correct?
As the commercial sector of the economy embraces the Internet, businesses are coming to realize the importance of trademarks as domain name identifiers -- Internet addresses -- which can direct prospective customers to the correct website where a business' wares or services can be viewed. Simply put, many consumers assume that businesses' trademarks such as "disney" are the Internet addresses of their trademark owners. Unfortunately for many businesses, this is not the case given the advent of "cybersquatting."
The above scenarios present "cybersquatting" incidents, involving competing claims for the right to a unique Internet domain name between a valid trademark holder versus a first in time registrant (the "cybersquatter") of that mark or a similar mark as an Internet domain name, often coupled with the squatter's attempt to traffic in the domain name by selling or licensing it to the trademark owner or a third party.
There have been a number of cases both prior and subsequent to passage of the Anticybersquatting Consumer Protection Act (hereinafter "act") on November 29, 1999. Generally, the courts have sided with the prior valid trademark registrant and allowed this party to prevail with respect to the right to register the identical or similar name as an Internet domain name even though someone else (a "cybersquatter") was first in time to register the name as an Internet domain name. Nonetheless, there have been concerns expressed about protecting persons who are first registrants of domain names which coincidentally bear a resemblance to or are identical to someone else's trademark.
The act deals with the general topic of "cyberpiracy," a term which given the act's coverage embraces both competing domain name claimants between trademark holders and first in time registrants of the other's trademark (generally referred to as "cybersquatting") as well as first in time domain name registrants of another individual's name to whom it is offered for financial gain. This article first examines some of the abuses leading to passage of the act, discusses principal provisions of the act dealing with cyberpiracy, and finally turns to an examination of two cases showing cybersquatting problems as noted at the outset of this article, one involving a cybersquatting matter in which the court did not rely on the ACPA to dispose of the case, while the other case flows from a recent U.S. Second Circuit Court of Appeals decision applying the new act.
Some Incidents Leading to Passage of Act
Hearings before both the Senate and House committees that considered the act reveal a number of activities involving Internet domain name registrations that could charitably be called "opportunistic" and critically termed "piracy." For example, it was revealed that when Exxon and Mobil announced their proposed merger in December 1998, a domain name speculator registered"every variation of the possible resulting domain name, i.e., mobil-exxon.com, exxon-mobil.com, mobil exxon, com, etc., ad infinitum." Further, a London-based computer club in May 1999 registered over 75,000 domain names using an automated computer program. Their apparent goal was to gain control of all available four letter domains by systematically reserving every possible combination of letters, starting with aaaa.com, then aaab.com up to zzzz.com so no one else could obtain these domains unless they purchased them from the group.
In addition to cornering the market in domain names, government reports revealed other serious domain name abuses. Some cybersquatters were seen to target trademarked brand names in order to extract high fees from trademark holders desiring to use their own names in Internet commerce. In this respect, it is quite common for a brand name such as "cocacola" to want to use it as its Internet url (address) because persons trying to locate "cocacola" intuitively use such trademarked names as a first attempt to locate the company's web page. Given the move to the Internet by traditional "bricks and mortar" companies in order to transform themselves into "clicks and mortar" firms with enhanced longevity, the need for consumer-friendly intuitive access to the Internet is a must for businesses. Traditional "bricks and mortar" firms have admittedly been a bit slow in adapting to the Internet and often find their trademarked names or corruptions thereof pre-empted by cybersquatters who are willing to part with big firms' trademarks for a "pretty penny." In one instance a small Canadian company with one shareholder and a couple of dozen domain names demanded that Umbro International, Inc., which markets and distributes soccer equipment, pay $50,000 to the one shareholder, $50,000 to an Internet charity, and provide a free lifetime supply of soccer equipment in exchange for the "umbro.com" domain name.
Warehousing of domain names has become common. This involves registering a large number of domain names and offering them to the highest bidder. There was evidence before the Senate Judiciary Committee of one cybersquatter (not an owner of any of the trademarks registered as domains) whose partial inventory of domain names included Coca-Cola, Pepsi, Burger King, KFC, McDonald's, Subway, Taco Bell, Wendy's, BMW, Chrysler, Dodge, General Motors, Honda, Hyundai, Jaguar, Mazda, Mercedes, Nissan, Porsche, Rolls-Royce, Saab, Saturn, Toyota, and Volvo. These domain names were offered to the highest bidder online. Again, the fact that a cybersquatter was able to preempt trademark owners from registering their own trademark as a domain reflects the slowness of "bricks and mortar" firms in responding to the Internet phenomenon.
Some cybersquatters simply seek to engage in a type of unfair competition by registering a famous trademark and then directing business to the cybersquatter by creating the erroneous consumer impression that the famous mark is in some way associated with or endorsing the cybersquatter's business. In one case cited by the Senate Judiciary Committee the domain name "disneytransportation.com" greeted online consumers with pictures of Mickey Mouse and offers of Orlando, Florida, shuttle service and Disney hotel reservations even though it was in no way associated with the Walt Disney Company.
Perhaps the most pernicious form of cybersquatting involves use of pornography. There are variants on the techniques used here. For example, a cybersquatter can register a famous mark, place pornographic materials at the site, and then offer to sell the domain name to the highest bidder, where presumably the mark owner would be most interested in seeing that its mark was not associated with lewd material. In one case a cybersquatter placed pornographic pictures of celebrities on a site using the domain name "pentium3.com" and offered the site to the highest bidder. Also, pornography can play a part in corruptions of famous marks such as "dosney.com" instead of"disney, com" based on human propensity to strike the wrong key on a keyboard. By adding pornography on the corrupted site where revenue for the site is based on the number of"hits," the valid mark is tarnished.
The aforementioned machinations of cybersquatters were all cited by congressional authorities as reasons for regulating cybersquatters.
Principal Provisions of Act
Given the aforementioned concerns leading to passage of the act, attention turns to a consideration of the act and its major provisions. The act is a small part of an appropriations measure enacted by Congress in late 1999. The act amends the Trademark Act of 1946 by adding a new subsection d. As the act's name suggests, it casts an unfavorable eye on cybersquatters. It does so by allowing a federal trademark holder to sue persons who, with "bad faith intent" to profit from the mark, registers, trafficks in, or uses a domain name that, in the case of a distinctive mark at the time of the domain name registration, is identical or confusingly similar to the mark. The act defines domain name and adopts the meaning of "Internet" contained in the Communications Act of 1934. Both in personam and in rem actions are permitted to address cybersquatting.
In Personam Actions Against Cybersquatters
The act allows trademark holders to sue civilly one who in "bad faith" registers, trafficks in, or uses a domain name that falls into either of two categories: a distinctive mark or a famous mark. In the case of a distinctive mark, the mark must be distinctive at the time of registration of the domain name and be identical or confusingly similar to the distinctive mark. By contrast, if the mark is a famous mark, it must be famous at the time of registration of the domain name and be identical or confusingly similar to or dilutive of the famous mark. The act thus recognizes that a mark does not necessarily have to be famous, but, rather, can be merely distinctive to be the subject of cybersquatting. In creating these two categories of marks that can be the subject of cybersquatting the act thus covers both regular trademarks that are "merely distinctive" and thus registerable as traditional trademark as well as those that are famous and benefit from protections of the Federal Trademark Dilution Act amendments to the Trademark Act.
The act further permits a civil suit against those who with bad faith intent register, traffic in, or use a domain name that is a trademark, word, or name protected by federal law making the unauthorized use of the Red Cross designation a misdemeanor or that is protected by the U.S. Olympic Committee from unauthorized use of its rights to seals, emblems, and badges bearing various of its marks.
The Act's Focus on "Bad Faith" Cybersquatting
One of the problematic areas of law lies in proving intent. What goes on in a defendant's head is subject to endless speculation. Acts are objectively observable and are cited as evidence of intent. The act jumps into the thicket of "intent" by providing a remedy only for "bad faith" cybersquatting. This implies that all uses of others' trademarks in domain name contexts are not necessarily done in bad faith. For example, Corvette owners might use "Corvetteclub.org" as a website for those addicted to their favorite automobile. There has been concern expressed in some quarters that domain name registrants could have a number of legitimate reasons for registering names identical or confusingly similar to others' marks or dilutive of famous marks and could be "bullied" into assigning a legitimate domain name over to a large corporation with a virtually unlimited litigation warchest. Trademark law permits comparative advertising in which a competitor factually points out weaknesses in a competitor's trademarked products or services. For example, a competitor of Buick motor cars might register a comparative domain site "buicksucks.com" in which a Buick competitor's factually superior features such as stopping distance, luggage space, interior room, mileage, horsepower, etc., were noted. This would probably not be condemned as "bad faith cybersquatting' given the fact that few would assume that Buick created such a site even though its trademarked name "Buick" was part of the domain name. Similarly, there are concurrent trademarks recognized in the law, as when Delta faucets and Delta airlines both have the right to trademark "Delta." The Internet domain names obviate this problem to some extent by virtue of the fact that there can be only one domain name "delta.com" even though more than one trademark can exist for "delta."
Realizing the quandary of proving "bad faith intent," the act seeks to provide courts with guidance with a list of nine factors to apply to particular cases. The act further recognizes that courts are not limited to this list if they perceive other factors beyond those mentioned in the act if they further assist in determining intent. The act's nine factors to be considered are:
1) the trademark or other intellectual property rights of the person, if any, in the domain name;
2) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;
3) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
4) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
5) the person's intent to divert customers 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;
6) the person'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 bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct;
7) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate information, or the person's prior conduct indicating a pattern of such conduct;
8) the person's registration or acquisition of multiple domain names which the person 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
9) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of the Trademark Act.
If a person believes or has reasonable grounds for believing that the use of the domain name was fair use or otherwise lawful, courts are not to find "bad faith intent."
The act authorizes courts to mete out a range of remedies in the event that it finds "bad faith intent" in registration, trafficking, or use of a domain name brought against a person. Such remedies include the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark. Persons who are not the domain name registrants or the registrant's authorized licensee are not liable for registration, trafficking, or use of a domain name with "bad faith intent." This provision is problematical. It could mean that shareholders of corporations registering another's trademark are not liable for cybersquatting with "bad faith intent." However, corporation law would appear to immunize shareholders from such liability so one is left with the possibility that if an individual presents someone else's trademark for registration as a domain name for a corporation, the agent actually presenting the mark for registration would not have "bad faith intent" but rather the corporation might.
"Trafficking in" in the context of the act refers to sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.
In Rem Actions to Remedy Cybersquatting
The matter of obtaining jurisdiction in the cyberworld can present problems. In hearings prior to passage of the act, it was disclosed that some domain name registrants provide false information as to their identity and location to conceal them from would-be lawsuits alleging improper use of another's trademark. The act anticipates some of these problems by providing that a mark owner may file an in rem civil 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. The act imposes certain conditions on bringing such in rem actions including 1) that the domain name must violate a right of a federal trademark owner and the court must find that the mark owner is unable to obtain in personam jurisdiction over a person who would have been a defendant in a civil action under the act. Alternatively, the court must find that through due diligence the mark owner was unable to find a person who would have been a defendant in a civil action under the act by sending a notice of the alleged violation and intent to proceed under the act to the registrant of the domain name at the postal or e-mail address provided by the registrant to the registrar and that publishing a notice of the action as the court may direct promptly after filing the action. At least one case has denied an in rem action against the domain name on grounds that the plaintiff had not done its due diligence to obtain in personam jurisdiction against the cybersquatter. Service of process shall take place for purposes of the in rem action by satisfying either of the aforementioned procedures.
Domain names for purposes of in rem actions have the situs in the judicial district in which the domain name registrar, registry, or other domain name authority that registered or assigned the domain name is located. Thus, it is conceivable that a person who registers a domain name infringing upon another's federally registered mark could be called upon to defend an in rem action in Virginia where a domain name registry is located even though the defendant resides in Idaho, if they believe they have a legitimate claim to the first registered domain name even though someone else holds a trademark to that name.
In the case of an in rem action under the act, remedies available are limited to court-ordered forfeiture or cancellation of the domain name or transfer of the domain name to the trademark owner. A potential objection to an in rem action regarding a domain name relates to the court's lack of power over the domain name so that the court can reassign the domain name to the trademark owner if the facts warrant. The act imposes affirmative duties upon the domain name authority or registrar to expeditiously deposit with the court documents sufficient to establish the court's control and authority regarding disposition of the registration and use of the domain name to the court. Further, the act forbids the domain name authority or registrar from transferring, suspending, or otherwise modifying the domain name during the pendency of the action except pursuant to court order. This should prevent modifications of the domain name that might attempt to "moot" a pending case in favor of one of the parties as well as facilitate a court's framing the appropriate remedy in the event that cybersquatting is found to exist.
One of the major legal threats facing a domain name authority or registrar is the possibility of legal action such as trademark infringement or contributory trademark infringement from a mark holder against the domain name registrar for wrongfully registering another's trademark as a domain name. To fend off such actions, the act provides a safe harbor for the registrar. It is not liable for injunctive or monetary relief in in rem actions except in the case of bad faith or reckless disregard.
Both the in personam action against the cybersquatter and the in rem action directed against the domain name are in addition to any other civil actions otherwise available against the cybersquatter.
Cyberpiracy Protections for Individuals
The act addresses cyberpiracy beyond the registration of another's trademark by providing protections for living persons whose names or names confusingly similar thereto are unauthorizedly registered as domain names. The act provides that any person who registers a domain name that consists of the name of another living person or a name confusingly ,similar thereto without the person's consent with the specific intent to profit from such name by selling the domain name for financial gain to that person or any third party, is liable in a civil action to such person.
In addition to having to surmount the hurdle of proving specific intent, the act also provides a defense for persons who in good faith register a domain name consisting of the name of another living person, or a name substantially and confusingly similar thereto, This could arise where someone has authored a biography and obtained a copyright on it and, as a promotional device, registered a web address under the name of the subject of the biography. If the subject of the biography then attempted to claim cyberpiracy against the biographer, the act provides some protections. Specifically, such defendants are not held liable if the name is used in, affiliated with, or related to a work of authorship protected under the U.S. copyright laws. This includes a work made for hire as defined under title 17 [sections] 101 if the person registering the domain name is the copyright owner or licensee of the work, the person intends to sell the domain name in conjuction with the lawful exploitation of the work, and such registration is not prohibited by a contract between the registrant and the named person. The protections afforded a copyright holder under this part of the act do not limit the protections afforded by the Trademark Act of 1946.
The act's remedies available to victims of individual cyberpiracy bringing civil suits are injunctive relief including the forfeiture or cancellation of the domain name or the transfer of the domain name to the plaintiff. One factor limiting the remedies available under the act is the fact that its provisions are stated to apply to domain names registered on or after the date of enactment of the act, thus presumably not covering domain name registrations occurring prior to the act's passage.
In addition to the other remedies available under the act for domain name piracy, plaintiffs may elect statutory damages of no less than $1,000 nor more than $100,000 any time before final judgment is entered by the trial court.
Safeharbors in the Act
The act contains liability limits. As already noted, by its terms it applies to domain names registered on or after the act's date of enactment, November 29, 1999. The general rule is that under federal law, civil statutes are not given retrospective effect. Cases have arisen in which the matter of deciding whether a matter which occurs prior to an act's passage applies to conduct subsequent to the act. Further, domain name registrars, registries, and authorities which refuse to register, remove from registration, transfer, temporarily disable, or permanently canceling a domain name pursuant to court order are not liable for monetary relief or injuctive relief to any person regardless of whether the domain name is finally determined to infringe or dilute the mark. Such domain authorities may be subject to injunctive relief only if they have not expeditiously deposited with a court disposing of a domain name matter, documents sufficient for the court to establish the court's control and authority regarding the disposition of the registration and use of the domain name. Also domain authorities are subject to injunctions if they transfer, suspend, or otherwise modify domain names during pendency of an action except by court order or if they fail to comply with court orders.
Domain name registries or authorities face a dilemma pending litigation over allegations of cybersquatting: Should they suspend registration of the domain name pending the outcome of the litigation or continue to allow alleged cybersquatters to profit from their alleged wrongs? The act provides some comfort for the domain name authorities in such situations by saying that they shall not be liable for damages for the maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name. False allegations which prompt domain registrars to take actions harmful to rightful domain name registrants are also dealt with. If a registrar acts based on a knowing, material misrepresentation by any other person that a domain name is identical to, confusingly similar to, or dilutive of a mark, the person making the misrepresentation is liable for damages incurred by the domain registrant as a result of such action. Thus, those intentionally misstating that a domain name infringes or dilutes another's mark are liable to the registrant rightfully entitled to so register the domain name. Courts are also empowered to provide injunctive relief to domain registrants including reactivation of a domain name or transfer of the domain name to the domain name registrant. The act further provides for a declaratory judgment action at the instance of a domain name registrant faced with suspension of its domain name status. In such suits courts have the authority to domain name registrants including reactivation of the domain name or transfer of the domain name to the domain name registrant.
The act recognizes the potential problems regarding abusive domain name registrations involving personal names. To that end the Department of Commerce in consultation with the Patent and Trademark Office and the Federal Election Commission are directed to conduct a study and report to Congress with recommendations on guidelines and procedures for resolving such disputes. This study and report are to be done within 180 days of passage of the act.
Cybersquatting Prior to Act: Intermatic, Inc. v. Toeppen
Prior to passage of the act, a number of cybersquatting cases were decided under federal trademark infringement, federal trademark dilution, and even state unfair competition grounds. One such case was Intermatic, Inc. v. Toeppen, noted in the opening scenario. There, Intermatic, Inc., owner of five trademarks including its "INTERMATIC' mark, sued Toeppen, a well known cybersquatter who had registered approximately 240 domain names including "ussteel.com" and "neiman-marcus.com" under [sections] 43(c) of the Lanham Act, also known as the Federal Trademark Dilution Act. The U.S. District Court for the Northern District of Illinois held that "INTERMATIC" was a famous mark and that Toeppen had infringed it by registering it as a domain name. Thus the court decided in favor of the trademark holder as against a registrant of its domain name.
The court in the Intermatic case relied on several facts. First, the trademark holder Intermatic, Inc., owned five incontestable federal trademarks. Secondly, prior to registering the Intermatic mark as an Internet domain name Toeppen, the cybersquatter, had never used the term "Intermatic" for any purpose. Third, the court there in a trademark dilution claim, examined whether Toeppen had ever put the registered domain name "Intermatic" to a "commercial use," a requirement for trademark dilution. The court there concluded that a ".com" domain name does not establish commercial use for purposes of trademark dilution. Fourth, the court further looked to Toeppen's intended use of "intermatic.com" and concluded that he intended to "arbitrage the ... domain name" and that such action constituted "commercial use" for purposes of the Lanham Act. By arbitrage the domain name the court there meant to sell the domain name back to Intermatic or some other party.
The Intermatic court noted that Toeppen intended to exploit the fact that he had registered as a domain name someone else's trademark. This is essentially what the act forbids when it allows a civil suit by the mark holder against one who "registers, traffics in, or uses a domain name that is ... identical or confusingly similar to that mark."
The factors the Intermatic court relied on in reaching its decision bear considerable similarity to those identified by the act as appropriate for determining "bad faith." Admittedly the list of factors in Toeppen was not as comprehensive as those found in the act. One important difference between the Federal Trademark Dilution Act and the Anticybersquatting Act lies in the range of remedies. The Dilution Act's remedies consist only of injunctive relief unless plaintiffs can prove defendant intended to trade on the mark owner's reputation or to cause dilution of the famous mark. Contrast this with the Anticybersquatting Act, which offers injunctions, recovery of defendant's profits, actual damages, attorneys' fees, and statutory damages.
Cybersquatters Following Passage of Act: Sporty's Farm L.L.C. v. Sportsman's Market
The second case noted at the outset of this article, Sporty's Farm v. Sportsman's Market, 202 F.2d 489 (2d Cir. 2000), was initially decided by the federal district court prior to passage of the Anticybersquatting Consumer Protection Act, but the act came into existence when the case was before the U.S. Second Circuit. In Sporty's, a domain name registrant of "sporties.com" brought a declaratory judgment action against a catalog company which held the federal trademark, arguing that it--the domain name registrant--had superior rights to the domain name over the prior trademark holder. Note the posture of the case: the cybersquatter was suing the trademark holder, for which there is precedent. The Second Circuit applied the Anticybersquatting Consumer Protection Act to the Sporty's case and decided the matter without sending the case back to the district court. In so doing the Second Circuit rejected plaintiff's argument that defendant's counterclaim based on the act was disallowed because federal courts generally apply the law that exists at the time of the appeal. The act only addresses the matter of retrospective application or application to pending cases with respect to one subsection dealing with "Cyberpiracy Protections for Individuals." Further, the act by its terms applies to all domain names registered before, on, or after the act's enactment except that damages are unavailable for registration, trafficking, or use of domain names occurring before passage of the act.
The Sporty's court went on to note that recovery under the act can be had where either the mark is entitled to protection if it is either "distinctive" or "famous." The court found that "sporty's" was distinctive obviating the need for inquiring into whether it was "famous." If a mark is distinctive, it must also be identical or confusingly similar to establish cybersquatting under the act. The Sporty's court noted that apostrophes cannot be used in domain names and thus it was impossible for the domain name "sportys.com" to be identical to the trademark "sporty's." However, the court observed that although the domain name sportys.com was not precisely identical to the sporty's mark, it is certainly confusingly similar to the protected mark.
The Sporty's court then examined the "bad faith" issue. It concluded that more than enough evidence existed to conclude there was bad faith intent to profit by the domain name registrant, Sporty's Farm, with respect to the earlier registered trademark, sporty's. First, the court noted that the domain name registrant had no property rights in "sportys.com" when it registered the domain name. In fact, Sporty's Farm was not established until nine months following registration of the domain name. Secondly, the name sportys was not a legal name of the party registering it as a domain name at the time of domain name registration. Sporty's Farm only came into existence after domain name registration. Third, the court found that there was no use of the domain name prior to registration by the registrant in connection with the offering of any goods or services. The court noted also that defendant Sporty's Farm did not contend that its use of the domain name was "noncommercial" (a defense to a dilution case) or "fair use" (a defense to an infringement case). The court also observed that the original registrant of the mark, Omega Engineering, Inc., sold the mark to its subsidiary, Sporty's Farms under suspicious circumstances from which one could infer "bad faith intent."
The Sporty's court departed from the nine items listed in the act to conclude that the cybersquatter in that case had "bad faith intent." In so doing the court noted that the act specifically permitted it to augment the list in an appropriate case and that this was such a matter. Specifically, the court observed that Omega intended to go into competition with Sportsmans Market, Inc., the owner of the sporty's trademark and a leading catalog seller of pilot and aviation consumer products. Further, Sportsman's Markets sent out 18 million of the catalogs annually and Omega officials knew that "sporty's" was a very strong mark for consumers of such products. Following the institution of suit by Sportsman's Market against Omega, Omega created another company to which to assign the sportys.com domain name so that some commercial use of the domain name could be claimed. Finally, the court noted with some degree of levity the"amusing" but hardly credible basis by which the name sportys originated.
The Second Circuit in Sporty's ordered injunctive relief but no damages under both the ACPA or the FTDA or state law (there was also a claim brought under applicable state unfair competition law). Because of the continuing nature of the infringement, application of the act to the case facts was not held to be retroactive.
The Sporty's case is a significant interpretation of the act for several reasons. First, the court applied it to a domain name registration antedating passage of the act. This accords with Congress' intention as expressed by the act itself and given the continuing nature of the infringement and the limited nature of the relief provided, seems consistent with due process principles. Secondly, the Second Circuit was willing to accept the act's willingness to allow courts to consider factors other than those listed in the act to determine if the cybersquatter exhibited "bad faith intent." Again, such a result is clearly contemplated by the act. Thirdly, the Second Circuit, being in a heavily commercial area of the country, represents a holding by a significant affirmation and recognition Of cybersquatting principles as articulated by the act.
The Anticybersquatting Consumer Protection Act of 1999 provides a range of factors which courts may consider to determine which party is entitled to an Internet domain name claimed by a trademark holder on the one hand and a prior registrant of the same or similar Internet domain name on the other. Given the number of permutations of facts that could arise in a given cybersquatting case, the ACPA appears to give the trademark holder an advantage to claims to a domain name identical to or confusingly similar to the mark. However, the act lays out a multifaceted test which permits a court to examine a wide range of factors as well as to consider other factors not named in the act to decide which party has the superior equities to the Internet domain name.
The two cybersquatting cases discussed here indicate that while courts were willing to find cybersquatting improper prior to passage of the act, the act serves as a clear expression of federal policy that cybersquatting when done in bad faith, constitutes grounds for civil suit. While the possibility exists for some types of cybersquatters to be recognized as legal, the case law suggests that trademark holders have the upper hand against such persons both prior to and following passage of the act.
 S. Rep. No. 106-140, at 4. "Trademark owners are facing a new form of piracy on the Internet caused by acts of `cybersquatting,' which refers to the deliberate, bad-faith, and abusive registration of Internet domain names in violation of the rights of trademark owners."
 See, e.g., Intermatic, Inc. v. Toeppen, 947 F.Supp. 1227 (N.D. Ill. 1996); MTV Networks v. Curry, 867 F. Supp. 202 (S.D. N.Y. 1994); Juno Online Services, L.P. v. Juno Lighting, Inc., 979 F. Supp. 684 (N.D. Ill. 1997); Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949 (C.D. Ca. 1997); OBH, Inc. v. Spotlight Magazine, Inc. 86 F. Supp.2d 176 (W.D. N.Y. 2000).
 Anticybersquatting Consumer Protection Act, Pub. L. No. 106-113-Appendix I, Title III--Trademark Cyberpiracy Prevention, 113 Stat. 1501A-545 (1999).
 See, e.g., Public Service Co. of N.M. v. Nexus Energy Software, Inc., 36 F. Supp.2d 436 (1999)(D. Mass.). But see, MTV Networks v. Curry, 867 F. Supp. 202 (S.D. N.Y. 1994). In the latter case which was not resolved on the merits, defendant cybersquatter alleged that trademark holder's officer contracted or agreed to permit defendant to develop the domain name mtv.com after refusing to join defendant in a joint venture to develop the domain name.
 S. Rep. No. 106-140, at 4. "Trademark owners are facing a new form of piracy on the Internet, caused by acts of `cybersquatting,' which refers to the deliberate, bad-faith, and abusive registration of Internet domain names in violation of the rights of trademark owners."
 Id. at 5.
 See, e.g., Claudia H. Deutsch, "Internet Strategy Becomes a Must at the Top," N.Y. Times, Oct. 20, 1999, at C8.
 Id. at 6.
 113 Stat. [sections] 1501A-545 (1999).
 15 U.S.C. [sections] 1051 et seq.
 Anticybersquatting Consumer Protection Act, Pub. L. No. 106-113, [sections] 3002(a)(d)(1)(A), 113 Stat. 1501-545 et seq. (1999).
 Id., [sections] 3005.
 47 U.S.C. [sections] 230(f)(1).
 Anticybersquatting Consumer Protection Act, Pub. L. No. 106-113, [sections] 3002, (a)(d)(1)(A)(ii)(I),(II)(1999).
 Id. (I).
 Id. (II).
 Id. [sections] (d)(ii)(III).
 See, e.g., Patrick McGeehan, "What's in a Web Address? Maybe a Lawsuit," N.Y. Times, Oct. 22, 1999, at Al, C6. "`Still, some judges don't see speculating in domain names as so harmful,' said Pam Samuelson, a professor of law at the University of California at Berkeley. `One could say that cybersquatting is just another example of American ingenuity,' she said. `These people are going out and creating things that somebody else might find of value. In a sense, they're entrepreneurs.'"
 Id. [sections] (a)(d)(1)(B)(i).
 Id. [sections] (d)(1)(B)(ii).
 Id. [sections] (d)(1)(C).
 Id. [sections] (d)(1)(D).
 Id. [sections] (d)(1)(E).
 S. Rep. No. 106-140, at 10 (1999).
 Anticybersquatting Consumer Protection Act, [sections] 3002(a)(2)(C).
 Lucent v. Lucentsucks.com, 95 F. Supp. 528 (2000).
 Anticybersquatting Consumer Protection Act, Pub. L. No. 106-113, [sections] 3002, (d)(2)(A), 113 Stat. 1501A-545, 547 (1999).
 See, e.g., Lockheed Martin Corp. v. Network Solutions, Inc, 985 F. Supp. 949 (1997).
 Pub. L. No. 106-113, [sections] 3002(d)(2)(D)(2).
 Id. [sections] (d)(3).
 Id. [sections] 3002 (b)(1)(A).
 Id. [sections] 3002 (b)(1)(B).
 Id. [sections] 3002 (b)(2).
 Id. [sections] (b)(4).
 Id. [sections] 3003(b).
 Id. [sections] 3004 (D)(i)(I).
 Id. [sections] (D)(i)(II).
 Id. [sections] 3004 (D)(iii).
 Id. [sections] (iv).
 Id. [sections] (iv).
 Id. [sections] (v).
 Id. [sections] 3006.
 Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227 (1996).
 Pub. L. No. 106-113, [sections] 3002(a)(d)(ii)(I).
 See, e.g., Juno Online Service v. Juno Lighting, 979 F. Supp. 684 (N.D. Ill. 1997).
 Sporty's, 202 F. 2d at 496.
 Pub. L. No. 106-113, [sections] 3002(b).
 Pub. L. No. 106-113, [sections] 3010 (1999).
 Pub. Law No. 106-113-Appendix I, [sections] 3002 (a)(d)(1)(A)(ii)(I),(II), 113 Stat. 1501A-545-46 (1999).
 Sporty's, 202 F. 2d at 497.
 Id. at 498. In support of its conclusion the court cited another case in which a new mark "Wello" was held to be confusingly similar to the trademark "Wella."
 Id. at 499.
 Id. at 494,499. "When asked how the name Sporty's Farm was selected for Omega's Christmas tree subsidiary, Ralph S. Michael, the CEO of Omega and manager of Sporty's Farm, explained, as summarized by the district court, that `in his own mind and among his family, he always thought of and referred to the Pennsylvania land where Sporty's Farm now operates as Spotty's farm. The origin of the name ... derived from a childhood memory he had of his uncle's farm in upstate New York. As a youngster, Michael owned a dog named Spotty. Because the dog strayed, his uncle took him to his upstate farm. Michael thereafter referred to the farm as Spotty's farm. The name Sporty's Farm was ... as subsequent derivation."
Bruce D. Fisher is professor of business law at the University of Tennessee, Knoxville. He earned his J.D. from the University of Michigan Law School and an LL.M. from George Washington University Law School. He has been a visiting professor at the Stanford Graduate School of Business, the University of Michigan Graduate School of Business, the School of Business at UNC-Chapel Hill, and the University of Florida College of Business.
|Printer friendly Cite/link Email Feedback|
|Author:||Fisher, Bruce D.|
|Publication:||Florida Bar Journal|
|Date:||May 1, 2001|
|Previous Article:||In memoriam: E. Dixie Beggs.|
|Next Article:||An antitrust primer for trade association counsel.|
|Franchisors Brandish Pair of Powerful Weapons in the War on Cybersquatters.|
|Cyberspace litigation: chasing the information highway bandits.|
|DON'T STEAL MY NAME.|
|Branding on the Web: Protecting Franchising's Crown Jewels.|