Friday, September 13, 2002

An issue that sometimes pits individuals against corporations is
cybersquatting. Cybersquatting occurs when someone who does not hold a trademark
registers the name as a domain name, in hopes of selling the domain name to the
trademark owners. While cybersquatters may argue that they have a free-speech
right to obtain and then sell domain names to a trademark holder, courts have
not agreed.

When Web sites are created, they are given an Internet Protocol, or IP,
address, which is a string of numbers. In order to make “surfing” the Internet
easier, these IP addresses then receive “domain names,” or alphanumeric Web
addresses that are easier for Internet users to identify and remember (such as A person who wants to select a domain name
must register it with a domain-name registration service, or registrar. These
registrars scan the Internet to make sure that the desired domain name is not
being used by another site. Once a domain name is set, the holder can go online
with it, and promote the site on search engines.

When a cybersquatter registers a domain name using a trademarked company
name, the result is a combination of identity theft and extortion. A company
that owns the trademark on the word being used as the squatter’s domain name
will discover that it cannot use that term as the address for its site. The
squatter says she will agree to give the company the rights to the domain name,
but for a hefty price.

For example, if XYZ Co. were a multibillion-dollar industry with a vast
consumer following, a cybersquatter might register,,
or whatever variation he could think of. When XYZ Co. decided to become a part
of the information superhighway, it would discover its potential domain names
taken, with the cybersquatter more or less holding them ransom.

In 1999, Congress passed the Anti-Cybersquatting Consumer Protection Act, or
ACPA, which addressed online corporate identity piracy.

The ACPA makes a person liable to a civil lawsuit if he or she uses the
domain name of a trademarked entity without the trademark holder’s permission,
and does so with the “bad faith intent to profit from that mark” by registering,
trafficking or using a domain name that incorporates a trademark in its address
that is “identical or confusingly similar to that mark.”

In order to determine whether someone has acted in “bad faith,” courts can
consider, among other things:

  1. The intellectual-property rights of the copyright/trademark holder.
  2. The extent to which the domain name incorporates the copyright/trademark.
  3. The alleged cybersquatter’s prior use of the domain name “in connection with
    bona fide offering of any goods or services.”
  4. The alleged squatter’s bona fide, noncommercial or fair use of a mark in a
    site accessible under the domain name.
  5. Any intent “to divert customers from the mark owner’s online location” or to
    harm the goodwill represented by the mark, “[e]ither 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
  6. Any offer by the alleged squatter to transfer or sell the domain name to the
    mark owner for financial gain.
  7. Any false and misleading contact information given when the alleged squatter
    registered the domain name.
  8. Any “registration or acquisition of multiple domain names which the person
    knows are identical or confusingly similar to marks of others that are
  9. The extent to which the mark incorporated in the squatter’s domain name
    registration is or is not distinctive and famous.

“Bad faith,” however, will not be found when the person who unlawfully uses
the copyright/trademark “believed and had reasonable grounds to believe that the
use of the domain name was a fair use or otherwise lawful.” Aside from monetary
damages, a court may also order the cybersquatter to forfeit his domain name to
the copyright holder.

Name game
Some cybersquatters have defended their actions on
free-speech grounds, but without success.

In a 3rd U.S. Circuit Court of Appeals case, Shields v. Zuccarini (2001), the court held that the First Amendment does not protect online
“protest pages” criticizing trademark owners’ corporations when a cybersquatting
arrangement is knowingly used. The defendant in this case used a First Amendment
defense drawing on the ACPA provision that says no “bad faith” exists if the
accused person reasonably believed that using the domain name was fair use. This
defense failed not because the site was created as a protest but because of the
cybersquatting aspect.

Another cybersquatting case decided in 2001 was Harrods Ltd. v. Sixty
Internet Domain Names.
In this case, the owner of the trademarks of the
famous London department store brought suit under the ACPA against an
Argentinian man who registered nearly 300 domain names incorporating the
plaintiff’s trademarks. A U.S. District Court in Virginia held that registrant
had a bad-faith intent to profit from use of “confusingly similar marks.”

“To ensure that speech protected by the First Amendment is not jeopardized by
the ACPA, a court should consider a registrant’s ‘legitimate noncommercial or
fair use of the mark in a website that is accessible under the domain name at
issue,’” the court wrote. In crafting ACPA, it said, “Congress envisioned that
the interests of trademark owners would be balanced with the interests of
registrants engaged in comparative advertising, comment, criticism, parody,
news, reporting, etc.” But as for the free-speech issue raised in this case, the
court held that since the registrant used the trademarks (i.e., erected the
sites) for commercial purposes, the free-speech issue was inapplicable.

However, in a March 2004 ruling,
href=””>Lucas v.
the U.S. 6th Circuit Court of Appeals in Cincinnati upheld a
lower court’s ruling that an aggrieved Michigan consumer, Michelle Grosse, was
not acting in bad faith when she created the Web site to
complain about Lucas Nursery and Landscaping Inc. of Canton, Mich. The U.S.
District Court in Detroit had said Grosse was neither acting in bad faith nor
trying to make a profit from the site.

Tag: You’re it
An additional problem with cybersquatting is whether
Company A is allowed to pirate competitor Company B’s identity by using B’s name
in A’s Web site so many times that A’s site appears as a “hit” in an online
search for B.

Although the APCA is silent about this, a Northern California U.S. District
Court addressed this issue in J.K. Harris & Co. v. Kassel (2002),
ruling such tactics unacceptable. In this lawsuit, the two parties, J.K. Harris
& Co. and Firse Tax Inc., had Web sites promoting their respective tax
representation and negotiation services, and
Firse Tax included in its site many articles criticizing J.K. Harris, and
employed the “J.K. Harris” name in the header and “metatags” that search engines
use to identify Web sites.

Such strategic placement of the Harris name allowed the Firse address to be a
“hit” when someone searched for “J.K. Harris.” The court held that Firse Tax’s
use of Harris’ name was a transparent attempt to manipulate search engines, and
although Firse Tax is allowed by the First Amendment to post information about
and use the name of J.K. Harris, it ordered Firse Tax to remove excessive
references. The court also ordered Firse Tax to remove Harris’ name from some
header and metatags, concluding that building keyword density (what all the
“Harris” references amounted to) resulted in confusion and could be seen as a
type of cybersquatting.