New Law Impacts On Internet Branding

April 17, 2000

Since the explosion of the commercial Internet in the mid-1990s, companies and individuals have occasionally found their trademarks or names taken by others as domain names (Internet addresses). In some cases, the parties registering the domain names have done so knowingly and maliciously, hoping to steal customers from, damage the reputation of or obtain payment from the trademark holder. Until recently, trademark holders falling victim to these so-called “cybersquatters” have been forced either to depend upon very narrowly-drafted dispute policies of Network Solutions or other domain name registrars, or to try to apply traditional trademark laws in circumstances never imagined by the legislators who created these laws.

Fortunately for trademark holders, the law has now caught up with the technology, at least when it comes to these types of domain name disputes. On November 29, 1999, President Clinton signed into law H.R. 3194, the federal budget bill. Incorporated within this bill by reference was another bill, S. 1948, the “Intellectual Property and Communications Omnibus Reform Act of 1999.” In addition to provisions permitting satellite television companies to carry local programming, S.1948 included the landmark “Anticybersquatting Consumer Protection Act”, which modifies the federal trademark laws to make it illegal to co-opt someone’s trademark or name as a domain name in bad faith. This law is specifically targeted at companies and individuals who register domain names identical or similar to existing trademarks or company names owned by others, in hopes of either misleading consumers or extorting payments from the true owners of the marks or names to return the domains. The new law, which is now found at 15 U.S.C. § 1125 (d), goes into some detail as to how to define whether a domain name is registered in “bad faith.” The factors include:

* The existing trademark rights in the name or mark

* Whether the mark in question is also the legal name of the party who registered the domain name

* Whether the party who registered the name is actually offering bona fide goods or services using it, or is using it in a non-commercial or “fair use” way

* The intention of the domain name registrant to mislead consumers or trade on the good will of or disparage the owner of the trademark

* Any offer by the domain name registrant to sell the domain name back to the trademark holder or otherwise make a profit from transferring the domain name; and

* Any false or out-of-date contact information for the domain name registrant, or a history of registering others’ trademarks as domain names in similar fashion.

The law provides for significant statutory damages if a bad faith registration is proven-not only may an aggrieved trademark holder obtain injunctive relief, transfer of the domain name and actual damages, but it may also elect, “instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just.”

It is crucial to remember that this law is not only for registered trademarks–there are quite a number of rights under the law protecting even unregistered marks. The immediate impact of the law, though, will be to make broadbased domain name speculation in others’ trademarks a more risky and less profitable venture–and give additional ammunition to those companies which are the victims of bad faith domain name registration. Farrell Fritz has already begun utilizing this new law in connection with trademark and domain name disputes on behalf of its clients.

If you have any questions about the scope or impact of The Anticybersquatting Consumer Protection Act, please contact Jim Wicks of our litigation department or Jonathan Ezor of our corporate department.

James M. Wicks, Esq. is a partner at Farrell Fritz, concentrating in commercial litigation. Mr. Wicks represents large and small businesses, financial institutions and individuals in federal and state trial courts, as well as arbitrations, involving a variety of commercial, real estate, insurance, contracts and banking issues and business torts. Mr. Wicks is involved in one of the first cases to be filed under the Anticybersquatting Consumer Protection Act.

Jonathan I. Ezor, Esq., is a corporate and new media attorney in the Corporate and Banking Department of Farrell Fritz. Mr. Ezor’s experience includes contractual and other legal issues related to e-commerce and Web sites, including development, hosting, advertising, prize promotions and sweepstakes, domain name protection and enforcement, content licensing, privacy, children’s marketing and transaction processing. For the last several years he has been giving presentations on Internet legal risks all over the United States for hundreds of people, including legal seminars for the Practicing Law Institute and other conferences, Internet World shows throughout the United States, and Sun’s JavaOne Expo in San Francisco. He is the author of the recently published “CLICKING THROUGH: A Survival Guide for Bringing Your Company Online” and has been a regular columnist on legal issues for BusinessWeek Enterprise Online and the @NY electronic weekly. This advisory was written by Jonathan I. Ezor, Esq., an attorney with Farrell Fritz. This advisory is meant as general information and should not be taken as specific legal advice. If you have any questions on specific legal matters, please contact your attorney.

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