What is the Anticybersquatting Consumer Protection Act (ACPA)? [back to top]
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The Anticybersquatting Consumer Protection Act (ACPA) 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.
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What must a trademark owner show to win a case of cybersquatting? [back to top]
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The plaintiff must prove that
| 1. | the defendant has a bad faith intent to profit from the plaintiff's mark, including a defendant name which is protected as a mark; and |
| 2. | registers, traffics in, or uses a domain that (a) 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, or (b) 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. |
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.
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What is bad faith intent to profit from a mark? [back to top]
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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:
| 1. | the trademark or other intellectual property rights of the defendant, if any, in the domain name; |
| 2. | 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; |
| 3. | the defendant's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; |
| 4. | the defendant's bona fide noncommercial or fair use of the mark in a site accessible under the domain name; |
| 5. | 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; |
| 6. | 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 bona fide offering of any goods or services, or the defendant's prior conduct indicating a pattern of such conduct; |
| 7. | 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; |
| 8. | 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 |
| 9. | 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.
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What is the quickest and easiest way for a domain name owner to lose an ACPA lawsuit? [back to top]
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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.
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What remedies may be granted by a court for violations of the ACPA? [back to top]
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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.
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What if the domain name owner cannot be found? [back to top]
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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.
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What remedies are available in an in rem lawsuit? [back to top]
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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.
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Is the ACPA the only weapon available to trademark owners against cybersquatters? [back to top]
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No. Trademark owners may also elect to file a complaint under ICANN's Uniform Dispute Resolution Policy (UDRP). 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 below).
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When would a trademark owner sue under the ACPA instead of filing a UDRP complaint? [back to top]
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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.
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What are the downsides to an ACPA action? [back to top]
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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.
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What is ICANN? [back to top]
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ICANN is an acronym for the Internet Corporation for Assigned Names and Numbers, a private-sector nonprofit organization. It is an internet technical coordination body that was formed in October of 1998 by a coalition of internet business, technical, academic, and user communities. ICANN is responsible for the management of the Internet domain name system. It coordinates the assignment of internet domain names, IP address numbers and protocol parameter and port numbers. ICANN also is responsible for the stable operation of the internet's root server system.
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What is ICANN's Uniform Domain Name Dispute Resolution Policy (UDRP)? [back to top]
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The Uniform Domain Name Dispute Resolution Policy (UDRP) is a policy adopted by ICANN that provides a mechanism for trademark owners to obtain domain names from "cybersquatters." All domain name registrars that have the power to grant .com, .net, and .org generic top-level domains must follow the UDRP. The UDRP provides that before a domain name registrar will cancel, suspend, or transfer a domain name that is the subject of a trademark-based dispute, it must have an agreement signed by the parties, a court order, or an arbitration award. The UDRP created a streamlined "cyber arbitration" procedure to quickly resolve domain name ownership disputes that involve trademarks.
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Who is subject to ICANN's UDRP? [back to top]
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All owners/registrants of all .com, .net and .org domain names are subject to the UDRP by virtue of: (i) the registration agreements agreed to with their registrars at the time of acquiring their domain names, or (ii) asking ICANN to maintain or renew a domain name registration.
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What are the possible results of a UDRP arbitration? [back to top]
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If the party that files the complaint wins the arbitration, the winner will get an award from an administrative panel instructing the registrar of the domain name to cancel, transfer or otherwise make changes to domain name registration. If the domain name owner wins the arbitration, nothing happens. Please note that only the party that brings a UDRP action can benefit from it.
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Is the dispute resolved if the domain name owner wins the UDRP arbitration? [back to top]
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Maybe. The party that filed the UDRP complaint and lost may bring any other legal action against the domain name owner. In fact, if the trademark owner believes it has a strong case, it may sue the domain name owner under the Anticybersquatting Consumer Protection Act seeking a court order to transfer the domain name to the trademark owner and monetary damages for trademark infringement. The result of the UDRP is that trademark owners have two chances to obtain a disputed domain name.
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How do you initiate a UDRP arbitration? [back to top]
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A trademark owner that believes it can prove a case of cybersquatting initiates a UDRP arbitration by filing a UDRP complaint with an approved dispute-resolution service provider. Each service provider has forms and supplemental rules that apply to UDRP proceedings under its jurisdiction.
With respect to costs, each service provider sets a fee for filing the complaint based on the number of panelists and the number of domain names subject to the UDRP. Thus, the fees vary from case to case. These fees are paid by the party that files the complaint unless the domain name owner requests a three member panel, in which case the two parties are each responsible for one half of the fee. Additionaly fees, including attorney's fees, must also be taken into account.
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Who is the judge and who is the jury in a UDRP arbitration? [back to top]
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An administrative panel of one or three members acts as judge and jury in all UDRP actions. The trademark owner (called the "complainant") that files the UDRP complaint designates in the complaint a one or three member arbitration panel. If the complainant designates a single-member panel, the domain name owner (the "respondent") may elect to have the dispute heard by a three-member panel..
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How much time does a domain name owner have to answer a UDRP complaint? [back to top]
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The respondent has twenty days from the date the service provider forwards the complaint to the respondent to submit a written response to the service provider selected by the complainant.
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What will happen if the domain name owner does not file a timely response to the complaint? [back to top]
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If the respondent does not submit a timely response, in the absence of exceptional circumstances, the administrative panel will decide the dispute based upon the complaint. If the respondent fails to respond timely, the administrative panel has the discretion to grant the relief requested in the complaint.
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What must a trademark owner prove to win a UDRP arbitration? [back to top]
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A complainant must prove each of the following elements to win a UDRP arbitration:
| 1. | the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; |
| 2. | the domain name owner does not have any rights or legitimate interests with respect to the domain name; and |
| 3. | the domain name owner registered the domain name is is using it in bad faith. |
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What is "bad faith" according to ICANN? [back to top]
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The UDRP lists the following nonexclusive circumstances as evidence of bad faith in the registration and use of a domain name:
| 1. | circumstances indicating that the domain name owner registered the domain name or acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or |
| 2. | the domain name owner registered the domain name to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that the domain name owner has engaged in a pattern of such conduct; or |
| 3. | the domain name owner registered the domain name primarily for the purpose of disrupting the business of a competitor; or |
| 4. | by using the domain name, the domain name owner has intentionally attempted to attract, for commercial gain, internet users to the domain name owner's web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of the domain name owner's web site or location or of a product or service on the domain name owner's web site or location. |
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What must a domain name owner prove to defeat a cybersquatting claim? [back to top]
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The domain name owner/alleged cybersquatter should win the UDRP proceeding if the domain name owner can show that the domain name owner has rights or legitimate interests to the domain name. If any of the following circumstances can be shown by the domain name owner to exist, the domain name owner should win the UDRP arbitration:
| 1. | Before any notice to the domain name owner of the dispute, the domain name owner's use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or |
| 2. | The domain name owner (as an individual, business, or other organization) has been commonly known by the domain name, even if the domain name owner has not acquired any trademark or service mark rights; or |
| 3. | The domain name owner is making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue. |
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What happens during the UDRP arbitration and how long does it take to get a decision? [back to top]
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After the complaint is filed, the respondent has twenty days to file a written response. If the respondent files a timely response, the Provider must submit the matter to an administrative panel within five days. In-person hearings (including hearings by teleconference, videoconference, and web conference) are not permitted, unless the panel determines, in its sole discretion and as an exceptional matter, that a hearing is necessary. Thus, most decisions will be based solely on the contents of the complaint and the response and supporting documents attached thereto. The panel must submit its decision to the Provider within fourteen days of being appointed to hear the dispute. Within three days of receiving a decision from the panel, the Provider must deliver the decision to the parties and ICANN. The date of filing the complaint to the date the UDRP decision is rendered is typically approximately 40 - 45 days or less.
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What are the domain name owner's options after losing a UDRP arbitration? [back to top]
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If an administrative panel decides that a domain name registration should be canceled or transferred, ICANN will wait ten business days after being informed by the Provider of the Administrative Panel's decision before ICANN implements the decision. If, during this ten day period, ICANN receives from the domain name owner official documentation (such as a copy of a complaint, file-stamped by the clerk of the court) that the domain name owner filed a lawsuit against the complainant, ICANN will not implement the decision. ICANN will then not take any further action, until it receives: (i) evidence satisfactory that the parties resolved the dispute; (ii) evidence satisfactory to it that the lawsuit has been dismissed or withdrawn; or (iii) a copy of an order from such court dismissing the lawsuit or ordering that the domain name owner does not have the right to continue to use the domain name.
In other words, if a domain name owner loses a UDRP arbitration, ICANN will implement the decision (which is usually that the domain name be transferred to the complainant) unless the domain name owner provides evidence of a settlement agreement signed by the parties or the domain name owner files a lawsuit against the complainant seeking to establish that the domain name owner has rights to the domain name.
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What should a domain name owner do if named as a respondent in a UDRP arbitration if the domain name owner wants to fight to keep the domain name? [back to top]
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Whenever a domain name owner is first challenged or threatened by a trademark owner who alleges trademark infringement and/or cybersquatting, and if the domain name owner wants to keep the domain name, the domain name owner should immediately hire an experienced domain name lawyer. It is a fundamental principal of law that statements made by a domain name owner can and will be used against the domain name owner in court and/or in a UDRP arbitration. This is one important reason why the domain name owner needs an attorney to act as an intermediary rather than the domain name owner attempting to negotiate with the trademark owner's attorney.
With the right facts, it is possible to defeat a claim of cybersquatting. There is a concept known as "reverse domain name hijacking," which means using the Uniform Domain Name Dispute Resolution Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name. If you have good facts, you need an attorney to prepare your response and simultaneously prepare to file a lawsuit to challenge a possible adverse UDRP decision.
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What is the surest way to lose a UDRP arbitration even when you are not a cybersquatter? [back to top]
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The surest way to lose a UDRP arbitration is to offer to sell or transfer to any person at any time the domain name for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name. If you get a cease and desist letter alleging that you are a cybersquatter, never offer to sell the domain name for more than your out-of-pocket costs for the domain name because you will give the trademark owner the evidence it may lack to prove you hold the domain name in bad faith.
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If I get an unsolicited offer to buy my domain name, what should I do? [back to top]
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If you get an inquiry out of the blue asking if you want to sell your domain name, think twice before responding. The inquiry may be from a trademark owner, the trademark owner's attorney or their agent seeking evidence to use against you in a UDRP arbitration or a lawsuit under the Anticybersquatting Consumer Protection Act. If you respond and ask for more than your out-of-pocket costs to acquire the domain name, your response could be used as evidence of bad faith and you may supply the evidence the trademark owner needs to prove you are a cybersquatter. If you want to respond to an inquiry to purchase your domain name, have your lawyer first contact the person who asked about purchasing the domain name and ask that the prospective purchaser sign a confidentiality and nondisclosure agreement under which the prospective purchaser covenants not to disclose the substance of any discussions about selling the domain name to any party and covenants that any statements, agreements or drafts of agreements relating to the discussions cannot be used or submitted as evidence in any lawsuit or proceeding in any court or other forum, including, but not limited to an ICANN UDRP arbitration. If you do not get a signed agreement, then do not offer to sell your domain name unless you are sure you can defeat a UDRP arbitration and an ACPA lawsuit.
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