Welcome to the Internet: Bad Faith Domain Name Registration

Part 2

Welcome back to Part 2 of “Welcome to the Internet,” where we review some of the broad legal topics concerning domain names.

Please recall that domain names are user-friendly names given to websites to reflect their unique IP address, a complex string of numbers.
For example, ‘www.google.com’ or ‘www.amazon.com’ are the respective domain names for Google and Amazon, while ‘www.dbllawyers.com’ is the domain name for this law firm, Dunlap Bennett & Ludwig PLLC. Domain registries manage domain names, often utilizing accredited domain registrars to sell domain name reservations to the public.

Once reserved, the person or entity who ‘purchases’ the domain name is referred to as the registrant and has the exclusive right to use the domain name for the reservation period. But what happens if you register a domain name and then don’t use it? In a typical setting, nothing—you remain the registrant and have exclusive rights to use the domain name if and when you so desire. However, there are scenarios where the registrant registers a domain name in bad faith with the intent to hold a business hostage when attempting to secure their domain name, which comes with consequences.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) defines “cybersquatting” as a bad faith registration of another’s trademarked term or phrase in a domain name. More specifically, cybersquatting—i.e., bad faith domain name registration—occurs when an individual or entity registers a domain name that incorporates or is very similar to a trademarked word or phrase. For example, a local clothing store, QuickStream T-Shirts, LLC, recently opened its doors and is making phenomenal sales out of its brick-and-mortar location. “John,” who lives in the area, recognizes that QuickStream T-Shirts will be a huge success, has trademarked its name and logo but doesn’t yet have a website. He immediately registers a number of domain names that the principals may want to use in the future: ‘quickstreamtshirts.com,’ ‘qstshirt.com,’ ‘quickstreamshirts.com,’ etc. John isn’t using the domain names, nor does he have any plans to use them in the future—however, he does plan on profiting from selling one or more of the domains to QuickStream T-Shirt’s principals once they decide they’d like to create a website.

There are several methods of combatting cybersquatters, both under U.S. Federal law and ICANN dispute procedures. Congress enacted the Anti-cybersquatting Consumer Protection Act (“ACPA”) in 1999, in the midst of the dot com boom, in order to prevent registrant cybersquatters from registering domain names of well-known, distinctive trademarks only to profit off of reselling them to the trademark owner.

As a cousin to the Lanham Act (which concerns traditional trademark/trade-dress infringement), the ACPA gives rise to a civil action where an individual registers a domain name that (i) that is identical or confusingly similar to a distinctive trademark; (ii) that is identical or confusingly similar to a famous trademark; or (iii) concerns a name, seal, or emblem specifically excluded from use by the public by the U.S. government. See 15 U.S.C. § 1125(d). Where a plaintiff prevails on their claim of bad faith cybersquatting, they can receive ownership of the domain name, statutory damages, and attorneys’ fees and costs as remedies. In other words, the ACPA was specifically intended to prevent the scenario we described above (though on a much larger scale with much larger organizations).

The second popular method for combatting unlawful cybersquatters is filing a complaint under the ICANN’s Uniform Domain-Name Dispute-Resolution Policy (“UDRP”). Under the UDRP, a claimant can file a complaint alleging cybersquatting with several ICANN-approved dispute resolution service providers. UDRP procedures are a popular method of filing a complaint because they are significantly cheaper to litigate – typically well under $10,000.

However, UDRP disputes are quite narrow in scope and only allow the complainant to receive ownership of the disputed domain name while not recouping any fees, costs, or other monetary damages.

Notably, while both the ACPA and UDRP are popular methods of defeating cybersquatting, they are not comprehensive. While the ACPA was designed to prevent cybersquatters from snatching up popular and trademarked domain names, serial cybersquatters often register hundreds or thousands of domain names that are neither trademarked nor popular. These cybersquatters do so in bad faith, without any legitimate use for the domains other than their hope that a legitimate business will crop up and seek to use the already registered domain name.

Unfortunately, they are then subject to price gouging in order to purchase their desired domain. Referred to as “anticipatory cybersquatting,” this practice severely hinders a business owner’s ability to strategically market their products and services to their customers and impedes their businesses. As such, it’s a wise decision to not only trademark your tradename, logo, etc., quickly but ensure that a viable domain name is available for registration.

Read Part 1 of Welcome to the Internet: What is a Domain Name and how does it work?

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