Attorneys

• James R. Carlisle, II

Relief finally has arrived for those besieged by "cybersquatters" or "cyberpirates" who seek to make a quick profit by registering and selling Internet domain names that are the same as or similar to famous trademarks or individual names. On November 29, 1999, President Clinton signed into law as part of the Omnibus Appropriations Act the Anticybersquatting Consumer Protection Act (the "Act"). The Act amends the Trademark Act of 1946 and contains cyberpiracy protections for businesses and individuals. Although the Act has been criticized as heavy handed and providing undue emphasis (and power) to trademark rights, most welcome it as a development in promoting online business.

Business Protections
Under the Act, a person will be liable if he or she, with bad-faith intent to profit from another's mark, registers, "traffics" or uses a domain name that is:

• Identical to or confusingly similar to a distinctive mark at the time of registration of the domain name
• Confusingly similar to or dilutive of a famous mark at the time of registration of the domain name
• A protected trademark, word or name under the United States Code

"Traffics" includes sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer or receipt in exchange for consideration. A key change to prior trademark law is that mere registration (including "parking" or "warehousing") of a domain name without use on a web site can be actionable.

"Bad Faith"
While "bad faith" is not defined in the Act, the Act provides that in determining bad faith, a court may consider other intellectual properties in the domain name including trademark or other intellectual property rights, using another person's legal name, prior use of the name, bona fide noncommercial or fair use in a site accessible under the domain name, intent to divert consumers, transferring the domain name for financial gain without having used it in the bona fide offering of goods or services, using false information to obtain the registration, and registering multiple domain names identical or confusingly similar to others.

However, "bad faith" should not be determined to exist where it was reasonably believed by the alleged cybersquatter that using the domain name was a fair use or was otherwise legal.

Remedies for Businesses
Trademark holders can force cybersquatters to relinquish, forfeit, cancel or transfer domain names and can collect civil penalties ranging from $1,000 to $100,000 per domain name. Domain name registries are immune from such penalties.

Alleged cybersquatters' defenses are preserved if using the domain name was a "fair use" or was protected by the First Amendment.

The Act applies to all future and existing domain name registrations, but cybersquatting victims may not recover monetary damages for wrongful acts that occurred prior to enactment.

Individual Protection
Anyone will be liable who registers, without consent and with intent of financial gain, a domain name that consists of or is substantially or confusingly similar to another living person s name.

There is an exclusion—except as otherwise prohibited by law, the registrant shall not be liable if the name is registered in good faith and related to a work of authorship under the United States Code, and if the registrant is the work's copyright owner or licensee and intends to sell the name in conjunction with the work.

Individual cyberpiracy protections apply to domain names registered on or after November 29, 1999.

Remedies for Individuals
Remedies may include forfeiting, canceling, or transferring the domain name to the individual in addition to costs and attorneys fees.

Post Enactment Activity
While the full extent of the effectiveness of the Act remains to be seen, several lawsuits have been filed since passage of the Act. One of the main benefits for businesses is the ability to take legal action against a domain name instead of only against individuals or parties who may have limited assets or may be judgment-proof. To name a few, lawsuits by the National Football League, Lucent Technologies and Teen Magazine were filed shortly after passage of the Act.

Individual cyberpiracy protections have had a significant impact. Pirated names for numerous celebrities including Sharon Stone and Brad Pitt ceased functioning shortly after the Act was passed, and John Tesh and Kenny Rogers each recently filed suit against online firms that had registered their domain names.

For more information, please contact jcarlisle@cohenlaw.com.