Avoid Cybersquatters and Brand Parasites
January 19, 2012
Panavision, a movie equipment company, tried to register “Panavision” as its Internet domain name. It failed. An entrepreneurial fellow named Toeppen was using the domain “panavison.com” to display photographs of Pana, Illinois. When asked to cease, Toeppen offered the domain name to Panavision for $13,000. Panavision balked, so Toeppen also registered Panavision’s trademark, Panaflex, as a domain name. Panavision sued to recover its domain under the trademark laws and won.
Anatomy of a Cybersquatter
Toeppen, who hijacked Panavision in 1998, was a cybersquatter—someone who registers names of well-known brands for the purpose of selling the sites to their owners or third parties. Hertz, Avon, Panasonic, and many lesser brands have all been victims of cybersquatting. After the first, feverish, Internet name grab years, Congress enacted the Anticybersquatting Protection Act (ACPA) in 1999, which allows trademark owners to sue to recover their domain names.
New Laws and Procedures
To foil a cybersquatter under ACPA, a trademark owner must prove: 1) the cybersquatter had a bad faith intent to profit from the trademark; 2) the trademark was distinctive at the time the domain name was first registered; 3) the domain name is identical or confusingly similar to the trademark; and 4) the trademark qualifies for protection under the federal trademark laws. Indications of bad faith include a domain holder providing misleading information to the domain registry, refusing to maintain contact information, or attempting to sell the domain name. The penalties for cybersquatting under ACPA range up to $100,000, plus attorneys fees.
A second route for relief against cybersquatters is arbitration under the dispute resolution policy of ICANN (Internet Corporation for Assigned Names and Numbers). If the complainant proves that a cybersquatter used bad faith in registering a domain name that is identical or confusingly similar to the complainant’s trademark, the domain name will be canceled or transferred to the complainant. ICANN arbitration is usually cheaper than an ACPA lawsuit. The downside is that decisions can be appealed by a later suit under ACPA.
As companies get more sophisticated about the Internet, they quickly register domain names and avoid the most blatant cybersquatting. However, there is still a booming business in “brand parasites” registering variations of well-known brand names. The parasites keep a low profile and profit from click-through traffic of ads targeted to the brand names.
Verizon argued, in a 2008 case, that the defendants registered 1,392 domain names that were confusingly similar to Verizon’s trademarks. Examples of misspelled names that might drive traffic to a high-jacked website include cokacola.com, microsft.com and even microsft.cm.
Zuccarini was another infamous brand parasite who registered five domain names consisting of slight misspellings of “joecartoon.com.” Each of Zuccarini’s websites mouse-trapped visitors so they could exit only after clicking on a succession of ads. Zuccarini made his profit through each of those clicks. In a suit brought under ACPA, the court determined that Zuccarini acted in bad faith and permanently enjoined him from using any domain name similar to the plaintiff’s. The court noted that Zuccarini had registered thousands of misspellings of popular trademarks and celebrities’ names, and the profits from those activities were approaching $1 million per year.
Maintain your trademarks. Prevailing under either ACPA or ICANN requires proving you have a valid trademark. It is tough to do that unless you have registered your mark with the U.S. Patent and Trademark Office. The description you use should be broad enough to cover all your business activities.
Check for websites that hijack your brand traffic. There are software tools to reveal third-party domains that capitalize on URL misspellings. One example is Microsoft’s Strider URL Tracer.
Consider registering variant names. Register the domain name of your correctly spelled trademark, but also consider registering variants and redirecting them to your main site. If you have a fight with a brand parasite and get the name canceled or transferred, use that name yourself.