Cybersquatting: Why Should I Be Concerned?

What is cybersquatting? It can informally be thought of as trademark infringement in a domain name. Formally, it is the use of a domain name with a bad faith intent to profit from the goodwill of a trademark belonging to a third-party. A domain name is the word or words that you type into your Internet browser to find a particular web page. Examples would be www.homedepot.com, www.sprite.com and www.attorneys.com. These examples indicate how a domain name may consist of a business’ corporate name, a trademark and a generic word.

It is important to consider cybersquatting from two different perspectives. The first is if you are the current owner of a relatively well known trademark. As the owner of the trademark you must be vigilant in the protection of your mark. If you determine that a third-party is improperly or impermissibly using all or a portion of your trademark in a domain name, then you must consider sending that party a cease and desist letter. The second is if you are just in the process of selecting a particular domain name for your product/service. During the domain name selection process you must conduct research to determine what domain names are and are not available to be registered. Once you narrow down your possible domain names you then must determine if registration of a domain name will result in cybersquatting. You do not want to invest time and money in selecting a domain name and then receive a cease and desist letter informing you of possible trademark infringement.

If it is perceived that cybersquatting may be occurring, there are multiple avenues available in an attempt to cease the activities. A lawsuit may be filed asserting the statutory action of cybersquatting, a lawsuit may be filed alleging trademark infringement or an arbitration may be filed. The focus of this article will be on the arbitration process. This process has been adopted by the Internet Corporation for Assigned Names and Numbers (ICANN) and it is referred to as the Uniform Dispute Resolution Policy (UDRP). Every registrar (i.e. – Godaddy) has agreed to abide by this arbitration process, and each registrant of a domain name has also agreed to abide by this arbitration process. The arbitration process may take approximately four months for a decision to be rendered with a filing fee of approximately $1,500. This arbitration process is far faster and cheaper than pursuing litigation. The remedy in this arbitration is the transfer of the domain name – only. The arbitration panel is not authorized to award any type of monetary damages. If it is believed that an arbitration ruling is erroneous then a lawsuit may be filed to basically appeal the ruling.

The UDRP arbitration panels have on occasion issued different rulings when considering similar fact patterns which may make it difficult to advise clients whether or not cybersquatting has occurred. However, businesses are still able to engage in planning in an attempt to minimize domain name registrations which result in cybersquatting or ensuring that the registration of a domain name will not result in cybersquatting.

If you are the company that owns the trademark and your company uses dealers, distributors or retailers to market and sell the trademarked goods or services, then you must take steps to control use of your trademark. This may be done by the company including the proper contractual provisions in any agreement with such dealer, distributor or retailer. The following provisions may be inserted into a dealer or distributor agreement, a sales and marketing plan or agreement or an internet sale or use agreement: (i) the trademark is not to be incorporated into any domain name – period, (ii) the dealer, distributor or retailer must first obtain prior written approval prior to registering a domain name incorporating the trademark, (iii) upon termination of any dealer, distributor or retailer relationship for any reason that all right, title and interest in such domain name shall be transferred and assigned to the trademark owner and (iv) any other restrictions or authorizations which the trademark owner may believe to be necessary to protect its trademark rights.

If you are the dealer, distributor or retailer of a company’s trademarked goods or services or you manufacture component or replacement parts for whole goods, then you need to review if the trademark owner has placed any conditions on your use of any trademarks or the registration of any domain names incorporating such trademarks. You should also consider if prior written consent from the trademark owner should be obtained prior to registering the domain name. Once you have registered a domain name incorporating a third-party’s trademark, you then must ensure that the content on your website is consistent with the fair use of the trademark and you are making a bona fide offering of such goods or services.

It is very common today that the Internet is the first place people may go to research or learn about different products or services. It is important that companies take the appropriate steps to either protect their trademark from unauthorized use or to ensure that the use of another’s trademark will not result in a finding of bad faith and the loss of use of that particular domain name. With a little bit of advance planning, businesses may have some certainty in their online presences.

Are you a victim or been accused of cybersquatting?

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Chris Corpus

Founding Partner at Corpus Law Inc

This article does not provide legal advice or create an attorney-client relationship. If you have any questions or would like to learn more about this topic or if you have other legal questions, do not hesitate to contact Chris Corpus, Esq. of Corpus Law Inc at 216-973-2475. Copyright Christopher A. Corpus 2016.