6 Ways to Recover a Domain Name from an Infringing Cybersquatter

If you own one of the more than 3 million trademarks registered with the United States Patent and Trademark Office, there is an excellent chance that a cybersquatter has obtained Internet domain names that are identical or confusingly similar to your mark. Domain names routinely infringe on trademarks.

One reason there are so many trademark-infringing domain names is because of the sheer number of registered domain names. More than 202 million Internet domain names have been registered, far more than the roughly 172,000 entries in the Oxford English Dictionary for words in current use.

But the single biggest reason there are so many infringing domain names is a prevailing lack of knowledge. Most people, including domain name registrants, are unaware of:

1. federal trademark laws,
2. the legal significance and consequences of trademark infringement, and
3. how to determine if a desired domain name might infringe on a trademark.

The domain name industry benefits if the public remains ignorant about trademark law and its relationship to domain names. Domain names have become a billion dollar business. The companies that issue domain names and the companies that facilitate domain name appraisals, auctions and sales all have a vested interest in the domain name market. Thus, they are not likely to kill the goose that laid the golden egg by telling prospective domain name registrants and buyers that a particular domain name may be a ticket to a lawsuit or an Internet Corporation for Assigned Names and Numbers (ICANN) arbitration procedure.

Mark Owners Must be Diligent

The Lanham Act, the federal trademark statute, and the case law interpreting it, place a duty on mark owners to take appropriate action to protect their marks when they discover infringement. It is possible for a mark owner to lose rights in a mark permanently if the mark owner does not take necessary protective action to prevent infringement and improper use of the mark. Mark owners with valuable trademarks should remember the phrase, “Protect it or lose it.”

How to Find Infringing Domain Names

A trademark owner can search for infringing domain names simply by going to a website that provides a comprehensive database of registered domain names. In a matter of a few minutes, a mark owner with a connection to the Internet can obtain a list of all domain names that contain text identical to a mark. I frequently start with BetterWhois when looking for infringing domain names, although any WHOIS lookup will work.

A Trademark Owner’s Options

A trademark owner who finds a domain name that is identical or confusingly similar to its mark has several options for dealing with the possible infringement. The owner of an unregistered or common law mark can act against a cybersquatter and seize an infringing domain name.

The following is a non-exhaustive list of options (in order from least to most costly) available to a mark owner for combating infringing domain names:

1. Do nothing

This is the easiest and cheapest course of action, but it runs the risk that the infringing domain names could damage the goodwill of the mark and/or result in the loss of the rights to the mark.

2. Send a cease-and-desist letter on your letterhead

One way to begin legal action against an infringer is to send the infringer what is known as a “cease and desist” letter. This is a letter that states:

1. I have a trademark (even unregistered common law marks are protectable),
2. you are infringing on my trademark and causing me damage,
3. you must immediately cease using the mark and not use it in the future,
4. you must transfer the domain name to me, and
5. if you fail to take the action demanded, I’m going to turn the matter over to my attorney to take appropriate legal action, which will include a claim for damages.

This may be worth a try. In my experience, however, the letter from the mark owner is usually ignored. If it works, great; if it does not, you have lost some time but still have the option to escalate the matter.

3. Enter into a trademark license agreement with the infringer

If the infringer is willing to enter into a license agreement governing the use of the mark (which may be unlikely), the mark owner can counter a claim that it failed to adequately police infringing uses of the mark with the argument that the other party was not infringing because it used the mark under the license agreement. The drawbacks to this alternative are that it may cost money to negotiate, prepare and sign the license agreement; the terms of the license may be less than satisfactory; and the licensee continues to use the mark.

4. Hire a lawyer to send a cease-and-desist letter

This approach costs money (maybe less than a lawyer-prepared trademark license agreement), but it does greatly increase the chance that you will get the desired result. It is common for an infringer without substantial resources to comply with the mark owner’s demands rather than risk being the defendant in a lawsuit or an ICANN Uniform Domain Name Dispute Resolution Policy (link) action. On the other hand, if the infringer is making money from the infringing domain name, it is likely that a lawyer’s cease and desist letter will be ignored.

5. File an ICANN arbitration action to obtain the infringing domain names

All registrants/owners of domain names are subject to an arbitration procedure known as ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP). This policy is a fantastic weapon for trademark owners that can be used to obtain ownership of infringing domain names relatively quickly and cheaply.

A UDRP arbitration consists of the following steps:

1. Mark owner files a complaint (maximum length of 15 pages) and pays an arbitration fee (approximately $1,300 for the first domain name at issue).
2. Domain name owner has 20 days to file an answer.
3. Mark owner has an option to file a reply to the answer within five calendar days of the date the answer is received.
4. The arbitrator usually rules within 14 days.
5. If the mark owner wins, the domain name will be transferred to the mark owner within 10 days of the decision unless the domain name owner files a lawsuit within the 10 day period in the appropriate court seeking to prevent the transfer.

A UDRP arbitration can be filed, won and the infringing domain name transferred within 50 to 60 days, start to finish. Because the only documents a mark owner files in a UDRP action are a complaint and an optional reply, and does not include discovery, briefs, trial or appearance before the arbitrator, the mark owner’s legal fees should be substantially less than an infringement lawsuit.

But the ability of the infringer to defeat the arbitration decision by filing suit can greatly increase the potential costs of using arbitration. This is especially true when the cybersquatter is located in a foreign jurisdiction because part of filing the arbitration is agreeing to submit to the jurisdiction of a court where the cybersquatter is located (at least for review of the arbitration decision). For example, if a Turkish cybersquatter files suit in Turkey to challenge the arbitration decision, are you really going to litigate in Turkey?

Also, if the jurisdiction allows claims based on harming someone’s business, these can easily be added to the suit the cybersquatter files to defeat the arbitration decision.

Generally, any real likelihood that the cybersquatter will appeal an unfavorable arbitration decision counsels choosing a trademark infringement suit over the UDRP arbitration. While the cost to the trademark owner is potentially higher, the cybersquatter’s costs are higher as well. People facing real costs are always more motivated to settle than those who have nothing to lose.

6. File a lawsuit in federal court alleging violations of the Anticybersquatting Consumer Protection Act (ACPA) or other laws

The ACPA is a decade-old addition to the Lanham Act. It gives trademark owners another powerful weapon to use to obtain infringing domain names. The downside to filing a lawsuit is that the mark owner will incur substantially more time litigating the matter than would be required in UDRP arbitration and potentially higher legal fees.

The only remedies in a UDRP action is an award from the arbitrator instructing the registrar of the domain name to cancel, transfer or otherwise make changes to domain name registration. A mark owner who seeks other remedies, such as money damages or an injunction against ongoing infringement, must file a lawsuit under the Lanham Act or other applicable laws.

An ACPA lawsuit can be very effective. The mark owner is entitled to actual damages, or alternatively, the court can award statutory damages of up to $100,000 for each infringing domain name. In one ACPA lawsuit, the notorious typosquatter John Zuccarini was ordered to pay statutory damages of $500,000 for five infringing domain names plus the mark owner’s attorneys’ fees and costs of more than $60,000.

Conclusion

Trademark owners should use the resources of the Internet to monitor their marks periodically for possible infringing domain names. If an infringing domain name is found, the mark owner should take appropriate action to protect the mark and prevent future infringement. ICANN’s Uniform Domain Name Dispute Resolution Policy and the Anticybersquatting Consumer Protection Act give mark owners powerful tools to stop infringing domain names and obtain ownership of the domain names. Mark owners who fail to properly police infringement of their marks risk finding that they have lost their rights in the mark.