Domain Disputes: Intellectual Property and the Internet

Obtaining a domain name is relatively easy and cheap. Combined with the need for businesses, organizations and celebrities to have a strong online presence, a legally grey practice has developed called cybersquatting. Cybersquatting occurs when an individual or competitor preemptively registers a domain name which is easily associated with a different company or person in order to sell the site to that person or company at a profit. Alternatively, the holder of the registration may use the site to diminish a competitor's online profile.

With the rapid growth of online commerce and search engine marketing in recent years, cybersquatting has become a lucrative practice and is a cause of growing concern among those wishing to protect their intellectual property rights in the Internet age.

Anticybersquatting Consumer Protection Act

Under a law known as the Anticybersquatting Consumer Protection Act, a victim of cybersquatting may be able to sue in federal court to transfer the legal right to the domain name. However, under the ACPA a domain holder must have used a company trademark, and all of the following conditions must be met before the right to the domain name will be transferred:

  • The holder registered the domain in bad faith with an intent to profit from the trademark
  • The trademark existed when the domain name was first registered
  • The domain name is the same or confusingly similar to the trademark
  • The trademark qualifies for protection under federal trademark laws

Under the ACPA, the trademark owner can also recover money damages for triple the amount of actual damages incurred. Actual damages include lost profits, loss of customers and loss of goodwill.

Recently the World Intellectual Property Organization began arbitrating domain name disputes as an alternative to litigation. Depending on the circumstances, this process may be less time-consuming and costly than litigation. However, parties agreeing to WIPO decisions can still choose to go to court after a decision is made if money damages are not awarded.

Emerging Area of Domain Competition

The Internet Corporation for Assigned Names and Numbers, which controls the .com, .org and .gov domains, began taking applications for other domain registrations in June. For example, .sailing or .lipstick will be potential future domains associated with a particular company. However, in order to avoid cybersquatting, ICANN is requesting applications and a check for $185,000 just to be able to bid on a particular domain.

While this will deter some cybersquatters, fights for domains will still occur. For example, it isn't clear who will get the right to .apple: the Beatles' Apple Corps or Apple Computer.

Any individual or company with questions regarding the intellectual property of a domain name should contact an experienced civil litigation attorney familiar with domain disputes.