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‘HALL OF FAME’ CYBERSQUATTERS END UP IN COURT

December 11, 2015

 

If there were a Hall of Fame for cybersquatters, John Zuccarini would be the Babe Ruth of that infamous pantheon.  William Purdy might be the Willie Mays or Ty Cobb.  Brian Wick, the Hank Aaron of the group, liked going after the names of large law firms.  Dennis Toeppen, one of the earliest stars, would be the Walter Johnson (who, as a pitcher for the Washington Senators, won 417 games and had a lifetime E.R.A. of 2.17 over his 21 year career).  These are some of the pioneers of cybersquatting, and we have them to thank for the Anticybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. §1125(d), a federal law designed to address the detestable but lucrative Internet practice of cybersquatting.
 

A cybersquatter is one who registers a domain name (or often, thousands of them) consisting of the name or trademark of a company or a famous individual with the intention of selling it or profiting from its use.  Zuccarini was the master of “typosquatting” -- registering common misspellings of well-known names or trademarks of others.  An Internet user who was a poor typist might end up at one of Zuccarini’s domains and find himself “mousetrapped” in the site, unable to exit without clicking on a seemingly endless succession of pop-up ads.  Each click put 10 to 25 cents in Zuccarini’s pocket, adding up to as much as a million dollars a year.  There were numerous lawsuits and arbitration actions against him, but what ultimately brought him down was his conviction in 2004 for registering misleading domain names that guided children looking for Disneyland or similar children’s sites to porn sites instead.  That lovely practice earned Zuccarini two years in jail.
 

Another all-star, Mr. Toeppen, is perhaps best known for his domain at panavision.com, a website he attempted to legitimize by posting aerial photos of Pana, Illinois (population 5,614).  That tactic didn’t work.  Panavision International v. Toeppen, 141 F.3d 1316 (9th Cir. 1998).
 

There are two main elements to prove cybersquatting under ACPA.  First, the trademark owner must show that the defendant registered or used a domain name that is identical to or confusingly similar to a distinctive or famous trademark.  In addition, the plaintiff must establish that the defendant had a bad faith intent to profit from the registration of use of the domain.  As Zuccarini and others have learned, cybersquatting can be risky business.  Statutory damages for a cybersquatting violation range from $1,000 to $100,000 per domain name.  The court can also order the defendant to transfer the domain name to the plaintiff. 
 

ACPA litigation is not the only way a trademark owner can respond to cyberpiracy.  An arbitration process under the Uniform Domain Name Dispute Resolution Policy (“UDRP”) is also available, but that is a topic for another day.  A few states have also enacted anticybersquatting legislation.
 

A key issue in ACPA cases is whether the defendant adopted the domain name in bad faith with the intent to profit from the plaintiff’s trademark.  The statute indentifies nine non-exclusive factors that courts can look to in determining whether the defendant had a bad faith intent to profit.  If the party adopting the domain name had legitimate trademark rights in the name, or if it is the person’s actual name, those facts would undermine a claim of bad faith.  If a fellow who happened to be named George Clooney had operated a shoe repair store for the past 30 years, the movie star would be hard pressed to prove that georgeclooneyshoes.com was adopted in bad faith.  Courts will also look at whether the defendant had ever used the name in connection with the bona fide offering of goods or services.

           
On the other hand, intent to divert Internet users from the trademark owner’s online location with an intent to tarnish or disparage the owner, is an indication of bad faith.  This was the downfall of cybersquatter Hall of Fame candidate Michael Doughney, who adopted the domain name peta.org for his website entitled “People Eating Tasty Animals.”  PETA was not amused, and neither was the Fourth Circuit, finding several indicia of bad faith, including Doughney’s recommendation that PETA should “make me an offer.”  People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001).  (The pundits are still undecided as to whether Doughney’s wordplay is enough to earn him a spot in the cybersquatter’s Hall of Fame).  Similarly, Brian Wick’s disparaging comments about the Morrison & Foerster law firm led to a finding that his adoption of morrisonandfoerster.com and a host of similar domain names was in bad faith.  Morrison & Foerster LLP v. Wick, 94 F. Supp.2d 1125 (D. Colo. 2000).  Wick is in the Hall of Fame because his stated purpose was to “mess with attorneys because…lawyers are the biological parents of big-business and the U.S. Constitution has never made a mortgage payment for a lawyer.”  That defense didn’t work either.

 

An offer to sell the domain name to the trademark owner, or otherwise hold the domain name hostage, is another strong indication of a bad faith intent to profit.  In DSPT v. Nahum, 624 F.3d 1213 (9th Cir. 2010), the defendant attempted to use the domain name as leverage against his former employer in order to recover unpaid commissions.  The court found that holding the domain as “ransom” was a bad faith attempt to profit, irrespective of the merits of his claim for commissions.  In Coca-Cola v. Purdy, 382 F.3d 774 (8th Cir. 2004), the defendant adopted domain names similar to Coca-Cola, Pepsi, and others well-known marks, including the Washington Post.  He directed these domain names to his anti-abortion website.  He told the Post he would give up the domain if it published something by him on the editorial page.  The court found bad faith in this demand.

 

Many cybersquatting cases turn on the question of whether the defendant “had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.”  §1125(d)(1)(B)(ii).  This is a defense to cybersquatting, and is the reason for the existence of websites like mychryslersucks.com or ihatecrocs.com (“dedicated to the elimination of crocs”).  This type of site, commonly referred to as a “gripe site,” generally can survive a challenge under ACPA so long as there is no commercial aspect to the site and no offer to sell or profit from the domain name.

 

But even gripe sites have been found to violate ACPA if the name creates confusion.  While the domain ihatecrocs.com is not likely to confuse anyone, it would be a different story if the gripe site were simply crocs.com or crocs.biz.  In that case, the parody or fair use is not apparent from the domain name.  As Morrison & Foerster and other cases have noted, a proper parody depends on the lack of confusion to make its point.  If the parody is only discovered after the Internet user has accessed the site and looked at the content, the confusion has already occurred.  Pinehurst v. Wick, 256 F. Supp.2d 424 (M.D.N.C. 2003) (assessing statutory damages of $100,000 plus attorney’s fees against Wick for registering two Pinehurst domains).  The fair use safe harbor is narrowly applied in cybersquatting cases.  As the court in the PETA case noted, a defendant “who acts even partially in bad faith in registering a domain name is not, as a matter of law, entitled to benefit from ACPA’s safe harbor provision.”

 

Cybersquatting is a big business, and with pay-per-click advertising it can be very profitable.  Advertising-based domain parking sites are growing rapidly, and the international dimension as well as sheer volume of current cybersquatting can make enforcement difficult.  As with baseball, the game has changed.  It is more sophisticated now, and more money is at stake.  But, under ACPA, the risks are high.  The Toeppens and the Zuccarinis have been replaced by a fresh young crop of cyberpirates trying to earn a spot in the Hall.  Expect the federal court battles against domain name abuse to grow accordingly.

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