Cybersquatting Thrives for Lack of a Strong Deterrent
Enforcement - The Choices at Hand
If a trademark owner has found (i) that a person has registered a domain name that is identical or confusingly similar to a trademark or service mark in which the trademark owner has rights; (ii) that person has no rights or legitimate interests in the domain name; and (iii) the domain name has been registered and is being used in bad faith, the trademark owner has the option of filing a claim under the Uniform Domain Name Dispute Resolution Policy (UDRP).
Benefits:
A UDRP proceeding can be a relatively inexpensive and quick way to reclaim a domain name in certain cases.
The trade-off:
- Most significantly, the only available remedy that the UDRP provides is the cancellation or transfer of the domain name. Damages cannot be awarded, and no additional remedy is available for domain names the cybersquatter may register after the conclusion of the UDRP proceeding. In turn, there is little deterrent to those who knowingly cybersquat.
- Because a clear case is needed to win, cybersquatters are getting more aggressive in hiring attorneys and organizing defenses. This can prolong the process and increase the chance of an unfavorable decision.
- Finally, UDRP is set up to be effective in cases where there are only a few infringements at stake, and is not set up to address massive portfolios of names. For these reasons, UDRP proceedings are of little concern to mass cybersquatters.
UDRP proceedings are the most effective when there is a clear case against a cybersquatter who would not be able to pay significant damages or who has only a handful of infringing domain names. In that situation, the brand owner is simply trying to gain control of the domain name in order to reduce the future loss of revenue and decrease harm to the brand’s reputation that may be caused by the name.
For trademark owners that are the victims of notorious cybersquatters with a record of bad-faith infringements and the ability to pay monetary damages, a claim under the ACPA can be an attractive option.
Benefits:
Because the ACPA allows not only the transfer of domain names to the trademark owner but also imposition of damages and future injunctive relief, the potential rewards to the trademark owner – and the threat to the cybersquatter – can be significant.
The trade-off:
- The costs of litigation can be very high, running well into six figures in a hotly contested case involving numerous domain names.
In a case against a large-scale cybersquatter, the brand owner is not just seeking to recover the infringing domain names. The key to making the ACPA work is to win substantial damages that will cripple the offending party and deter future misconduct by that party and others in a similar position. Without the threat of significant monetary sanctions, mass cybersquatters are unlikely to be deterred solely by the prospect that they will have to surrender domain names at the end of the proceeding.
By far the most common monetary remedy sought by trademark owners has been statutory damages. This is not surprising, because such damages do not require proof or quantification of actual harm to the owner, which are often hard to establish. However, the mere availability of statutory damages has not deterred the new breed of cybersquatter. According to Bob Shaughnessy of Williams & Connolly LLP, a Washington, D.C. litigator who has represented trademark owners against cybersquatters, experience under the ACPA shows that courts have generally not assessed statutory damages at the upper end of the $1,000 to $100,000 range, at least not in cases where cybersquatters have actively defended themselves. As a result, recoveries generally have not been large enough to cover the trademark owner’s litigation costs or to deter cybersquatters. In order to generate large recoveries, Shaughnessy observes that "trademark owners must do either or both of two things: assert a large number of infringements in a single case, and, where possible, develop persuasive evidence of substantial actual damages." This evidence might include demonstration of lost revenue from diverted traffic, as in the "Mypsace.com" example noted above.
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