Protecting Your Domain Name: Understanding the Anti-Cybersquatting Consumer Protection Act

Despite the simple functionality on many levels of a domain name, it is vital to the success of an online business enterprise. At its heart, a domain name essentially is an address that tells a user of the Internet how to find a particular website. In many instances, the owners of trade or service marks use their marks as part of their business domain names. Nonetheless, there are many instances in which someone else may take advantage and start using the trade or service mark as part of another domain name. With this well in mind, it is incumbent upon trade and service mark owners to monitor to make certain that others are not misusing their intellectual property in the registration of other domain names.

No matter how the domain name usage actually is discovered, trade or service mark owners have two basic options for resolving disputes over domain names. First, a person or company can take action under the Uniform Domain Name Dispute Policy. The benefits of this process is that it is relatively fast and relative inexpensive. There are drawbacks that include the fact that this process is not available to all domain names, it is not appropriate for license disputes and damages and attorney fees cannot be recovered through this process.

The other alternative available to a person or company who believes it has been wronged or violated in terms of a domain name related issue is the Anti-Cybersquatting Consumer Protection Act ("ACPA"). The ACPA was enacted in 1999 and was designed to prevent cybersquatting on the Internet.

Cybersquatting generally is considered the use of domain names that are confusingly similar to trademarks and service marks owned by other business enterprises or individuals.

The ACPA can impose liability on the registrant of such a domain name (or its licensee) if that person or entity has done the following:

(i) has a bad faith intent to profit from the mark; and,

(ii) registers, traffics in, or uses a domain name that is identical or confusingly similar to the mark and the mark (or dilutive if the mark is famous) was distinctive (or famous) at the time of the domain name registration.

The ACPA does establish a set of nine nonexclusive factors that a court may utilize in working to determining whether a person or entity has acted in bad faith, has a bad intent, in regard to a domain name registration. The ACPA states that "Bad faith intent . . . shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful."

For example, the actual trade or service mark owner must demonstrate that the challenged domain name is confusingly similar to its own trade or service mark. Only the challenged domain name and the trade or service mark will be compared under the ACPA. According to the ACPA, the proper inquiry is whether the defendant's domain name is so similar to the plaintiff's trade or service mark that the two could be confused by a third party.

If the mark owner is successful in the action, the court may order the forfeiture, cancellation or transfer of the domain name. Moreover, the mark owner may recover the defendant's profits, any damages sustained by the owner of the trademark and its costs of the action.

Pursuant to the statute, the owner of the mark may elect to recover statutory damages, in lieu of actual damages and profits. The court can award statutory damages in an amount between $1,000 and $100,000 per domain name.

Claims that are made under the ACPA and UDRP are two options available to trade and service mark owners who are trying to protect their mark from being used by others in bad faith.