Suellen W. Bergman, an associate at the firm, assisted in the preparation
of these materials.

I. What is Cybersquatting?

Contrary to popular belief, reserving a domain name does not give the domain name owner rights superior to a the owner of a registered trademark.(1) Cardservice International, Inc. v. McGhee, 950 F. Supp. 737, 740 (E.D. Va. 1997) ("anyone who obtains a domain name under Network Solutions' >first-come-first-served= policy must do so subject to whatever liability is provided for by federal law"); Washington Speakers Bureau, Inc. v. Leading Authorities, Inc. 33 F. Supp. 2d 488, n.3 (E.D. Va. 1999). Cybersquatters are "individuals [who] attempt to profit on the Internet by reserving and later selling or licensing domain names back to the companies that spent millions of dollars developing the good will of the trademark."  Intermatic, Inc. v. Toppen, 947 F. Supp. 1227 (N.D. Ill. 1996).

Final Report of the WIPO Internet Domain Name Process, & 171 (WIPO Publication No. 92-805-0779-6, April 30, 1999). See, http://ecommerce.wipo.int/domains/process/eng/processhome.html

A number of early cybersquatting cases involved Dennis Toppen of Champaign, Illinois, who at one time had reserved approximately 240 domain names "consisting of a who=s who of American trademarks. "McCarthy on Trademarks ' 25:77, p. 25-185.

In Intermatic, Inc. v. Toppen, 947 F. Supp. 1227 (N.D. Ill. 1996) the District Court entered summary judgment against Toppen and in favor of the holder of the trademark "Intermatic." Although there was no evidence of likelihood of confusion by Mr. Toppen's registration of the domain name "intermatic.com", the court found that Toppen had illegally diluted Plaintiffs famous mark. See also, American Standard, Inc. v. Toppen, 1996 U.S. Dist. LEXIS 14451 (N.D. Ill. 1996)(preliminary injunction granted; Toppen's registration of "american standard.com" diluted the trademark "American Standard"); Panavision International, L.P. v. Toppen, 945 F. Supp. 1296 (C.D. Cal. 1996) affd, 141 F. 3d 1316 (9^th Cir. 1998)(Toppen=s registration of "panavision.com" diluted the trademark "Panavision").

Commentators suggested that the courts had "stretched the law" to combat the actions of Mr. Toppen and other cybersquatters. McCarthy on Trademarks, ' 25:77 at p 25-187. Amongst the difficulties in pursuing cybersquatters were the following:

1.    The Lanham Act [15 U.S.C. '1051 et seq.] requires "commercial use" of a infringing mark. 15 U.S.C. ' 1125(a)(1). The Trademark Dilution Act further exempts "[n]oncommercial use of a [famous] mark" from a dilution claim. 15 U.S.C. '1125(c)(4)(B). The mere registration of a domain name, standing alone, does not constitute commercial use.(2)  See, e.g., HQM Ltd. and Hatfield Inc. v. William B. Hatfield, 71 F. Supp. 2d 500 (D. Md. 1999) (registering and activating a Web site with the ".com" designation does not, by itself, constitute commercial use); Bally Total Fitness Holding Corp. v. Faber, 29 F. Supp. 2d 1161 (C.D. Ca. 1998) (mere use of another's mark on Internet is insufficient to constitute commercial use); Academy of Motion Picture Arts & Sciences v. Network Solutions, Inc., 989 F. Supp. 1276 (C.D.Cal. 1997) (holding mere registration of a domain name does not constitute commercial use); Juno Online Services v. Juno Lighting, Inc., 979 F. Supp. 684 (N.D. Ill. 1997) (holding reservation of domain name without a Website does not constitute infringement under Lanham Act ' 43(a)).

        2.  Jurisdictional Issues

Traditional "minimum contacts" analysis often presents substantial difficulties in evaluating the propriety of asserting personal jurisdiction over a infringing domain name holder. Since the Internet is a worldwide network, and a Web site containing an allegedly infringing mark can be can be accessed from anywhere in the world, is the infringer subject to suit anywhere the site can be accessed? ( 3) The cases suggest that determination of personal jurisdiction must be resolved on a case-by-case basis, taking into account all of the various factors and interests involved, so the court can assess whether the defendant "purposefully availed" itself of the forum and therefore could "reasonably anticipate being hailed into court" there.

1.  To assert jurisdiction over a cybersquatter, a court would often have to push due process concerns to the limit. See, e.g., Panavision International, L.P. v. Toppen, 141 F. 3d 1316 (9^th Cir. 1998) (California court had jurisdiction over Illinois resident because of Defendant's intentional reservation of Plaintiff=s trademarks as domain names, "knowing that this would likely injure [Plaintiff] in California.")

2. The "Sliding Scale" or "Spectrum" of Internet Activity (4 )

In Zippo Mfg. Co. v. Zippo Dot Com, 952 F. Supp. 1119, 1124-25 (W.D. Pa. 1997), the court recognized that "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." The court categorized Internet activity into three levels:

Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996)(Internet advertising was sufficient to allow jurisdiction over Massachusetts defendant in a trademark infringement action in Connecticut, even though defendant did not have a place of business, nor any employees, in Connecticut where site was accessed over 100 times by Missouri users.)

People v. World Interactive Gaming Corp., 1999 N.Y. Misc. LEXIS 425 (N.Y. Sup. Ct., N.Y. Co. July 22, 1999) (gambling site in Antigua that would not allow gambling on the site if anyone gave an address in a state that prohibited gambling but did not take any other further steps to verify the address' accuracy constituted a violation of New York State's prohibitions on gambling and the Federal Wire Act, the Travel Act, and the Interstate Transportation of Wagering Paraphernalia Act, and was subject to the jurisdiction of the New York courts). (5)

Bochan v. LaFontaine, 68 F.Supp.2d 692 (E.D. Va. 1999)(Virginia resident sued out of state defendants for posting allegedly defamatory material on servers in Virginia via "AOL", jurisdiction found on the basis that a tort had occurred in Virginia).

Heros, Inc. v. Heros Foundation, 958 F. Supp. 1 (D. D.C. 1996)(jurisdiction found where Defendants advertising of charitable activities on its Website, coupled with advertisements in a local paper).

CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6^th Cir. 1996)(subscriber to CompuServe services which had used CompuServe as a distributor of its shareware, and had signed a online agreement containing a choice of law clause).

Hasbro, Inc. v. Clue Computing, 994 F.Supp. 34 (D. Mass 1997)(jurisdiction found where Website was deemed to be "interactive", since it listed an email address for contacting the Defendant).

1.    No Jurisdiction Found

Cybercell, Inc. v. Cybercell, Inc., 130 F.3d 414 (9^th Cir. 1997) (mere fact that Defendant=s site was accessible in Arizona did not indicate that it had "purposely availed itself" of doing business in Arizona.)

Transcraft Corp. v. Doonan Corp., 45 U.S.P.Q. 2d 1097 (N. D. Ill. 1997) (Website containing email contact information insufficient to create personal jurisdiction. "As a rule, national advertisements (including those on the Internet) are insufficient to subject a defendant to jurisdiction in Illinois").

Trademark holders often found that the persons listed as owners of the domain name were fictitious, and/or located in foreign jurisdictions.(6) Personal jurisdiction over the owner of the domain name was therefore often impossible to acquire. As an alternative strategy, at least one trademark owner filed a "in rem" lawsuit, seeking to attach and gain possession of the "res"-- the underlying registration certificates for the offending domain names. However, the case was dismissed for lack of jurisdiction. The court concluded that the Trademark Dilution Act, 15 U.S.C. '1125(c) could not be read to permit in rem action, and further, that an in rem adjudication raised substantial due process concerns. Porsche Cars North America, Inc. v. Porsche.com, 51 F. Supp. 2d 707 (E. D. Va. 1999).

On November 29, 1999, President Clinton signed the Anticybersquatting Consumer Protection Act, 15 U.S.C. '1125(d). The Act amends Section 43 of the Lanham Act to add subsection (d). The Act is directed to domain name registrants who acquire or use a domain name containing a trademark "with a bad-faith intent to profit" from the use of such mark. In particular, the amendment authorizes a private cause of action by the owner of a mark against anyone who, with a bad-faith intent to profit, registers, traffics in, or uses a domain name that:

is identical or confusingly similar to a mark that is distinctive at the time of registration of the domain name,

is identical or confusingly similar to or dilutive of a famous mark that is famous at the time of registration of the domain name, or

is a trademark, word, or name protected by reason of section 18 U.S.C. ' 706, (7) or 36 U.S.C. ' 220506.(8)

2.  Damages

The Act provides for injunctive relief and damages in accordance with the existing provisions of the Lanham Act.(9) The court may also order the forfeiture or cancellation of the domain name, or its transfer to the owner of the mark. In addition, the Act permits a plaintiff to elect, at any time before final judgment, to recover statutory damages of not less than $1,000 and not more than $100,000 per domain name, subject to court approval.

3. The in rem Remedy

The Act also authorizes an in rem action against the domain name. The remedies in such an in rem action are limited to the forfeiture or cancellation of the domain name, or transfer of the domain name to the mark's owner. The in rem action is available if the holder of the domain name is not subject to personal jurisdiction in a federal civil action, or cannot be found. The venue for the in rem action is the district in which the domain name registrar, domain name registry, or other authority that registered or assigned the domain name is located. The action can be brought against multiple defendants, if those defendants all use the same registrar.

The first case to take advantage of this "in rem" provision is one in which Bell Atlantic Corp. will assume control of more than 20 domain names registered by cybersquatters, including bellatlantic.com bellphones.com, and ballatlantic.com (which linked to an adult Web site). Previously, Bell Atlantic sued these (and over 70 other) defendants in a trademark infringement claim. After the Anticybersquatting legislation passed, Bell Atlantic sued these approximately 20 defendants which refused to relinquish the names under the previous lawsuit or remained unreachable by Bell Atlantic's attorneys.(10)

Bargain Bid v. Ubid, 99-CV-7598 (E.D.N.Y. 2000) (injunction granted prohibiting defendants (1) from using the Bargain Bid and Barginbid marks and (2) from indicating that the defendants= services were sponsored, affiliated, or approved by Bargain Bid, where the defendants registered the domain name "barginbid.com" to allegedly divert consumers from the Bargain Bid=s Web site by using the common misspelling of "bargain.") (11)

John Tesh v. Celebsites, Inc., 00-00603ABC (RZX) (C.D. Calif., filed Jan. 19, 2000), (John Tesh claims, inter alia, that defendants, owners of "JohnTesh.com," falsely advertised that site as the official site for Tesh, creating consumer confusion because Tesh owns and operates his own official Web site, "Tesh.com.");(12)

President and Fellows of Harvard College v. Rhys, No. 99CV12489RCL (D. Mass., filed 12/6/99), (Harvard sued domain name owners, and seeks to prevent Web Productions, a company which has registered sixty-five domain names relating to Harvard and Radcliffe, from using Harvard's trademarks).

Brad Pitt has also filed suit against the owners of "bradpitt.com," who initially tried to sell the domain name to Pitt for as much as $50,000.00, and the owners of "bradpitt.net," a commercial cite and fan club outlet which sells merchandise featuring Brad Pitt.(13)

New York Yankees v. McKiernan, 99 CV 8449 (S.D.N.Y., filed 12/23/99)(action by The New York Yankees alleging that defendant's registration of the domain name "newyorkyankees.com" was a bad faith attempt to profit from the Yankee=s famous and distinctive marks).(14)

Sporty=s Farm, L.L.C. v. Sportsman=s Market, Inc., F.3d, 2000 U.S. App. LEXIS 1246, (2d Cir.2000)(the court found that (a) "sporty=s" is a distinctive mark, (b) the domain name "sporty=s.com" is confusingly similar to the sporty=s mark, and (c) there was ample evidence in the record of "bad faith intent to profit," and the court affirmed the lower court=s order that defendant transfer the domain name to the plaintiff).

The Internet Corporation for Assigned Names and Numbers ("ICANN") is a non-profit corporation formed by a coalition of the internet's business, technical, and academic community. ICANN has been designated by the United States Government to serve as the entity to which the U.S. Government is transferring the responsibility for management of the top level domain names ".com", ".org.", and "net". On January 3, 2000, the Uniform Domain Name Dispute Resolution Policy ("UDRP"), and the accompanying Rules for Uniform Domain Name Dispute Resolution Policy adopted by ICANN became effective.(16)

ICANN has instituted a mandatory arbitration procedure for domain name disputes. Arbitration takes place before an accredited provider of arbitration services.(17) The UDRP applies to all domain names currently in existence or subsequently registered, and replaces the domain name dispute policy previously used by Network Solutions, Inc., formerly the only avenue to register a domain name.

A.     Scope

The ICANN Policy is directed to cybersquatters who have registered and are using the domain name in bad faith. The ICANN procedure should not be invoked unless the Complainant can demonstrate the requisite bad faith. Moreover, the ICANN Policy is more restrictive than the federal legislation, which provides a cause of action if the registration or use of the domain name is in bad faith.

B.     Factors and Evidence Considered

1.     The Complainant/Trademark Holder

To initiate an arbitration, and to prevail, the Complainant/Trademark holder must assert (and presumably prove) the following three factors:

The domain name at issue is identical or confusingly similar to a trademark or service mark of the Complainant;

The domain name registrant has no rights or legitimate interests in the domain name; and

The domain name at issue has been registered and is being used in bad faith. (Policy, Paragraph 4(a)).

2.     The Respondent

The Policy also provides direction to Respondent as to the evidence necessary to meet the assertions made by the Complainant. For the Respondent, certain circumstances are suggested which may demonstrate rights or legitimate interests in the domain name. These non-exclusive factors are:

Whether the domain name registrant prior to learning of the dispute, had used or taken steps to use the domain name in connection with the bona fide offering of goods or services;

Whether the domain name registrant has been commonly known by the domain name; and

Whether the domain name registrant is making a legitimate non-commercial or fair use of the domain name without intent to obtain commercial gain by misleadingly diverting consumers or tarnishing the mark at issue. (Policy Paragraph 4(c)).

3.     Bad Faith

The Policy further provides direction to the Claimant for demonstrating bad faith. Much like the Anti-Cybersquatting Act, ICANN policy sets forth a number of illustrative factors which, if found by the arbitration panel, would be evidence of the registration and use of a domain name in bad faith. These include:

Evidence indicating the domain name was registered or acquired for the purpose of extracting payment from the trademark owner in excess of the costs associated with registering or acquiring the domain name;

The domain name was registered to prevent the trademark owner from being able to use it as a domain name, provided that the registrant has engaged in a pattern of such contact in connection with other domain names;

The domain name was registered for purpose of disrupting the competitor; or

The domain name registrant has used the domain name to divert commercial traffic to its website by creating a likelihood of confusion among internet users. (Policy, Paragraph 4(b)).

4.     Process and Remedies

The Arbitration process is conducted solely on paper. There is no provision for hearings or the taking of live testimony. The sole remedy available in an ICANN proceeding is the cancellation of the domain name or the transfer of the domain name to the Complainant. (Policy, Paragraph 4(i)). Submitting a domain name dispute pursuant to the ICANN policy does not prevent either party from submitting the dispute to a court of competent jurisdiction for independent resolution before the proceeding is commenced, or after the proceeding is commenced. (Id., Paragraph 4(k)).

(2)  A domain name can be registered for a nominal fee without any content being provided or other usage made of the Web site. In such instances, the Web site advises the viewer that it is under construction.   Web sites can also be registered at Network Solutions, Inc., at www.nsi.com; NetNames International Ltd., at www.netnames.com; and Register.com, Inc. at www.register.com.

(3)  Jurisdiction over infringers has been premised upon the concept that the infringement is a tortious act within the state sufficient to confer long-arm jurisdiction. See, e.g., H.K. Corp. v. Louder, 336 F. Supp. 79 (N.D. Ga. 1971)(trademark infringement in Georgia held to be a tortuous injury in the State by a act or omission outside the State by one who derives substantial revenue from goods sold in the State).

(4)  Many of these cases do not involve cybersquatters, but are illustrative of the jurisdictional issues to be considered in Internet cases.

(5)    This case is reported in the Internet Newsletter, August 1999.

(6)    The name and address of the registrant of a domain name can be determined by reviewing the information located at www.networksolutions.com/cgi-bin/whois/whois.

(7)    18 U.S.C. Section 706 provides for criminal for fraudulent or unauthorized use or display of the Red Cross of the American National Red Cross.

(8)    36 U.S.C. Section 220506 provides for civil penalties for unauthorized use of the names, marks or symbols of United States Olympic Committee, the International Olympic Committee, the International Paralympic Committee, the Pan-American Sports Organization.

(9)    Remedies permitted under the Lanham Act include injunctive relief. 15 U.S.C. Section 1116. In addition, a plaintiff may recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.  15 U.S.C. Section' 1117(a). The court also has the discretion, under appropriate circumstances, to assess damages above the amount found as actual damages, not exceeding three times such amount. Id. In exceptional cases, attorneys fees may also be awarded. Id.

(10)    McGuire, David, Bell Atlantic wins landmark cybersquatting ruling, Newsbytes, February 3, 2000.

(11)    See also Jones, Leigh, Federal Cybersquatter Law Survives Test, N.Y.L.J., Jan 18, 2000.

(12)    John Tesh Sues for Trademark Infringement and Cybersquatting, E-Commerce Law Weekly, Jan. 31, 2000.This case has settled and the celebrity fan site has agreed to turn over the domain name to Tesh.com. See Mack, Jennifer, John Tesh settles cybersquatting suit, ZDNet News, Feb. 3, 2000.

(13)    Shepherd, Ritchenya A., Cyberpirates Now May Have to Walk the Plank, The National Law Journal, Dec. 16, 1999.

(14)    Yankees Sue Fan Over Right for Name as Domain Name, The Internet Newsletter, p. 12, Jan. 2000.

(15)    See ICANN Fact Sheet at http://www.icann.org./general/fact-sheet.htm.

(16)    The Rules are found at http://www.icann.org/udrp/udrp-rules-24oct99.htm. The Policy is found at http://www.icann.org/udrp/udrp-policy-24oct99.htm.

(17)    A list of accredited providers, and links to their supplemental rules, is found at http://www.icann.org/udrp/approved-providers.htm. At this time, the World Intellectual Property Organization (AWIPO) located in Geneva, Switzerland, the National Arbitration Forum (NAF), located in Minneapolis, Minnesota, and Disputes.org/eResolution Consortium, located in Montreal, Canada are accredited providers under the ICANN policy.

	The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

© 2000 Robert C. Port. All Right Reserved