In order to navigate the Internet, users enter the alphanumeric names of the Web sites they wish to visit, known as domain names. Behind the scenes, root servers match the domain name entered into a browser to the actual numeric address that is used to route the user’s browser to the proper site. In order to avoid duplication of domain names that would render the system inoperable, domain names must be registered and managed. With the explosion of Internet use in the early 1990s, people realized that domain names associated with the names or trademarks of well-known business–for example, microsoft.com–would be extremely valuable to those businesses. In the absence of any rules or restrictions on registration of domain names, thousands of domain names were registered by people with no connection to the businesses and trademarks associated with those names except the desire to offer the domain names for sale to the businesses with which the domain names were connected. This practice was given the name “cybersquatting.”
Businesses and other trademark owners seeking ownership of domain names already registered by others initially had a choice of pursuing a trademark infringement action or paying the price sought by the registrant. However, courts hearing trademark infringement cases had difficulty sorting out incidents of actual infringement and legitimate uses of a trademark within a domain name, such as for the purposes of criticizing the trademark owner. The first legislative attempt to establish clear ground rules for the registration of trademark-associated domain names was the Anticybersquatting Consumer Protection Act (ACPA), passed in 1999.
The ACPA provides for civil liability for one who registers, traffics in or uses a domain name that is identical or confusingly similar to an existing trademark with a bad faith intent to profit from that trademark. The statute provides several considerations for determining the existence of bad faith, including:
the registrant’s valid intellectual property rights or other interest in the domain name;
whether the domain name is the name of or otherwise identifies the registrant;
the registrant’s prior valid use of the domain name in offering goods or services;
the registrant’s intent to divert customers from the trademark owner’s own site for the registrant’s commercial gain or for the purpose of tarnishing or disparaging the trademark by creating a likelihood of confusion as to the actual source of the site;
the registrant’s intent to sell the domain name to the trademark owner without having previously used the site for legitimate purposes;
the providing of false or misleading information during the registration process.
A slight variant of cybersquatting is a practice called typosquatting, in which registrants anticipate common misspellings of existing trademarks or domain names with the intent of tricking an intended visitor of the properly spelled domain to visit the typosquatter’s domain. Commonly, the typosquatter’s domain will prevent a user from exiting without clicking through advertisements, for which the typosquatter collects fees. In other cases, users are unwittingly directed to pornographic or other undesirable Web sites. Courts have treated typosquatting cases in the same manner as cybersquatting cases, based on the legislative history of the ACPA as well as the specific language applying to domain names that are “confusingly similar” to famous or distinctive trademarks.
Another form of cybersquatting is the registration of names of celebrities as domain names. Because the ACPA is designed to protect trademarks from cybersquatting, this type of cybersquatting is not prohibited. Except in cases where a celebrity has registered his or her name as a trademark, which requires that the name be well enough known to have acquired a secondary meaning to the public, cybersquatters are free to traffic in domain names based on person’s names. The ACPA also does not prohibit the registration or use of generic terms as domain names, such as toys.com or books.com.
The responsibility of managing many of the common top-level domain names, among them .com, .org, and .net, was transferred to the Internet Corporation for Assigned Names and Numbers (ICANN) in 1998. ICANN established a compulsory resolution process to resolve disputes over domain names typified by cybersquatting and typosquatting called the Uniform Dispute Resolution Procedure (UDRP). Under the UDRP, a trademark owner files a complaint with an approved dispute resolution provider. The process is extremely streamlined and unlike the judicial and arbitration processes does not provide for the hearing of evidence or argument, although the domain registrant does have an opportunity to respond to the complaint. A hearing panel then decides whether or not the domain should be transferred to the complaining trademark owner. The loser may then bring a lawsuit to challenge the result. The UDRP results in favorable decisions for trademark owners in four out of five cases, resulting in widespread criticism that the procedure is fundamentally flawed and unfair.
The most troublesome cases have proven to be those in which domain names have been registered with the intent of expressing discontent with the trademark holder, such as the ubiquitous [trademark]sucks.com domain names. While some registrants have been frank about their intent to exact some price from the trademark holder for turning over the offending domain name, constituting the bad faith necessary to find a violation of ACPA, some courts have interpreted the mere intent to criticize a trademark holder as creating a presumption of bad faith. Others have considered criticism in the absence of financial motive a legitimate use of a trademark. This has sparked a debate as to the role of the First Amendment in the domain name registration arena and induced the somewhat ironic practice of trademark owners registering every imaginable denigrating domain name that includes their trademark to protect it from criticism. Critics argue that such practice improperly allows trademark holders to insulate themselves from criticism on the Internet.