Sunday, January 25, 2009

Mr. X and the Cybersquatters

Mr. X and the Cybersquatters

Mr. X as owner of the U.S. trademark “SuperSpuds” noticed that the domain name was taken by another person. Mr. X believes his trademark rights ensure his acquisition of the domain name. He begins a trademark lawsuit against the owner of the domain name.

Domain names are valuable commodities regulated by "The Internet Corporation for Assigned Names and Numbers" (ICANN). In order for Mr. X to acquire the domain name, or in other words, deregister the name from the current holder and transfer to himself, he or his lawyers need to prove three points completely under the Uniform Domain Name Resolution Policy ("UDRP").

1. The domain name is similar in a confusing way to his trademarked company name.

As the domain name and his company name are virtually identical there exists confusing similarity which would possibly support his case.

2. Domain has been registered and used in bad faith.

Mr. X would need to instruct his lawyers to investigate this point as there is as of yet no evidence of bad faith. Evidence of bad faith would be found if registration of the domain name was made with the intention of re-selling the domain name for a profit, business disruption of competitors or misrepresentation of the website as being affiliated with the trademarked company of the complainant.

3. Defendant has no legitimate business interests in the domain name.

Mr. X would need to instruct his lawyers to investigate this point as there is as of yet no evidence of legitimate or illegitimate business. The current holder of this domain name may have legitimate rights such as bona fide intention to conduct sales of goods or services, defendant is closely associated with the domain name even without holding a trade mark on it, or the use of the website does not intend commercial gain at the expense of the trade mark name holder and is conducting non-commercial or fair use of the domain name.

Advice for Mr. X: While the first point of confusing similarity may be the easiest to confirm or prove the following two points, evidence of bad faith usage or cyber-squatting and legitimacy of business interests require more consideration. If the second proves true it might be more economical to simply make an out of court offer to purchase the domain name (unless the price is exorbident). In the second case if it is found that the non-trademarked holder is conducting non-commercial or fair use of the domain name it will be impossible to ensure deregistration and transfer to Mr. X.

A cybersquatter is in the business of selling domain names to rightful holders and enters the internet pantheon some where in the realms of spam advertisers and phising scams. It would be very unlikely that a defendant proven holding the domain name in bad faith could alternatively prove legitimacy in terms of fair use. This would be the UDRP's provision for relief against cyber-squatters.

Cybersquatters have specific goals relating to pay-offs from larger trademarked companies. While the costs of litigation for domain name deregistration are described as at a minimum of USD $5,000 through the UDRP the full pursuit of a domain name by a trade marked company may be cheaper than the cybersquatter's asking price. If Mr. X proceeds with cautious negotiations with the cybersquatter directly prior to litigation perhaps a greater cost savings may be made. Even in the case of a legitimate non-commercial or fair use of the domain name a simple request might suffice particuarly if the domain holder is reasonable the deregistration process may occur simply out of courtesy without the threat of litigation. By this means civility is the first option for Mr. X.

Jumping into a lawsuit without first investigating rather than mediation or simply making requests for transfer of the domain title would be a foolish and costly first move for Mr. X. Why pay to fight for something you might get for free or next to nothing if you ask nicely?

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