Protect Your Domain Name From "Cybersquatters"

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Saving Your (Domain) Name

Using The Federal Trademark Dilution Act To Squash Cybersquatters

Every Internet web page has its own address which uses an identifier called a "domain name." The domain name often consists of a person's name or a company's name or trademark (like mcdonalds.com, pepsi.com, etc.) "Cybersquatters," as that term has come to be commonly understood, are those who have registered several Internet domain names to prevent others from using those names without their consent. Domain names are registered through any one of several Accredited Registrars on a first-come, first-served basis for a standard registration fee. The Registrars do not, however, investigate a domain name registrant's right to use a domain name and, not long ago, cybersquatting on famous names was reminiscent of the California gold rush. Cybersquatters rushed about madly gobbling up domain names in the hope of later being able to sell them (at a hefty profit) to the person or company who was actually doing business under the registered name. There was a time when persons who wanted to make use of a particular domain name, regardless of whether they had previously used, or even registered, the name as a trade mark or service mark, were left with little recourse but to pay up to cybersquatters in order to use their own name or mark as an Internet domain name. All that began to change however with the passage of the Federal Trademark Dilution Act of 1995, 15 U.S.C. §§ 1125(c), 1127, (the "Act").

The Act provides, in part, as follows:

"The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark . . . ."

California has its own similar anti-dilution statute at Business & Professions Code § 14330. The term "use in commerce" is defined for purposes of the Federal Act as "the bona fide use of a mark in the ordinary course of trade . . . ." [15 U.S.C. § 1127] "Dilution" is defined as "the lessening of the capacity of a famous mark to identify and distinguish goods or services . . . ." [15 U.S.C. § 1127] To determine whether the holder of a trademark will successfully be able obtain an injunction against a cybersquatter under the Act requires an analysis of: (1) whether the mark is sufficiently "famous;" (2) whether it has been used by another person (i.e., the cybersquatter) in commerce, or the "ordinary course of trade;" (3) whether the other person's use of the mark "causes dilution of the distinctive quality of the mark" or lessens the ability of the mark to identify goods or services; and (4) whether the principles of equity require that the injunction be issued.

1. Is The Mark "Famous?"

Whether the mark is sufficiently famous to be afforded protection will, of course, be a question of fact and will depend upon the degree to which the mark is generally recognizable by individuals in the community. The non-exclusive list of criteria which the court may consider in determining whether a mark is "famous" include: the degree of inherent or acquired distinctiveness of the mark; the duration and extent of use of the mark; the duration and extent of advertising and publicity; the geographical scope of the use; the channels of trade in which the mark is used; the degree of recognition of the mark in the owner's channels of trade or "community;" the nature and extent of third party uses of the mark; and, whether the mark is federally registered, although federal registration of a mark is not a necessary prerequisite to obtaining protection under the Act.

2. Has The Mark Been Used "In Commerce?"

In recent cases applying the Federal Trademark Dilution Act to the activities of cybersquatters, the courts have consistently held that a famous mark is used in commerce, or in "the ordinary course of trade" when (a) it is registered as a domain name by a registrant who is not otherwise identified by, or associated with, the commonly accepted meaning of the domain name, and (b) the name is not used by the registrant as its own domain name, but rather is simply held for the purpose of sale or license to others. The courts have recognized that the cybersquatters' "business" is to register trademarks as domain names and then sell them to the rightful owners, thereby preventing the holders of the mark from doing business on the Internet under their trademarked names unless they pay the cybersquatter's fee. This, as the courts have held, is a sufficiently "commercial" use of the mark. [Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996); Panavision International L.P. v. Toeppen, 945 F. Supp. 1296 (C.D. Cal. 1996); Avery Dennison Corporation, v. Sumpton, 1998 U.S. Dist. Lexis 4373 (C.D. Cal. March 16, 1998).]

3. Has The Mark Been "Diluted?"

To find dilution under the Act, courts need not rely on traditional definitions such as "blurring" or "tarnishment." The courts presented with the question have unanimously held that it does in fact lessen the capacity of a famous mark to identify and distinguish goods or services when someone other than the trademark holder registers the trademark name as an Internet domain name. [Intermatic, Inc. v. Toeppen, supra; Panavision International L.P. v. Toeppen, supra.] The registration of a famous mark as a domain name, which prevents the holder of the mark from using it as its own domain name, has been held to sufficiently dilute the mark's ability to identify goods and services so as to entitle the holder of the mark to relief under the Act. [Avery Dennison Corporation, v. Sumpton, supra.]

4. Equity

The Act requires more, however, than mere proof that a cybersquatter has used a famous trademark in commerce and that, as a result, the capacity of the mark to identify goods or services has been diluted. In order to grant injunctive relief, the Act requires the court to consider the "equities" as between the parties. In Avery Dennison Corporation, v. Sumpton the court agreed with the plaintiffs that the Internet registration system simply does not authorize the registration of famous marks for sale or license to other persons rather than for the use by the registrant as its own domain name. If it is shown that the person who registered the mark as a domain name is a cybersquatter (i.e., that his/her business purpose was to preempt domain names for the purpose of selling them to the highest bidder), the cybersquatter could be required to relinquish the domain name without any compensation whatsoever. [Intermatic, Inc. v. Toeppen, supra; Panavision International L.P. v. Toeppen, supra.] Otherwise, if the registrant can show that the domain name was registered for some other, legitimate, business purpose equity will likely require that she be paid a reasonable sum for relinquishment of the domain name.

The bottom line is that the Federal Trademark Dilution Act (and its California counterpart) is a potent weapon with which to combat the activities of cybersquatters. Trademark dilution on the Internet was clearly a matter of congressional concern. Senator Patrick Leahy (D-Vt.) said: ". . . it is my hope that this anti-dilution statute can help stem the use of deceptive Internet addresses taken by those who are choosing marks that are associated with the products and services of others." [141 Congressional Record § 19312-01 (daily edition December 29, 1995) (statement of Senator Leahy).] So far the judicial decisions applying the Act have significantly helped to realize Senator Leahy's hope.