Cybersquatting: The West Coast Free-Pass
Domain Names (Re)registrations and Trademark Infringement
The Anticybersquatting Consumer Protection Act (“ACPA”) prohibits “cybersquatters” from registering internet domain names that are identical or confusingly similar to trademarks.[1] However, some courts’ interpretation of the ACPA makes the statute ineffective when it comes to “millions of domain names on the resale market.”[2] Since 2011, the circuit courts have been split, dramatically affecting the outcome of many similar trademark infringement cases related to a domain name.[3] While most courts take domain name re-registrations into account in order to characterize a cybersquatting claim, the Ninth Circuit does not.[4] In its decisions, the Ninth Circuit consistently held that the ACPA applies solely to creating or first registering domain names while excluding all subsequent registrations.[5] On the contrary, other circuits apply the ACPA to every domain name registration, including its creation and subsequent re-registrations.[6]
At first, this might appear to be a detail, but the domain name second-hand market is vast in practice. The Ninth Circuit interpretation results in dismissed trademark infringement cases, even when the jury found that the domain name owner acted in bad faith, as in GoPets. Even more dismissed cases for those domain names that were created before the ACPA went into effect in 1999, as in the Schmidheiny v. Weber case.[7]
The UDRP and the Judiciary Paths
In a cybersquatting case, good practice is to file a complaint before a WIPO arbitrator following the international UDRP procedure.[8] This path is known to be effective and less expensive.[9]However, this path is not always available, first because it does not apply to every type of domain name, and second because of the bad faith standard.[10] For example, a WIPO arbitrator considered that a domain name was not registered in bad faith simply because it was created before the allegedly infringed trademark was used, without any further concern relating to the behavior of the owner.[11] Thus, if the domain name is created before the use of the trademark, the arbitrator may hold that there is no bad faith, and they will not order the domain name transfer.[12] Courts in the U.S. have a broader idea of what bad faith is, further protecting the trademark owner per the ACPA provisions.[13] In GoPets, “[t]he district court found that the Hises’ registration of the Additional Domains was in bad faith,” notwithstanding the WIPO arbitrator ruling otherwise.[14]
The Ninth Circuit’s Argument
The ACPA prohibits registering a domain name identical or confusingly similar to a trademark by a third party who does not own the trademark rights.[15] The bad faith analysis under ACPA is pretty broad; courts are invited to consider several factors, including any prior use, the bona fide intent to offer goods or services, the registration or acquisition of multiple confusingly similar domain names, etc.[16] However, the statute does not define “registration,” hence the case law and circuit split on whether the term covers only the creation of a domain name or also all the subsequent (re)registrations.[17]
In GoPets, the Ninth Circuit held that applying ACPA to re-registration would effectively make some domain names inalienable.[18] Indeed, the court considered that it would make “infringing” domain name owners never sell their domain names because they would anticipate a trademark infringement case, which would result in those domain names being inalienable in practice.[19]
Although this argument implicitly admits the infringing nature of the domain names in question, it also fails in practice because domain name registrations must be maintained and renewed to be kept by their owners.[20] Therefore, a bad faith owner willing to hold a domain name similar to a trademark would need to re-register it regularly.[21]
Moreover, ACPA’s plain and comprehensive language, “registration,” should not be reduced to “creation-registration” without a good policy reason.[22] The legislative would have changed it if it deemed it appropriate following the circuit split that has been going on for more than ten years.[23]
ACPA’s very purpose is to protect the senior trademark owners’ rights against cybersquatters.[24] The Ninth Circuit’s interpretation renders ACPA provisions entirely useless for a vast part of the infringement cases; in fact, millions of domain names. The Fourth Circuit renewed its disagreement with the ninth circuit’s approach, providing a compelling argument showing how the latter empties the ACPA provisions of its substance.[25] Moreover, scholars, practitioners, and WIPO arbitrators have agreed on the matter several times, considering that Congress intended to protect the trademark owners from all fraudulent (re)-registrations, effectively preventing cybersquatting.[26]
Footnotes
