The last decade has seen an unprecedented growth in technology, which has paved the way for internet globalization and given new meaning to the term “international commerce”. Consequently, the digital highway has become populated with modern day highwaymen out for a fast buck. These rogues, known as “cybersquatters”, are individuals who register domain name addresses with the primary purpose of reselling them. Therefore, trademark holders are forced to pay these cybersquatters a substantial amount of money in order to get back a domain name making use of their trademark. When cybersquatting first reared its ugly head, the only ammunition that trademark holders had was traditional theories based on trademark law. However, these proved to be insufficient in the wake of internet technology, thus necessitating the creation of new enforcement mechanisms. Hence, the Anti-Cybersquatting Consumer Protection Act (ACPA) was enacted.
In enacting the ACPA, Congress was attempting to create a bright-line rule that would clearly resolve cybersquatting disputes. However, what it has also done is create uncertainty in many cases. Granted, the Act is useful in cases involving obvious bad faith. But where the circumstances surrounding bad faith are unclear, the Act is less helpful. In determining bad faith, one of the more important factors in the Act is whether the defendant “offered to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services.” The difficulty comes in where the court has to determine whether a defendant intended to use the domain name. It would be very difficult to say with any certainty that someone did not intend to use a name. It is possible that a defendant registered a domain name with the intention of offering goods and services, but later decided that the business venture was not economically viable. In this situation, it would make sense to sell the domain name if there were any takers. However, it is also plausible that the defendant will not be able to prove that it had plans to start a business. The court might then infer bad faith in a situation where the defendant was nothing more than conscientious in promptly registering a domain name.
It is easy to see how a defendant can be snagged in the cybersquatting net when it had no bad faith intentions to begin with. More important, a defendant’s use of a domain name may not even infringe on a valid trademark. Trademark law in the U.S. is complex with many factors that need to be considered before superior rights are determined. But the problem with the concept of cybersquatting is that it assumes that one of the parties has to be the “bad guy” (usually the domain name registrant). The ACPA can be used to pressure a defendant into giving up a domain name in what is known as “reverse cybersquatting,” and it can be a powerful bullying tool given the substantial penalties that the ACPA inflicts on cybersquatters.
So in the event you receive a cease and desist letter from a business claiming that you wrongfully registered a domain name that infringes on their trademark, do not automatically cave in to the pressure. You need to seek the advice of trademark counsel if you registered the domain name in good faith. You may in fact have superior rights to both the domain name as well as the trademark itself. It could very well be that the accuser is trying to bully you into giving up a domain name that it did not have the foresight to register.