Cyberpirates Now May Have to Walk the Plank
Suits begin under new law that outlaws
A noose is tightening around the necks of the cyberpirates who collect big bucks by registering, then selling, the domain names of well-known businesses and individuals.
President Clinton signed the Anticybersquatting Consumer Protection Act on Nov. 29 as part of an omnibus appropriations bill. A flurry of lawsuits invoking the new law's provisions was quick to follow, including a suit, filed three days after the act was signed, by actor Brad Pitt against two domain-name holders.
Attorneys say that the new law, together with dispute-resolution procedures adopted in August by the International Corporation for Assigned Names and Numbers (ICANN), makes it increasingly risky to engage in the casual Internet profiteering off the name and goodwill of others.
"The anti-cybersquatting statute... strengthens [our] position quite a bit," said Mr. Pitt's lawyer, Jay Lavely, of Los Angeles' Lavely & Singer. It deals with the express situation his client is in, he said.
The new law adds a section to the Trademark Act of 1946 (the Lanham Act). The new act prohibits the bad-faith registration or use of an Internet domain name that infringes on a trademark or famous mark. It also protects people with famous names, although the extent of that protection is less clear, lawyers say, because the statute orders the Department of Commerce to study the issue.
"The [new] law is very helpful because trademark law doesn't necessarily fit very well with protecting domain-name registration," said Barbara Shufro, an IP lawyer in Pillsbury Madison & Sutro L.L.P.'s Palo Alto, Calif., office.
Trademark law protects marks connected with the distribution of goods and services, but cybersquatters often allow a domain name to go unused, and therefore may not be infringers, she said. By prohibiting cybersquatting itself, the act "will make it easier for trademark owners to get ownership of the domain names that correspond with their trademark," she said.
"There are people saying this bill gives an unfair advantage to trademark holders," said Ron N. Dreben, an intellectual property and technology partner in the Washington, D.C., office of Morgan, Lewis & Bockius L.L.P. "I don't see it that way," he said. "I see it as clarifying that people who take domain names of other people's markers with no bona fide purpose or intentions have infringed. That's now very, very clear and always should have been clear."
The statute adds teeth to common-law remedies by offering the option of seeking statutory damages of between $1,000 and $300,000 in lieu of proving damages. "There's a certain downside monetary risk to cyberpirates even if trademark holders can't show actual harm," Mr. Dreben said.
That's an important deterrent, said Harry Rubin, head of the Internet practice group at Washington, D.C.'s Shaw Pittman, because "most of these outfits that have been kidnapping domain names are Mom-and-Pop shops or kids sitting in the basement."
The act also allows parties to bring in rem actions against the offending sites themselves in cases in which domain-name owners cannot be located--something that courts have been unwilling to allow in the past, Mr. Dreben said.
Also named in the suit is KMA Visual Design OY, a Finnish company that owns bradpitt.net, a commercial site and fan club outlet that sells merchandise featuring the actor.
Trademark holders have criticized the new law for requiring them to show bad faith in order to go after cybersquatters. But Mr. Lavely said that he thinks the requirement is met if people are profiting off someone else's name: "I believe that constitutes evidence of bad faith."
Mr. Pitt's suit is now one of a crowd of early birds. Others, filed within weeks of the new anti-cybersquatting measure, include actions brought by Harvard University, the National Football League and Quokka Sports Inc.--the operator of the official America's Cup Web site--acting on behalf of America's Cup organizers.
"It's likely that there will be other clients, other people who will want to assert rights of this claim," Mr. Lavely predicted. "These represent valuable rights," he added, referring to the online turf war.
The new law also gives lawyers ammunition before they get into court, said Keith Kupferschmid, intellectual property counsel for the Software & Information Industry Association. Companies and individuals sending cease-and-desist letters to cybersquatters requesting that they voluntarily give up domain names now have a law to cite.
And the law is a welcome addition to the dispute-resolution procedures adopted by ICANN, Mr. Dreben said. "If a party is seeking monetary, injunctive relief beyond [a domain-name] cancellation or transfer, they have to go to court," he said. "Then, this new legislation will be helpful."
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