Trademarks Now Clearly Enforceable on the Web: The Anticybersqatting Consumer Protection Act Becomes Law

Well-established businesses with registered trademarks and name recognition among consumers have, despite such traditional advantages, often encountered problems in becoming e-businesses. These problems have arisen because the mechanisms for registering web site domain names — which might be identical to one's registered trademark — allowed persons unrelated to the trademark owner to obtain such domain names and hold them hostage.

For instance, Porsche Cars North America was unable in early 1999 to wrest from cybersquatters 128 different Internet Web Sites using "Porsche" mark within their domain names. See Porsche Cars North America Inc. v., et al., 55 F.Supp.2d 1461 (E.D. Va. 1999). As of November 29, 1999, businesses have a strong new weapon against such cyber-pirates, the Anticybersquatting Consumer Protection Act.

First, that Act provides a means for attacking the cybersquatter him or herself. Importantly it allows actions to be triggered against such individuals who "register[], traffic[] in, or use[]" such domain names identical or confusingly similar to a trademark. This language is significant because it eases the "commercial use" requirement that some times thwarted trademark holders' efforts to use traditional Lanham Act remedies against those who were true squatters holding out for a high pay-off while making no real use of the domain name. The Act then goes on to lay out criteria for determining whether the alleged squatter's registration should be considered one made in bad faith.

The Act provides for the award of compensatory damages, or, at the plaintiff's option, statutory damages of up to $100,000 per domain name, and for injunctive relief. Actions against such cybersquatters have already been filed in California, New York, and Massachusetts under this new law applicable to "all domain names registered before, on, or after" November 29, 1999.

The Act's two most significant features, however, stem from the nature of the actions and procedures that the Act now allows. First, the Act allows for constructive service of process on the cybersquatter through publication and through providing of notice to the postal and e-mail addresses the cybersquatter provided to the domain name registrar, even if such addresses were incorrect when given. This is an important provision since cybersquatters are notorious for being difficult to track down and for avoiding service of process.

Second, and most importantly, the Act allows for in rem actions against the name itself. An in rem action is one where the trademark owner as plaintiff would sue the domain name itself, and give notice to the domain name registrar or internet service provider, which third party would then deposit with the court all documents and information necessary for the court to order forfeiture, cancellation or transfer to the trademark owner of the domain name in question. (Under certain conditions, such registrars themselves may even have monetary liability). We expect the district court in Virginia, proximate to our Washington offices, to see a large number of such actions filed because it is the home of the nation's principal domain name registrar (Network Solutions, Inc.).

The Act is an important first step in policing trademarks right in an area of commerce once described by the phrase "There is no law west of the modem." Now there is a law that will protect trademark owners in all areas. Any business looking to take its trademarks and good will to the internet must consider these issues, and undertake necessary planning to defend its rights.