Remedies Against Cyberpirates

How owners can protect their trademarks as domain names

Hugh Latimer
Tom Queen
Ben Reed,
Wiley Rein & Fielding

One of the hottest issues in trademark law is the current conflicts arising between trademark owners and domain name registrants over the right to use particular names as Web site addresses. Trademark owners often believe that any right to register a trademark as a domain name is theirs by virtue of their trademark ownership. Many domain name registrants, however, have sought to 'lock-up' as many names as possible in order to profit from a later sale or lease/license arrangement with the trademark owner. These 'cyberpirates' often are not subject to traditional trademark remedies because they have not used the mark in commerce (that is, they are not actually operating a Web site under the potentially infringing domain name, but have simply registered the name.)

Although traditional trademark infringement and dilution remedies are available against cyberpirates where the domain name is being used and the other elements of liability can be satisfied, two new means of addressing these issues have recently become available to trademark owners. They are the Anticybersquatting Consumer Protection Act of 1999 ('Cyberpiracy Act') passed by Congress; and the new Uniform Domain Name Dispute Resolution Policy ('Dispute Policy') promulgated by the Internet Corporation for Assigned Names and Numbers ('ICANN'). In light of these recent developments, this article summarizes the old and new remedies available to trademark owners against cyberpirates or others who seek to exploit the owner's protected trademarks as their own domain names.


To bring a traditional case for trademark infringement, a plaintiff must have a distinctive mark one that is capable of identifying the product with which the mark is associated. This does not mean that the mark must be federally registered, although a federally registered mark is presumed to be distinctive. In addition, the domain name must be confusingly similar to the distinctive mark. A domain name is confusingly similar if its use is likely to cause confusion among consumers as to the source, endorsement, or sponsorship of the goods or services associated with the domain name. In other words, it must be likely that consumers will believe that the product associated with the domain name is related to or sponsored by the trademark owner. Because this determination is very fact specific, proving confusion in court can be difficult. Unless confusion is clear, litigating infringement or unfair competition cases can be costly due to the need for consumer surveys or other evidence to establish confusion.

In addition to distinctiveness and confusing similarity, the trademark owner must show that the domain name registrant has used the domain name in commerce. Under a traditional analysis, this would have meant that the domain name registrant would have needed to operate a Web site under the confusingly similar name with some commercial purpose. However, in Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), the Ninth Circuit Court of Appeals decided that a domain name registrant made commercial use of a mark by attempting to extract a fee from the trademark owner for rights to the domain name registration, even when the site operated had no commercial purpose. Thus, a cyberpirate may engage in commercial use sufficient to satisfy infringement requirements when he attempts to sell a domain name to a trademark owner, provided the domain name is being used in the operation of a Web site. The cyberpirate must operate a site, however. Mere registration is insufficient to constitute commercial use for purposes of an infringement action.

Thus, infringement may not be asserted in every case of cyberpiracy. When the domain name is being used, however, the trademark owner may choose to send a cease and desist letter to a Web site operator warning that an infringement suit may be filed if the domain name is not transferred to the trademark owner. Generally, the trademark owner need only have a distinctive mark in order to take this initial action. Often domain name registrants will be willing to negotiate, fearing the risk or the expense of litigation. To the extent that the domain name registrant has engaged in willful infringement, the trademark owner may be able to obtain not only injunctive relief but also may claim additional damages as provided for by statute.

As mentioned, litigation of infringement claims may be expensive and time consuming. Furthermore, infringement can only be asserted when the domain name registrant is actually operating a Web site that utilizes the infringing name. Thus, obtaining trademark infringement relief against a cyberpirate is hot always possible and may be difficult.


Dilution under the 1996 federal anti-dilution statute differs from infringement mainly in the type of mark at issue. To allege dilution, the mark must be 'famous.' In I.P. Lund Trading ApS v. Kohler, Co., 163 F.3d 27 (1st Cir. 1998), the First Circuit Court of Appeals ruled that a mark's distinctiveness for traditional trademark purposes is not sufficient to meet the 'higher' and 'more rigorous' standard that the mark must be famous for dilution. The mark must be very well-known. Moreover, as with an infringement action, the domain name registrant must be using the allegedly dilutive mark in operating a Web site.

If the mark is famous, the trademark owner must show that the domain name is similar or identical to the trademark and that the use of the name dilutes the goodwill or reputation of the mark. A domain name dilutes a trademark if it blurs the source of goods or services associated with the mark (for example, APPLE toothpaste) or if it tarnishes the reputation of the mark (for example, BUICK jalopies). Because federal dilution law is relatively new, the burden on a trademark owner to prove dilution is unclear and varies depending on where a suit is brought. Significantly, it is very difficult to prove dilution in the United States Court of Appeals for the Fourth Circuit, the c~5uit in which Network Solutions is located. This is important for trademark owners because that circuit may be the only place that many foreign defendants can be sued if their domain name registration is with Network Solutions.

Like infringement, dilution is a useful claim for the purposes of a cease and desist letter. However, the mark must be famous and the domain must be used in operating a Web site. Where the domain registrant uses the domain name in operating a site that reflects poorly on the trademark (for example, a pornography site), a dilution claim may be a better option than a infringement claim. However, unlike infringement, an injunction is the main remedy for dilution; damages are available only if the domain name registrant willfully intended to cause dilution or profit from the trademark owner's reputation.

Litigation of a dilution claim may also be costly. This is especially true because few cases have been litigated under the federal dilution statute, and circuit courts have adopted different and conflicting tests for dilution. Thus, judicial standards are still being worked out, making the success or failure of a dilution claim somewhat unpredictable.


Because traditional infringement and dilution claims did not always provide trademark owners relief from cyberpirates for the reasons set forth above, the Cyberpiracy Act was recently enacted. The Act requires that the trademark owner's mark be distinctive or famous. Thus, the mark must be one that would be protectable under trademark or dilution laws, although it does not need to be registered. The domain name at issue must be either identical to, confusingly similar to, or dilutive of the trademark owner's mark.

As with infringement and dilution claims, trademark owners can make cyberpiracy claims when the domain name is used in operating a Web site. However, use is not required. Thus, unlike traditional remedies, the new Act allows claims where the domain name is merely registered.

In order to obtain relief, however, the Act adds a requirement that the alleged cyberpirate must have acted with a bad-faith intent to profit from registering, trafficking in, or using the name. Bad faith may be demonstrated by registration of a substantial number of potentially infringing or dilutive domain names, attempts to extort substantially large transfer fees from trademark owners without an intent to use the names in conjunction with a bona-fide offer of goods or services, or use of misleading contact information in registering the domain names. In addition, an intent to dilute, infringe, or unfairly compete with the trademark owner's mark may also be used to show bad faith on the part of the domain name registrant. Despite these statutory elements, there is not yet any case law delineating how they will be applied to specific conduct.

The Act offers specific protections to a domain name registrant who reasonably believes that use of the domain name is a fair use or otherwise lawful. Thus, a court will consider the domain name registrant's prior use of the domain name in offering goods or services and any bona-fide fair or noncommercial use of the name in operating a Web site. These factors may insulate domain name registrants who have no commercial purpose or who registered the domain name without knowledge of the trademark owner's mark.

Despite the bad faith requirement and the fair use protections, the Cyberpiracy Act should be extremely helpful in pursuing cyberpirates. Indeed, for domain names registered or used after November 29, 1999, the trademark owner has the option to elect statutory damages of not less than $1,000 or more than $100,000 per domain name if a violation of the Act is proven. Furthermore, if the domain name registrant has provided false contact information in its registration form or likely cannot be sued in the United States, a trademark owner can bring an in rem action for control of the domain name registration. This means that the trademark owner may file suit in a court having jurisdiction where the domain name registrar (often Network Solutions) is located, naming the domain name as the defendant. Such an action would allow a trademark owner to obtain a domain name where that might otherwise be impossible through traditional remedies because the registrant is not within the jurisdiction of American courts.

Trademark owners should note that the Act has not yet been the subject of substantial litigation. Many domain name registrants have decried the constitutionality of some of the Act's provisions. In particular, the in rem remedy and the retroactive provisions in the statute have been challenged as unconstitutional. Thus, the full effect of the Cyberpiracy Act is not yet certain, but is very promising for trademark owners.


As an alternative to litigation, trademark owners may wish to resolve domain name disputes through the new ICANN Dispute Policy. This policy replaces one that Network Solutions ('NSF') previously used and allows a trademark owner to obtain the domain name from the registrant rather than simply have the name placed on 'hold' (as had been the case previously). In order to file a complaint under the policy, the domain name must be identical or confusingly similar to a trademark owner's mark. No federal registration is required to invoke the ICANN policy. The trademark owner must also show that the domain name registrant has no legitimate interest in the domain name and that the domain name was registered and is being used in bad faith.

Similar to the Cyberpiracy Act, bad faith can be evidenced by a number of circumstances: (1) registration of a domain name primarily to sell it to the complainant for an amount in excess of the out-of-pocket cost of the registration; (2) registration in order to prevent the trademark owner from obtaining a domain name reflecting that mark; (3) registration of the domain name to disrupt a competitor's business; or (4) using a domain name to intentionally divert users to a Web site through likelihood of confusion with the complainant's trademark. These factors may be more rigid than the Act because the conduct evidencing bad faith apparently must be directed at the complainant. (Under the cyberpiracy legislation, general evidence of bad faith will likely be sufficient.) On the other hand, while the Cyberpiracy Act requires a bad faith intent, which requires a subjective inquiry as to a registrant's purpose, the ICANN procedure appears to require only objective evidence of bad faith. From cases that already have been decided under the Cyberpiracy Act and ICANN Dispute Policy, it appears that this standard will be broadly applied to cover any activity that suggests bad faith.

Also like the Cyberpiracy Act, under the ICANN procedure the domain name registrant has an opportunity to provide evidence of a legitimate interest in the registered name. Factors an ICANN-approved arbitrator will consider in this connection include use of the domain name to offer bona-fide goods or services prior to the dispute; use of the name in identifying the registrant or its business; or a legitimate noncommercial or fair use of the domain name without any intent to divert potential users for commercial gain or to tarnish the trademark at issue.

Once a complaint is filed and the complainant has paid the required arbitration fees, the registrant will have 20 days to respond. An arbitrator will be appointed within five days after the response is filed or five days after the time to file a response has lapsed. If a response is not received, the arbitrator will decide the dispute based upon the complaint. In any case, the arbitrator will issue a decision within 14 days after of appointed. The remedies available are transfer of the domain name registration to the complainant or cancellation of the domain name. Furthermore, within ten days of the decision, either party may commence a lawsuit and thereby prevent implementation of the arbitrator's decision. This suit must be filed in either the location of the domain name registrar (for NSI, the court is the United States District Court for the Eastern District of Virginia), or the location of the registrant as evidenced by the address listed in the WHOIS database. In filing an ICANN complaint, the trademark owner must consent to the jurisdiction of the courts in one of these locations for the purposes of resolving a domain name registrant' s challenge to the arbitrator's decision.

NSI has taken the position that the ICANN policy is applicable to all current domain name registrations. Thus, the ICANN policy applies to domain names even if the registrant did not consent to the policy in connection with its original domain name registration. For trademark owners who could not challenge a similar domain name under the prior NSI policy (because the mark was not registered or the name was not identical) and who did not wish to undergo the time and expense of a court challenge, the ICANN procedure provides a fast and inexpensive process for obtaining relief against cyberpirates, whenever the domain name was registered.

In the first case decided under the new process, an ICANN arbitrator ruled in mid-January that a California man who registered '' had to transfer the registration to WWF. As of early February, there were more than 40 cases awaiting arbitration under the ICANN arbitration process. As a practical matter, however, the process incorporates standards similar to those in the Cyberpiracy Act. The main difference is that the arbitration process is an informal summary procedure; its total cost should be small compared to litigation. The risk is that a trademark owner will succeed, but end up litigating the matter anyway. In any event, the ICANN procedure is a possible alternative that can be utilized in conjunction with a cease and desist letter or as an attempt to resolve a matter inexpensively.


As the Internet becomes a larger part of the business world, trademark owners will find greater need for domain names that identify their presence on the Web. In addition, trademark owners will want to take steps to prevent others from using their marks or holding valuable domain names for ransom. Although traditional trademark law offers some relief to a trademark owner against the cyberpirate, the new remedies should provide greater protection from those who register infringing and dilutive domain names.