Like all large Internet domain purveyors, GoDaddy makes a tidy income off of selling and supporting websites. What they don’t do, and aren’t about to promise any time soon, is to prevent someone from operating a website using a domain that contains your trademark, or a term so similar that it could deceive the public, divert business or palm off your hard-earned good will. Looking out for your trademark rights against the threats existing in cyberspace, especially if it meant selling fewer domains, would be contrary to the very life blood of such companies. As one victim recently learned the hard way, fighting against this type of brand erosion is an uphill battle that requires hands-on vigilance and can be aided by some simple preventive measures.
Cybersquatting, the practice of legally registering a domain that embodies someone else’s trademark, and then holding the domain hostage for ransom or exploiting the domain to divert business away from the trademark owner, has long been the bane of the intellectual property community. Initially, it was only in extreme cases that one party’s unauthorized use of a competitor’s trademark in a domain address was held to be an infringement of the trademark owner’s rights. Internet domain hosts like GoDaddy, meanwhile, managed to stay above the fray. They did this by adopting the same stance the phone company takes for abusive phone calls – they provide the framework but they don’t police the behavior of those who use it.
When Congress finally enacted the Anti-Cybersquatting Consumer Protection Act (ACPA) in 1999, it was hoped to provide trademark owners with a new weapon against this practice. As one recent case showed, while the ACPA has proven extremely helpful, obtaining a favorable result can be surprisingly difficult. The case involved the Academy of Motion Picture Arts and Sciences, the folks that produce the Oscars. For over five years, the Academy pursued an ACPA claim against GoDaddy, accusing them of deliberately allowing private parties to purchase hundreds of misleading domains, such as “2011Oscars.com,” or “AcademyAwardBuzz.com,” that clearly were being mistaken for legitimate Oscar sites. According to the Academy, GoDaddy went a step further and, along with the private domain owners, made money off of traffic visiting these domains through the Google pay-per-click program. Despite this evidence, and the fact that the Academy prevailed on almost every part of its $30 million claim, GoDaddy escaped liability on the sole basis that, according to the court, the Academy hadn’t shown that GoDaddy acted with a “bad faith intent to profit.” By letting the host off the hook, it meant the Academy had to go after each owner on a case-by-case basis.
The inability to prove that a cybersquatter acted in “bad faith” is what trips up the vast majority of claims brought under the ACPA. Imposing this requirement of an extra strong level of culpability was the compromise ultimately brokered between the tech community, the legislature and free speech advocates that enabled the ACPA to be adopted. Nonetheless, even in seemingly egregious cases like this one, it can be an oppressive burden to prove the existence of a nefarious motive, for the simple reason that there rarely is much tangible evidence demonstrating the thinking behind the original purchase of an offending domain name. As the Academy learned, bad faith is easy to allege but far more difficult to prove.
The practical takeaway, therefore, is that while cybersquatting laws provide the teeth and framework for halting serious violations of trademark rights, it is foolhardy to rely on these laws alone. And, it’s naïve to assume that a domain host like GoDaddy would care about the motives behind a customer’s purchase, or have the slightest hesitation in selling someone a domain name that poaches on the good will of your trademark.
There are preemptive steps that can be taken to avoid this dilemma. The first is simple and careful monitoring of activity. Before deciding to adopt a new trademark, care should be taken to ensure that at least one acceptable domain address containing this mark is available to be registered. If a few of them are located, they should be grabbed up as soon as possible. As use of the trademark unfolds over time, it should be a standard weekly, or even daily, practice to monitor the existence of newly registered domains that might present an infringement problem. If an offending domain is detected, and the owner is either using it in a way that impacts your business or offers to sell it to you at an exorbitant price, there should be an immediate formal objection raised and a demand to both cease using the domain and to transfer it in return for the actual registration price. Finally, although the domain registrars are temporarily getting a pass on direct liability, they can still be ordered to transfer ownership of an offending domain through a relatively efficient and inexpensive dispute process that registrars must follow. These are cheap and easy steps that can avoid lengthy, costly, and often unsuccessful legal battles.