CYBER-SQUATTING AND CYBER-PIRACY

There has been significant publicity of individuals registering domain names incorporating the names of famous persons or organizations or otherwise incorporating trademarks and trade names of others. The domain names are then held for resale to the organizations for a substantial profit.

In November, 1999, Congress passed and President Clinton signed the Anti-cyber Piracy Act (the “Act”). The Act is found at 15 U.S.C Section 1125. The Act establishes that a registrant of a domain name may be liable to the owner of a trademark or others that may be affected by the “bad faith” of the domain name registrant.

As indicated, the Act provides protection not only for registered trademarks, but also to:

any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact which is likely to cause confusion or to cause mistake, or to deceive as to affiliation, connection or association of such person with another person, or as to the origin, sponsorship or, in commercial advertising or promotion, misrepresents the nature, characteristics, qualities of goods or services.

The Act further provides that the owner of the domain name “ … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

The Act defines bad faith to include:

“the person’s offer to transfer, sell or otherwise assign the domain name to the owner of the mark for financial gain without having used or (having) the intent to use the domain name in a bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct.”

The Act applies to domain names registered both before and after the Act’s effective date (November 29, 1999). However the owner of the mark may not be able to recover lost profits from the owner of a domain name registered prior to the effective date of the Act.

Note that NSI and its now approximate 95 competitors are not liable under the Act.

Although a new statute, it has already been used by a number of parties to stop (enjoin) domain name owners from profiting from their speculative acquisition or registration of domain names. For example, John Tesh (a television personality and stage performer) brought a lawsuit under the provisions of the Act against Celebsites, Inc., the owner of the domain name JohnTesh.com. It was recently announced that the lawsuit had been settled with Celebsites agreeing to transfer the domain name to John Tesh.