Publications

The Daily Journal
March 15, 2007

"Mastering Your Domain"
By Mary Tesh Glarum and Michael M. Amir

Imagine this: You are the owner of a company that caters to small children and their parents. You have expended significant time and resources marketing your brand, which is now widely recognized and trusted. Like many businesses, you rely heavily on your Web site, which you use to sell your product and communicate directly with clients. Your Web site's domain name is identical to your company name. Then things get complicated.

Just prior to kicking-off your holiday marketing blitz in December, you discover that you no longer have access to your Web site. Instead, the Web site has been taken over by a
hard-core pornography operator. Now, when small children and their parents type in your domain name, expecting to enter a child-friendly environment, they see a barrage of pornographic images.

You immediately contact your domain-name registrar (the company with which you registered your domain name). After waiting on hold for what feels like hours, you finally hear the voice of a live human. This customer service "professional" tells you that you no longer own your Web site because your domain-name registration has expired, and the registrar has sold your domain name to an online auction house. The auction house, in turn, has sold it to a pornography company.

You explain that you were never notified that the domain name was expiring and demand that the registrar immediately return your domain name. The person on the other end of the line, however, tells you that there is nothing she can do. Worse yet, she tells you that you have no legal recourse.

Unfortunately, this scenario (which is drawn from a case our firm handled) is all too common. Some domain-name registrars are working with auction houses to sell expiring domain names to the highest bidder. The registrar releases expiring domain names directly to the auction house, which then sells it at an online auction. Thus, the profit made on an expiring domain name is potentially much higher than the renewal fee that the original domain-name holder would have paid. There is little incentive for the registrar to ensure that the existing domain-name holder renews its registration.

There is currently little legal recourse available against the registrar. Historically, Congress and the courts have exempted registrars from legal liability except in extreme cases of bad faith. So far, neither Congress nor the Internet Corporation for Assigned Names and Numbers ("ICANN") (the group responsible for administering the domain-name system)
has addressed the practice of auctioning off expired domain names.

But if you own a trademark in the words that comprise your domain name, there are two legal channels against the person who bought the domain name at auction: (1) a civil action under the Anti-Cybersquatting Consumer Protection Act; or (2) a proceeding under ICANN's Uniform Domain Name Dispute Resolution Policy (the "UDRP").

Cybersquatting
The term "cybersquatter" refers to a person who reserves a domain name and then seeks to profit from the domain name, either by selling it back to its original owner or by trading on goodwill built up by the original owner in the name. The primary piece of legislation in this context is the Anti-Cybersquatting Consumer Protection Act.

To prevail under the act, a plaintiff must prove that: (1) the defendant has registered or used a domain name; (2) the domain name is identical or confusingly similar to plaintiff's mark; (3) plaintiff's mark was distinctive when defendant registered it; and (4) defendant has acted in bad faith and with the intent to profit.

These disputes often times involve difficult jurisdictional challenges. The act allows the plaintiff to pursue an in personam action against a cybersquatter if the cybersquatter resides, does business or is otherwise present in a judicial district in the United States .
If the cybersquatter does not fit these categories, or if the plaintiff is unable to locate the cybersquatter, the plaintiff may proceed in rem against the domain name. The plaintiff must file an in rem action in the judicial district where the domain-name registrar is located.

If the action is in personam, the plaintiff may recover monetary and injunctive relief. The act also provides for statutory damages as an alternative, ranging from $1,000 to $100,000 per infringing domain name. The court has discretion to determine the statutory damages within a statutory floor and ceiling. A plaintiff may also recover attorney fees in appropriate cases.

In rem proceedings offer fewer options. The court may only issue an order forfeiting or cancelling the domain name, or ordering that the domain name be transferred to plaintiff.

ICANN Proceedings
ICANN's Uniform Domain Name Dispute Resolution Policy applies to all accredited registrars in the top level domains, which include .com, .net and .org. The UDRP is directly incorporated into all top level domain-name registration agreements, and thus anyone who registers a domain name in one of these top level domains agrees to abide by the UDRP. The only remedy available under the UDRP is transfer or cancellation of the domain name at issue - no monetary damages are available.

To prevail in a UDRP proceeding, a complainant must show that (1) the domain name registered is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (2) the domain-name registrant has no rights or legitimate interest in the domain name in question; and (3) the domain name has been registered and is being used in bad faith.
A complainant can initiate a UDRP proceeding by filing a complaint with one of the four providers ICANN has authorized to administer the UDRP: (1) The National Arbitration Forum; (2) World Intellectual Property Organization; (3) International Institute for Conflict Prevention and Resolution; and (4) Asian Domain Name Dispute Resolution Center . Once a proceeding is commenced, the domain name is "locked" pending the outcome - the registrar can take no action affecting the domain name until it receives a decision from the provider. Generally, a UDRP proceeding is concluded within two months.

A UDRP proceeding is decided by a panel of either one or three members, depending on the parties' preference. The panel must submit its decision within 14 days of appointment. If the decision involves cancellation or transfer of the domain name, the registrar must wait 10 days before implementing the decision to permit the current domain-name holder to initiate a court proceeding. If the domain-name holder does so, the registrar will not implement the provider's decision and instead will await resolution by the court.