8/29/11 – Fardo/Rogel Settle Cybersquatting Case in Federal Court.
Attorneys Noah Paul Fardo, Esquire, and William F. Rogel, Esquire, of the Pittsburgh law firm, Flaherty Fardo, LLC have announced a successful confidential resolution of a federal claim involving a recent trend known as “cybersquatting”. In this case, allegations existed against the defendant who used similar domain names of their competitors to divert web traffic to their own website.
As the internet grows, the competition for on-line traffic is at an all time high and the federal government has regulated the use of domain names to protect businesses.
What is Cybersquatting?
The Anticybersquatting Consumer Protection Act (ACPA) was enacted in order to prevent people, acting in bad faith, from registering or using a domain name that is confusingly similar to a trademark or distinctive mark.
The elements necessary to bring a claim under the ACPA are simply:
- Plaintiffs plead distinctive marks;
- the domain names in question are identical or confusingly similar to such marks;
- Defendants registered the domain names; and
- that they did so with the bad faith intent to profit therefrom.
The challenge in these cases can lie in establishing whether a mark is distinctive, especially when the Plaintiff does not have a protectable, registered trademark. In these instances, as was this case, Plaintiffs must establish that their mark is distinctive to the general public, and that they have a clear secondary meaning within the market.
The argument comes down to whether a term is arbitrary, suggestive, descriptive or generic, or if it is distinctive and has established a secondary meaning.
The courts have articulated a non-exhaustive eleven-factor test which is relevant to the determination of whether a term has established secondary meaning:
- extent of sales and advertising leading to buyer association
- length of use
- exclusivity of use
- fact of copying
- customer surveys
- customer testimony
- use of the mark in trade journals
- size of the company
- number of sales
- number of customers
- actual confusion
Under the ACPA parties can elect to seek actual or statutory damages. The Act provides for statutory damages, because actual damages are often difficult to prove in these cases.
The statutory damages provision provides damages ranging from a minimum of $1,000.00 to $100,000.00 per domain name. This amount is completely up to the discretion of the court, and often depends upon the egregiousness of the defendant’s conduct. The largest verdicts and settlements of these cases always involve allegations of bad faith (i.e. stealing your competitors domain name and then trying to sell it back to them for substantially higher).