Legal Matters: Keep It in Your Domain
The cybersquatting phenomenon has existed since the early days of the Internet, and there are numerous examples of trademark owners paying large sums to recover domain names. The Internet Corporation for Assigned Names and Numbers (ICANN) is the organization responsible for doling out domain names. In the beginning, it did so strictly on a first come, first served basis. Consequently, it was relatively easy for cybersquatters to grab famous brand names and hold out for large payments when trademark owners sought to acquire their own brand names for use as Internet addresses.
Hertz, Avon and Panasonic were all early victims of this practice and joined many Fortune 500 companies that frequently paid tens of thousands of dollars to purchase domain names corresponding to their brands.
Early cybersquatters operated in an environment where the legality of their practice, however egregious, was unclear. There were few reliable and cost-effective tools available to trademark owners to combat the practice. Until the late ’90s, for example, it wasn’t clear that existing U.S. trademark law prohibited cybersquatting.
However, in 1999, two developments changed the legal landscape:
- Congress enacted the Anticybersquatting Consumer Protection Act of 1999 (also known as the Truth in Domain Names Act). This enables trademark owners to sue in federal court to recover domain names, including the right to bring action against the domain name itself, even if the registrant is beyond the jurisdictional reach of the federal courts.
- ICANN rolled out a contractual method for resolving ownership disputes, called the Uniform Domain Name Dispute Resolution Policy (UDRP). As a condition of obtaining a domain name, every registrant must agree to submit to an arbitration process to determine whether it’s entitled to maintain a domain name similar to another company’s trademark. This process applies to all generic, top-level domains, which include the ubiquitous “.com” as well as “.net,” “.org,” “.biz” and others.