On Cybersquatting, Product Safety and Trademark Protection
Cybersquatting occurs when a person registers an Internet domain name that incorporates a famous trademark and then “squats” on it until an opportunity arises to profit from ownership. Until the late ’90s, it was unclear whether existing U.S. trademark law prohibited this practice.
But in 1999, ICANN, the organization that functions as the de facto governing body of Internet infrastructure, rolled out a contractual method for resolving disputes over ownership of domain names. One of the current requirements for registering a domain name is that the registrant agrees to submit to an alternative dispute resolution process to determine whether it’s entitled to maintain a domain name that includes, or plays off, another company’s trademark. This process has greatly benefited trademark owners and provides a relatively quick (six to eight weeks) and affordable ($5,000 or less) means of recovering domain names.
Also that year, Congress enacted the Anti-cybersquatting Consumer Protection Act of 1999, which enables trademark owners to sue in federal court to recover domain names, including the right to bring an action against the domain name itself, even if the registrant is beyond the jurisdictional reach of the federal courts.
Consumer Product Safety
The federal Consumer Product Safety Act requires catalogers and other retailers to report to the Consumer Product Safety Commission (CPSC) any product defect that “could create a substantial product hazard.” This regulatory scheme heavily relies on self-reporting with large penalties for failure to do so. Many catalog merchants are unaware of the act’s record-keeping requirements, what events trigger a reporting obligation to the CPSC, the extent to which a company can negotiate with the staff of the CPSC the terms of a consumer recall notice, or the possibility of offsetting recall responsibilities onto the manufacturer or supplier.
Establishing a formal and closely monitored compliance program is critical to assuring that your company meets the requirements of the law. In addition, the very existence of a documented compliance program may be helpful in avoiding or reducing penalties in the event of an inadvertent failure to report a substantial product hazard
to the CPSC.