What is Bad Faith Cybersquatting under the ACPA?

What is Bad Faith Cybersquatting under the ACPA?

So what is bad faith cybersquatting, and what does a plaintiff who has filed an ACPA cybersquatting lawsuit have to prove? And what does the defendant have to establish in order to avoid a finding of bad faith under the ACPA? There are a number of non-exhaustive factors that a jury is going to look at, in determining whether or not someone has registered, used, or trafficked in a domain name, with a bad faith intent to profit requisite under the act.

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Welcome to Cybersquatting Law Radio. My name is Cybersquatting Attorney, Enrico Schaefer. And today we’re talking about the  bad faith element of cybersquatting under the Anti-cybersquatting Consumer Protection Act, affectionately known as the ACPA. The big question in trademark domain name cases on allegations of cybersquatting is whether or not someone has registered, used or trafficked in, a domain name with the bad faith intent to profit from the mark, that being the trademark.

So what is bad faith cybersquatting, and what does a plaintiff who has filed an ACPA cybersquatting lawsuit have to prove? And what does the defendant have to establish in order to avoid a finding of bad faith under the ACPA? There are a number of non-exhaustive factors that a jury is going to look at, in determining whether or not someone has registered, used, or trafficked in a domain name, with a bad faith intent to profit requisite under the act.

The first is whether or not the domain name registrant has any trademark rights in the domain name. If I’m operating under a business called “Traverse Legal,” and someone else has a trademark which is similar to Traverse Legal, and they assert an ACPA cybersquatting claim against me, I might say any number of different things. But one of the things I will be able to say is, “Irrespective of whether or not these trademarks are similar or not similar to each other, I actually am operating under the name Traverse Legal. So when I registered the domain and when I used the domain, I did so believing that I had trademark rights in the domain.” So, if the person does have colorable trademark rights at the point of registration or use or potential sale, that’s going to be very helpful for them in defending against an ACPA cybersquatting allegation.

What is much more common is that the domain name registrant has no intellectual property rights, they’re not doing business under the domain name as a brand, and they’re not using the domain name as a trademark. If you’re just picking up a domain name as a domain name broker, trying to get valuable domain names and sell them on the market, you’re doing so typically without any trademark rights, and that’s going to be a factor that will work against you.

The second factor is whether or not the domain name contains the registrant’s legal or common name. So if I register my own name or a variation of how I am known, then again, similar to the trademark analysis, I’m going to be able to say that I didn’t register the domain in bad faith, and I didn’t use the domain in bad faith. I had a legitimate reason for wanting this domain name.

The third factor is whether or not the domain name registrant or owner has a prior use of the domain name in connection with a bonafide offering of goods or services. That is to say, if I registered the domain and I used to operate a website that sold widgets under that domain name, and the sale of those widgets is legitimate, that is, I’m not infringing on someone’s intellectual property by selling those widgets. Then my prior use will establish that I did all these things in good faith and that I am not a bad faith cybersquatter. The next factor is whether or not the domain name registrant had a bona fide non-commercial or fair use of the domain name. What that means, is a “gripe site” or non-commercial use or non-profit use that might be viewed as being legitimate.

The fifth factor is whether or not the registrant of the domain name had an actual intent to try to divert the trademark owner’s customers in order to gain financially, in order to profit. If it turns out I registered the domain name because I was aware of a trademark owner and I was trying to get their customers over to me, that is certainly going to be a bad faith factor under the ACPA cybersquatting act, which is going to work against me.

The sixth factor is whether or not the registrant of the domain name has tried to sell the domain name, to the owner of the trademark or some other third party for financial gain. Meaning they want to get more than they paid for the domain. So, if I’m offering it for sale, and I’m trying to monetize it for financial gain or profit, and I haven’t used the mark in any sort of legitimate website, then that’s going to be a factor. These factors tend to work against the notion of domain name brokering. Where you simply buy and try to sell domain names, and that’s your only purpose. If that’s your business model, you need to be aware that a lot of these factors really work against you out of the gate.

The seventh factor is whether or not there is any misleading “Who Is” information that was provided as part of the domain name registration. So if you lie about who the owner of the domain is, or you provide false “Who Is” information for the database, then that is going to be a  cybersquatting factor against you in helping to establish that you, in fact, registered or used a domain name with a bad faith intent to profit from the mark.

The next factor is whether or not you have other domain names in your portfolio which infringe on third party rights. If you’ve got a portfolio of a thousand domain names and a hundred of those appear to be derivations of known trademarks, then you’ve got again a big problem. And it is far more likely that the jury is going to find that you registered, used, or trafficked in the subject domain name with a bad faith intent to profit.

The last listed factor, and these are non-exhaustive, meaning the courts and juries can consider just about anything. Is the extent to which the mark in the domain name is distinctive and famous. So obviously the word “Nike” is better protected than, say, the name of the store down the block from you that’s mostly local, but happens to have a website. So these are the the types of things that a court and a jury are going to look at, in assessing whether or not there’s been a bad faith intent to profit under the Anti-cybersquatting Consumer Protection Act. These are the factors that the plaintiff is going to have to prove. These are the factors that the defendant is going to have to disprove.

What is bad faith cybersquatting? It’s really, in summary, registering a domain name in order to profit off of someone elses trademark. And you can’t just bury your head in the sand, you can’t be willfully blind to the trademark. If it appears by the total circumstance that you, in fact, are trying to profit off of third party trademarks, then you will in all likelihood be found guilty of bad faith cybersquatting. My name is Domain Name Cybersquatting Attorney Enrico Schaefer. We’ll see you next time.

You’ve been listening to Cybersquatting Law Radio.  Whether you are filing or defending a claim of cybersquatting under the Uniform Domain Name Dispute Resolution Policy (UDRP) or Anticybersquatting Consumer Protection Act (ACPA), we have a cybersquatting and domain dispute attorney ready to answer your questions.