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Cybersquatting; typosquatting – Facebook’s $2.8 million in damages and domain names

A decision was recently handed down in California awarding Facebook $2.8 million in damages for domain name ‘squatting’.

The defendants in the Facebook case were found to have contravened the United States Anticybersquatting Consumer Protection Act (ACPA), the domain names in question attempting to profit from misspelling and/or utilisation of the trade mark either alone or amongst other common or misspelled words in the domain name.

Eleven defendants were ordered to pay amounts ranging from $5,000 to $1.34 million and transfer of over 100 domain names to Facebook was ordered.

Cybersquatting

Cybersquatting is the practice of purchasing a commercially valuable domain name, typically incorporating the use of a trade mark, with the intent to profit from its sale or use. Derived from ‘squatting’ (the act of occupying vacant or abandoned space without permission), cybersquatting can be a serious problem for trade mark holders.

Cybersquatters may acquire a domain name with the specific intent to on-sell it to its rightful owner at a higher price. Another aim is to ‘monetize’ the domain, by the use of paid links or advertisements which relate to a specific trade mark, thus attracting users looking for products or information related to that trade mark.

Cybersquatting also has the potential to damage the trade mark brand and reputation; for example, where the content of the ‘squatted’ site is illegal or is in contravention of the principles espoused by the brand.

In December 1999, The World Intellectual Property Organisation (WIPO) introduced the Uniform Domain Name Dispute Resolution Policy (UDRP), the internationally recognised standard for dispute resolution related to domain names, outside the traditional courts system. Since that time, in excess of 20,000 cases related to over 35,000 domain names have been received by the WIPO Center.

In 2012, WIPO had a record year for cybersquatting complaints with 2,884 trade mark owners registering complaints about 5,084 domain names. Of all the cases that went before the WIPO panel, 91% were decided in favour of the complainant.

The level of complaints is perhaps set to grow with even more levels of domain names being introduced.  See our article on these new domain names and the Trade Mark Clearinghouse here.

Typosquatting

Typosquatting, or domain mimicry, occurs where there is an attempt to profit from typographical errors. The Facebook case is an example of such typosquatting, with www.fagebook.com and www.facewbook.com an example of those names that were registered in bad faith. All domain names that were the subject of the case were ordered to be surrendered to Facebook. A similar case occurred with AltaVista in 2000 resulting in 43 domain names including www.actavista.com and www.alkavista.com being transferred to the search engine portal.

Bad faith

The UDRP takes several factors into consideration regarding a determination of bad faith:

(i)    the domain was registered primarily for the purpose of selling it to the complainant or a competitor for more than the documented out-of-pocket expenses related to the name; or 

(ii)   the domain was registered in order to prevent the mark owner from using it, provided that the registrant has engaged in a pattern of such registration; or 

(iii)   the domain was registered primarily to disrupt the business of a competitor; or

(iv)   by using the domain, the registrant has intentionally attempted to attract users for commercial gain by creating a likelihood of confusion as to source or affiliation.

The ACPA contains similar provisions including, but not limited to, whether any other intellectual property exists in the name (i.e. trade marks), prior use of the name, if the name is the legal or nickname of the registrant, the extent to which the mark is distinctive or famous, as well as whether there is any intent to profit from on-sale, and any misleading conduct.  

Not the first….won’t be the last….

The Facebook case is by no means the first case of typosquatting to occur, but it has arguably been the most publicised. Thousands of other cases are heard through the WIPO alternative dispute resolution process at the WIPO Arbitration and Mediation Center, and some, like the Facebook case, will go through the Courts.

Cybersquatting, domain squatting, typosquatting, domain mimicry, whatever name it goes by, is a real and growing threat to trade mark owners.

10 May 2013

Christy Roth, Lawyer, Marianne Dunham, Special Counsel and Jason Watson, Partner