January 11, 2016
You have worked hard to build your company's name, and now customers routinely seek out your brand. Your busy website is bringing in significant sales every day. One day, you mistype the address of that website and another one pops up instead. Its domain name is strikingly similar to yours. It is selling products that look strikingly similar, too.
You may have unearthed a "cybersquatter." And there is something you can do.
"Cybersquatting" refers to registering or using a domain name with the bad faith intent to profit from the goodwill associated with another's trademark. In 1999, Congress passed a law to combat this practice: the Anticybersquatting Consumer Protection Act ("ACPA"). Among other things, the ACPA gives trademark owners the right to sue cybersquatters directly.
A cybersquatter doesn't need to hack into your website to profit from your work. Instead, a cybersquatter often purchases a domain name similar to a well-known trademark in the hope of selling that domain name to the trademark owner at an inflated price. Or the cybersquatter may use the domain name to sell counterfeit products. Whatever the cybersquatter's goal, however, the ACPA can prove a useful tool as long as the mark's owner can prove the following elements of an ACPA claim:
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That its mark is distinctive or famous and is entitled to protection;
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That the defendant's domain name is either identical to, or confusingly similar to, the mark; and
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That the defendant registered or used that domain name with bad faith intent to profit.
A number of fashion industry participants have invoked the ACPA in recent years, obtaining remedies such as injunctions enjoining sale of counterfeit items, lost profits, transfer of the infringing domain names to the mark owner, and statutory damages tied to each offending domain name.
For example, in Adidas AG v. 2013jeremyscottadidas.com, No. 13-61867-CIV, 2014 WL 799132 (S.D. Fl. Feb. 28, 2014), the plaintiffs brought a cybersquatting claim (as well as other claims) against the defendants. After first retaining private investigative firms that, as part of their investigation, placed online orders on the defendants' websites for counterfeit products bearing the plaintiffs' marks, the plaintiffs filed a complaint alleging that the defendants were advertising and selling various counterfeit products online -- including footwear, sunglasses, sports balls and apparel.
The Court ultimately entered a default judgment against the defendants, who did not respond to the complaint or otherwise appear in the action. Under the ACPA, in addition to ordering that ownership of the defendant's domain names at issue be transferred to the plaintiffs, the Court awarded the plaintiffs $180,000 in statutory damages -- that is, $10,000 for each of the infringing domain names. The Court also awarded certain other damages and costs.
Similarly, in Tory Burch LLC v. Does 1-100, No. 12 C 7163, 2012 WL 4581409 (N.D. Ill. Oct. 2, 2012), the plaintiffs sued the defendants for, among other things, cybersquatting. Plaintiffs (a fashion brand that produces footwear, handbags, accessories, clothing, and other products and services) alleged that the defendants were operating websites offering counterfeit items for sale. After first receiving a temporary restraining order and other relief from the Court, the plaintiffs moved for a preliminary injunction. In support of their motion, they submitted documentary evidence showing that the defendants were using domain names that were identical or confusingly similar to the plaintiffs' well-known mark, and which used copyrighted photos of the plaintiffs' products and logos to sell counterfeits. The defendants did not appear at the preliminary injunction hearing or submit any written objection.
The Court granted the plaintiffs' request to convert the temporary injunction into a preliminary injunction, so that (i) the defendants remained enjoined from manufacturing, importing, distributing, offering for sale, and selling products bearing counterfeit trademarks during the litigation, (ii) Paypal accounts associated with the defendants' websites remained frozen until the end of the legal proceedings, and (iii) relevant domain names that the plaintiffs had requested to be transferred to them remained in their control until the end of the legal proceedings.
To minimize your chances of becoming a cybersquatting victim in the first place, consider preemptively purchasing not just your actual domain name but several variations of it -- the names a cybersquatter might otherwise purchase.
About the Authors:
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Natalie Shkolnik is a partner in the litigation department at Wilk Auslander. She represents public and private corporations as well as hedge funds, large institutional banks, and high-profile individuals in complex, high stakes litigation. She may be reached at: 212-981-2294 or nshkolnik@wilkauslander.com. |
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Julie Cilia is an associate in Wilk Auslander's litigation department. She represents clients in a broad range of complex judgment enforcement, commercial, and securities litigation matters. Her practice includes a particular focus on dispositive motions, and she regularly drafts briefs at the trial and appellate levels. She may be reached at: 212-981-2297 or jcilia@wilkauslander.com. |