Illinois Association of Defense Trial Counsel Springfield, Illinois | www.iadtc.org | 800-232-0169 IDC Quarterly | Volume 19, Number 1 (19.1.57)
Property Insurance By: Tracy E. Stevenson Robbins, Salomon & Patt, Ltd.
Your Domain Name is Your Property, Isn’t It?
In this era when we find ourselves dependent on our computers, cellular phones and the internet, we may forget that data on our web sites is property in which we have a vested interest. Often it is not until we lose access to such cyberspace data that we then realize its value. While we attempt to create user names that are clever or thought-provoking, most of us do not realize that our “original” domain name may have a prior or existing life. Unfortunately, we may not learn about the prior use until a lawsuit is filed or we receive a letter from a lawyer. Similar to trademark infringement, use of another’s domain name carries stiff penalties. Domain names or Uniform Resource Locators (URL’s) are protected property with monetary value. The United States statutes specifically address the proprietary aspects of the cyberspace data that we deal with every day (often without a second thought), and mandate the rules related to ownership and use of these names in the public arena.
The Statutes
Subsection (d) of Section 1125 of Title 15 of the United States Code, entitled “Cyberpiracy prevention,” reads as follows: (d) Cyberpiracy prevention. (1) (A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person (i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and (ii) registers, traffics in, or uses a domain name that— (I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark; (II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or (III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36. (B) (i) In determining whether a person has a bad faith intent described under subparagraph (a), a court may consider factors such as, but not limited to (I) the trademark or other intellectual property rights of the person, if any, in the domain name; (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;
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(III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; (IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; (V) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; (VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; (VII) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; (VIII) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and (IX) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of subsection (c) of this section. (ii) Bad faith intent described under subparagraph (A) shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.
Statutory penalties for a violation of 15 U.S.C. § 1125(d)(1) are authorized by 15 U.S.C. § 1117(d), which reads as follows:
[T]he plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just.
Court Application of the Statutes
The courts have reviewed these statutory mandates pertaining to claims of alleged wrongful use of a domain name or a URL. The analysis is comparable to trademark infringement but has some unique characteristics. Usually, the first inquiry made by the court is whether the defendant registered the domain name in bad faith. Virtual Works, Inc. v. Volkswagen of America Inc., 238 F.3d 264, 269 (4th Cir. 2001) (citing to 15 U.S.C. § 1125(d)). The court looks at the nine factors delineated within the statute to establish whether there was bad faith. The court, however, is not limited to those factors, and can consider specific facts of a case or even equitable principles. Next, the court inquires into whether the defendant: “(1) registered, trafficked in, or used a domain name; (2) that is identical or confusingly similar to a distinctive mark; or (3) is identical, confusingly similar to, or dilutive of a famous mark.” Virtual Works, Inc., 238 F.3d at 270 (applying § 1125(d)(1)(A)(ii)(I)-(III)); see
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also, Pinehurst, Inc. v. Wick, 256 F. Supp. 2d 424, 427 (M.D.N.C. 2003). This inquiry follows traditional trademark infringement analysis. Additionally, the Fourth Circuit Court of Appeals remarked that:
[W]hen a defendant registers a domain name that is identical to someone else’s trademarked name and thereby impacts the trademark owner’s business by preventing internet users from reaching the trademark owner’s own web site, this impacts the trademark owner’s business and is a use ‘in connection’ with goods and services.
E. & J. Gallo Winery v. Spider Webs, Ltd., 286 F.3d 270, 275 (4th Cir. 2002) (referring to § 1125(d)(1)(B)(i)(III)). In that case, the court found that a permanent injunction was warranted to prevent the defendant from using the name under the Cybersquatting Act, 15 U.S.C. 1125 et seq., and the Texas unfair competition laws. See Texas Anti-Dilution Statute, Tex. Bus. & Com. Code § 16.29. If the court finds a violation of the Anti-Cybersquatting Consumer Protection Act, it may award statutory damages. The plaintiff may elect, at any time before final judgment, to recover statutory damages in the amount of not less than $1000 and no more than $100,000 per domain name. Interestingly, while the court’s opinion used the subjective “may” (286 F.3d at 275), the statute, on its face, appears to state that if the plaintiff proves his case, he/she may elect to receive the express statutory damages which the judge must award. Additionally, there is no requirement that the court consider the duration of the infringement when calculating damages, and the court can award damages as it considers just under the statute. The E. & J. Gallo case also set precedent when it held that a violator can be held liable for statutory damages, even though it registered its name before enactment of ACPA, based upon its post-enactment use.
Conclusion
The internet and our high-speed lifestyles appear to be here to stay. So are the regulations that control the use of domain names in order that all are treated equitably. We all must keep in mind that while the internet “belongs to everyone,” domain names may be property of a single individual or entity with rights to possess it.
About the Author
Tracy E. Stevenson is a partner in the Chicago firm of Robbins, Salomon & Patt, Ltd., where she concentrates her practice in medical malpractice defense and insurance defense. She has defended cases on behalf of physicians and hospitals and represented various major insurance companies in claims involving fraud. Ms. Stevenson also represents corporations in litigation matters including TRO’s and shareholder actions. She is licensed in Michigan as well as Illinois and speaks at various seminars around the country.
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