In a recent cybersquatting lawsuit in the Northern District of California, Verizon Communications Inc. received a default judgment in the amount of $33.15 million, against an accredited ICANN registrar, OnlineNIC. Pursuant to the Anti-Cybersquatting Protection Act (ACPA), the judge awarded $50,000 for each of the 663 domain names that were in issue. The Judge determined that the domain names were unlawfully registered, and were either identical to or confusingly similar to Verizon's trademarks. The court opined that OnlineNIC's bad-faith registrations of Verizon-related domain names were designed to steer web users away from their attempts to access Verizon's legitimate websites.
In its complaint, Verizon had alleged that OnlineNIC had used a number of shell entities, fictitious business names, or alias personal names, along with privacy protection services that shield the WHOIS information, in an attempt to conceal the true identity of the registrant and OnlineNIC's involvement in the trafficking of domain names. Verizon also alleged that OnlineNIC, through its aliases, was engaged in the practice of "tasting," wherein a domain name is registered and then deleted within five days, in order to avoid paying for the registration fees when the domain name does not generate a sufficient profit from pay-per-click fees. In addition, OnlineNIC was alleged to have practiced "kiting", which is when one repeatedly registers, deletes, and reregisters a domain name within five days to avoid paying the registration fees. This activity was shown to have been repeatedly done by OnlineNIC through its various aliases, against Verizon and other well-known mark owners.
While a Uniform Domain-Name Dispute-Resolution Policy (UDRP) complaint can only achieve the transfer or cancellation of a domain name from a cybersquatter, the ACPA additionally allows for statutory damages ranging from a minimum $1000 to a maximum of $100,000 per domain name, depending on what the court considers just. In this instance, the judge settled on $50,000 per name against OnlineNIC, which did not appear in court to contest the matter.
Typically, a UDRP is a quicker and more cost-effective method of obtaining the transfer of a domain name, than an ACPA litigation in Federal Court. An ACPA action also requires that a trademark owner be able to obtain personal jurisdiction in the U.S. against the defendant, while a UDRP action can be brought against a registrant in any location. If personal jurisdiction does not exist for an ACPA action, or the domain name owner cannot be found, an ‘in rem' action could be brought if the registry, such as that relating to .COM domain names, is located in the United States, although the remedy is then limited to the transfer, forfeiture or cancellation of the domain name, without any monetary damages.
Although OnlineNIC is listed as an accredited Registrar with ICANN for registering domain names, Verizon has been unable to locate the company at OnlineNIC's listed address in California. The alleged aliases list addresses mainly located in China. Whether Verizon is able to collect the monetary award or is merely able to acquire or delete the subject domain names remains to be seen, but trademark owners may breathe easier because the significance of the dollar amount of the judgment will act as a deterrent to other registrars or registrants who engage in cybersquatting.
Vol. 53, June 2010