Sold to the Highest Squatter

Opportunities for cybersquatting, the registering of a domain name for the sole purpose of reselling it at a higher price, are proliferating as new domains are created. In the past, the victims had little recourse, but that might change, thanks to the ACPA.

by Julie Wheeler [December 27, 2001]

Cybersquatting—the act of registering domain names on a speculative basis—has probably been around as long as the Internet itself. At least it has been around as long as the Internet has been commercially viable.

For some time, it seemed as if its victims were forced to either pay the exorbitant prices cybersquatters were asking for their trademarked names, or the exorbitant fees to lawyers. Either way, they were pretty much getting screwed.

Upon the filing of a complaint to then Network Solutions, the gatekeeper to the whole system back in the day, the domain name would be put on hold, disappearing from the Internet until the case reached a resolution. This could take years.

And then there was ICANN, which set up the Uniform Dispute Resolution Policy (UDRP) to arbitrate cases before a panel of experts in little matters such as intellectual property. Though there were false starts and missteps with the UDRP (and there continue to be), it has, for the most part, been a success. Since its inception in early 2000, the UDRP has heard nearly 14,000 cases, including those several hundred still pending.

Until recently, complainants could choose one of four companies to hear their UDRP cases: the World Intellectual Property Organization (WIPO), eResolution, the National Arbitration Forum (NAF), and CPRADR. But on November 30, eResolution closed its doors, claiming that "the market share of eResolution kept shrinking to a point where the proceeds no longer covered the costs of maintaining the service." The company attributed that market share shrinkage to WIPO's powerful position as one of the contributors to the writing of the UDRP itself.

Also, it would probably make sense that, if a certain arbitrator had the record of handing over domain names to complainants, it wouldn't take long for more complainants to chose the arbitrator that would give them the best chance of obtaining their names.

Protection or protraction?
And then on November 29, 1999, the Anticybersquatting Protection Act (ACPA, as if this industry needed another acronym) came into effect. And with it, the words "bad faith" entered the arena. Decisions would not necessarily hinge on trademark violation alone, but on the registrant's intent. Many cases, especially those with celebrities who did not have actual registered trademarks on their names, were tried under the ACPA, and many claimants earned back their names.

As it claims in its title, the goal of the "Anticybersquatting" Protection Act was to curb the rampant cybersquatting taking place on the Interne, and to some extent it succeeded. But it seems, as has been pointed out recently, that it may also serve to add fuel to cybersquatters' claims on domain names. December brought the U.S. Court of Appeals decision allowing a registrant to sue under the ACPA if he is forced to give up his name in arbitration under the UDRP. While this decision could serve to undermine the authority of UDRP decisions, as with any other lost court case, it would seem fair to allow for appeals under decisions made by UDRP panels. But what will it mean for cybersquatting in general?

The case in question was Sallen v. Corinthians, an arbitration overseen by WIPO on the basis that it was confusingly similar to the registered trademark of the Corinthians soccer club and that Jay Sallen had registered the domain name for the sole purpose of selling it to the team, a seeming indication of bad faith. That's what WIPO decided, and transferred the name. But after the district court dismissed the case, claiming that it didn't have jurisdiction to hear it, the appeals court reversed the decision, sending it back to the lower court for hearing. Does that say the UDRP needs some work, or the traditional legal system? Either way, this could get messy.

Complicating matters
Now the stakes are being raised, and the game becoming ever more complicated with the introduction of new top-level domains (TLDs). Though most of the new registries are using the UDRP to some extend or another, they all have their own intricacies, as well as their own names to protect, names that have been long registered in the .com and .net extensions.

Take, for example, Afilias' .info sunrise period, that somehow went seriously awry. Though the company had a system set up to allow trademark holders to claim their trademarks before anyone else could, hundreds of names were allegedly registered not only on common names that had no trademark on them at all, but also those with trademarks belonging to others. As a result, Afilias itself plans to challenge the names using its own sunrise challenge procedures.

It will be interesting to see what kinds of changes the UDRP will undergo in the next few months, especially as the new TLDs find its holes through their own little hiccups, but also as the ACPA and legal system are thrown into the mix.

—End