In December 2008, United States District Judge Jeremy D. Fogel issued a default judgment in the amount of $33.2 million against an Internet services company, OnlineNIC. The company had registered hundreds of domain names that incorporated trademarks owned by Verizon Communications. The court awarded $50,000 for each of the 663 addresses which had been registered by OnlineNIC in violation of Verizon’s trademarks. Following the decision, Verizon referred to the award as the “largest-ever judgment” for cybersquatting.
Sample domain names registered by OnlineNIC included myverizonwireless.com, iphoneverizonplans.com, and verizon-cellular.com. However, OnlineNIC’s registration activities were not limited to Verizon alone. Existing as an accredited registrar since 1996 for the Internet Corporation for Assigned Names and Numbers (“ICANN”) the company had registered more than 900,000 domain names. Verizon noted in their court filings that OnlineNIC had practiced similar registration activities with the trademarks of companies like Google, Adidas, MySpace, Wal-Mart, and Yahoo. In fact, both Microsoft and Yahoo also filed similar lawsuits against OnlineNIC in 2008.
Presumably, OnlineNIC’s sole motivation for infringing upon Verizon’s trademarks was to make easy money. Specifically, the infringing domain addresses displayed ads that generated revenue for the company. Worse yet, OnlineNIC’s domain addresses often took Internet users to Verizon’s competitors. In contrast, other cybersquatting schemes are frequently designed to create domain names that infringe upon trademarks in order to sell the domain address to the trademark holder at an inflated price.
In this case, it will likely be impossible for Verizon to collect on the judgment. Although OnlineNIC is a San Francisco-based domain registrar, the company is headquartered in Xiamen, China. Analyst Martin Reynolds told InternetNews.com, you can only enforce U.S. laws where they are accepted, “and generally that means you can only collect in the U.S.” It is also unlikely that ICANN will revoke OnlineNIC’s accreditation. Therefore, the most meaningful component of the judgment may be the transfer of the offending addresses to Verizon.
This raises the question of what occurs when a trademark owner is unwilling or unable to invest significant resources on litigation that produces relatively meaningless results? Verizon’s Vice President Sarah Deutsch stated that “this case should send a clear message and serve to deter cybersquatters who continue to run businesses for the primary purpose of misleading consumers.” However, is that really true? After all, the monetary rewards seem very real, while the risks appear minimal. This is particularly true if the offending party is a foreign entity with little or no assets in the U.S.
Complicating this issue further is the fact that cybersquatting is on the rise. This is despite the fact that Congress passed the U.S. Anti-Cybersquatting Consumer Protection Act in 1999. Subsequently, the practice had been in decline, but then began to rise again in 2004.
The problem will become more of a burden as cybersquatters implement other methods to pester trademark owners, including cybersquatting variants like typosquatting. Nor will the problem be helped by ICANN’s plan to introduce new generic Top Level Domains. Ultimately, when you combine the ability for anyone to register domain names for a nominal fee with the potential for easy monetary gain, difficult legal issues will follow.
Comments
Post new comment