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Top corporations are using lawsuits instead of arbitration to fight increasingly sophisticated cybersquatters profiting from their trademarks and brand names. Companies such as Microsoft Corp. and Dell Inc. say filing domain-name arbitration disputes with the Minneapolis-based National Arbitration Forum (NAF) and the World Intellectual Property Organization (WIPO) is no longer enough. Increasingly, they are filing lawsuits claiming violation of the Anticybersquatting Consumer Protection Act, which became law in 1999. Microsoft has filed 17 such lawsuits in the United States in the past couple of years, including many recent and still pending cases. Besides four cases in Washington state, Microsoft has filed cases in federal courts in California, Colorado, the District of Columbia, Indiana, New York, Texas and Utah. Dell has lawsuits in Florida and Louisiana federal courts. In February, it resolved a Texas federal case out of court against a company that registers domain names for customers. Microsoft and Dell are part of a coalition of corporations led by the International Trademark Association that has taken legal action against cybersquatters. Fourteen other cases have made claims under the anti-cybersquatting law in California, Colorado, New Jersey, New York, Oregon, Utah and West Virginia in the past six months alone. Registering in bulk Companies say they need the courts to combat cybersquatters because they can’t get injunctive relief or damages from arbitration proceedings. Even when cybersquatters lose the right to register certain domain names through an arbitration, companies say the same entities are still registering other domain names and collecting revenue from activity on those sites. Microsoft is responding to the “growing and alarming trend” of cybersquatters illegally using domain names to profit from pay-per-click ads, said Aaron Kornblum, senior attorney with Microsoft’s Internet safety enforcement team. A common tactic involves registering a “.com” domain name similar to a company’s actual name, such as changing one of the letters in Microsoft, Kornblum said. When computer users click on ads linked to the site, it creates a transaction event from which the domain name holder profits, he said. So far, Microsoft has recovered more than 2,000 domain names and collected more than $2 million in civil settlements, Kornblum said. Federal court cases are more expensive and take more time than domain- name arbitration disputes, and obtaining jurisdiction over registrants in other countries can be a challenge, said Kristine Dorrain, Internet legal counsel for NAF. “[These] all tend to diminish the attraction of monetary damage awards when the Uniform Domain Name Dispute Resolution Policy is available to deal quickly with the core problem: a domain name registered and being abused by a party without rights to it,” Dorrain said. The policy is a process the Internet Corporation for Assigned Names and Numbers established for resolving Internet domain-name registration disputes. NAF and WIPO numbers also show that domain-name arbitration cases are still growing. NAF data show that case filings have climbed steadily, from 1,023 in 2004 to 1,805 in 2007, and WIPO filings have grown from 1,176 in 2004 to 2,156 in 2007. The cybersquatting game has changed in the past couple of years. Cybersquatters now register domain names in bulk, said Allison McDade, a Dell counsel for trademarks and copyright. Arbitration procedures allow companies to recover disputed domain names, but they don’t allow injunctive relief, she said. Howard A. Kroll, an intellectual property litigator at Christie, Parker & Hale in Pasadena, Calif., said he and his partner have filed actions for 1-800 Contacts Inc., Dell, Dermalogica Inc., The Neiman Marcus Group Inc. and Verizon Communications Inc. Kroll said the lawsuits have value beyond stopping an individual cybersquatter and getting an injunction or monetary damages. “It has a deterrent effect as well,” he said. The legal pendulum has swung too far toward the rights of trademark owners at the expense of lawful domain-name holders, said Derek A. Newman of Newman & Newman in Seattle, who has represented both sides in cybersquatting cases. His firm is currently defending domain holders in the Dell Florida case and a Microsoft case. Microsoft Corp. v. Kovyrin, No. 07-01398 (W.D. Wash.). “Even companies with trademarks that are weak are seeing success in court, [and] that leads to more litigation,” Newman said.

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