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As general counsel, it is important to understand the issues and remedies available to protect companies from the various forms of infringement, unfair competition and other abuses related to the Internet. Cybersquatting, a form of infringement unique to the Internet, should be of particular concern because it may prevent a corporation from using its own trademark. Cybersquatting is the use or imitation of a company’s trademark in the Internet address (domain name) of a Web site not affiliated with that company. In its earliest form, cybersquatting involved computer-savvy individuals who purchased domain names containing common names or marks and offered to sell them to their rightful owners for large sums of money. Although this practice has declined, cybersquatting continues in other, sometimes more subtle, forms. For example, competitors may use another company’s trademark in a domain name to try to reach or capture the competitor’s customers. Or, disgruntled customers and former employees may create Web sites to disparage companies. However, often the cybersquatter is merely trying to divert a large amount of traffic to its own site — which may be wholly unrelated to the mark — by use of the name of a large company or popular brand. Whatever its form or purpose, cybersquatting can be a serious problem for companies that have invested considerable resources creating and maintaining the goodwill associated with their names and trademarks. In November 1999, Congress amended the Lanham Act to include the Anticybersquatting Consumer Protection Act. The ACPA was enacted to protect “consumers and American business by prohibiting the bad faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks.” The ACPA enables a trademark owner to prevent use of its mark by anyone who, with “bad faith intent to profit,” registers or uses a domain name that is “identical or confusingly similar” to its mark. The ACPA does not employ the “likelihood of confusion” standard used elsewhere in the Lanham Act. Rather than conducting a contextual comparison of the mark’s use, the court simply must compare the mark to the domain name to determine whether they are confusingly similar. Courts have found, for example, that “Barbiesplaypen.com” is confusingly similar to the “Barbie” mark; “sportys.com” is confusingly similar to the “Sporty’s” mark; and “northernlights.com” is confusingly similar to “Northern Light.” A common misspelling of a trademark likewise may be confusingly similar to that mark. BAD-FAITH INTENT TO PROFIT The ACPA sets forth a number of factors that a court may consider to determine whether a person has a bad-faith intent to profit. The list includes factors that are indicative of good faith and factors suggesting bad faith. The list is not exhaustive, and a court may consider other factors as well. It is indicative of good faith, for example, if the domain name is the registrant’s own name or if the registrant has trademark rights in the name. An individual also may demonstrate good faith by showing that he previously has used the domain name in connection with a legitimate commercial or noncommercial Web site. The statute identifies a number of factors that can indicate bad faith. For example, bad faith may exist if the site reveals an intent to divert consumers from the trademark owner’s site, for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion regarding the site’s sponsorship. Other factors that are indicative of bad faith include the following: the registrant’s offer to sell a domain name that he has not used; the registration of multiple domain names that the registrant knows are identical or confusingly similar to the marks of others; the provision of false contact information to the registration service when registering a domain name; and the extent to which a mark incorporated into a Web address is distinctive or famous (as defined by the Lanham Act). Prior to the enactment of the ACPA, it often was difficult to obtain in personam jurisdiction over cybersquatters since they frequently provided false information to domain registrars. As a result, Congress created a special provision to solve this problem. Specifically, the statute provides for in rem jurisdiction in the judicial district in which the registrar that assigned the domain name is located if: 1) the domain name violates any right of the owner of a mark; and 2) the mark owner either is unable to obtain in personam jurisdiction or is unable, through due diligence, to find the registrant. If the basis for in rem jurisdiction is the inability to locate the registrant, the mark owner must establish “due diligence” by showing that he sent notice of the violation and the intent to sue to the postal and e-mail addresses provided to the registrar and that he published notice of the action after its filing. In such a case, sending and publishing notice constitutes service of process. Although in rem jurisdiction may be necessary in certain circumstances, it may not be preferable because monetary damages are not available. Rather, when the court exercises in rem jurisdiction, it can only order the transfer of the domain name or cancellation of the registration. On the other hand, a court exercising in personam jurisdiction has the power to order either transfer or cancellation and to award damages. The damages award can be the amount of the plaintiff’s actual damages, statutory damages between $1,000 and $100,000 per domain name, or damages in the amount of the defendant’s profits while it infringed upon the plaintiff’s mark. As in other Lanham Act cases, the trial judge also can treble the damages; however, attorneys’ fees are to be awarded only in “exceptional” circumstances. Litigation is not the only avenue for trademark owners wishing to protect their marks from Internet abuses. Another option is to arbitrate the dispute before a dispute resolution service approved by the Internet Corporation for Assigned Names and Numbers. ICANN is a nonprofit corporation created in 1998 to coordinate the Internet domain name system. All Internet registrars follow ICANN’s Uniform Domain Name Dispute Resolution Policy and also require registrants to agree to follow these policies. Upon submission of an ICANN complaint and answer to an approved dispute resolution service — a list of which can be found on ICANN’s Web site at www.icann.com — a panel of three arbitrators is appointed. Typically, the panel will rule, without a hearing, based upon the parties’ written submissions. The panel’s decision is to be issued within 14 days from the appointment of the panel. Although arbitration provides a faster, less expensive alternative to litigation, arbitration may not be the answer for every company. An ICANN arbitration panel cannot award damages, and the only remedy available through ICANN arbitration is the cancellation or transfer of a domain name. In addition, arbitration does not prevent either party from filing a suit after the arbitration is concluded. Michael A. Swartzendruber and Richard S. Krumholz are senior associates at Fulbright & Jaworski in Dallas.

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