Designer Skin LLC v. S & L Vitamins, Inc., et al.
The Anticybersquatting Consumer Protection Act: Key Information
The Anticybersquatting Consumer Protection Act (ACPA), 15 USC §1125(D) "was intended to prevent 'cybersquatting,' an expression that has come to mean the bad faith, abusive registration and use of the distinctive trademarks of others as Internet domain names, with the intent to profit from the goodwill associated with those trademarks." 
The ACPA renders one liable to the owner of a trademark who, with "a bad faith intent to profit from that mark," "registers, traffics in or uses a domain name" that is either identical or confusingly similar to a "distinctive" mark or is identical, confusingly similar or dilutive of a "famous mark."
If a violation of the ACPA is found, a court can "order the forfeiture or cancellation of the [offending] domain name or [its] transfer . . . to the owner of the mark." §1125(D)(1)(c). The mark owner can also recover up to three times his actual damages and obtain injunctive relief. Actual damages include the profits the domain name registrant made from his use of the mark, as well as losses sustained by the mark holder as a result of the domain name registrant's actions, such as lost sales or harm to the mark's reputation. In lieu of actual damages, the mark owner can elect to recover statutory damages of between $1,000 and $100,000 per domain (§1117). The actual amount awarded is fixed by the court in its discretion. §1117(d). In "exceptional cases," attorney's fees can also be recovered. (§1117).
The ACPA has been effectively used to combat a number of wrongs. These include "cybersquatting," which occurs when a registrant obtains a domain name containing another's mark and offers to sell it to the mark holder for a tidy sum. The ACPA has also been used to prevent domain registrants from improperly profiting from the commercial use of another's mark, such as by selling or displaying ads for products that compete with those of the mark holder at a domain containing the mark. The ACPA has also been successfully used to prevent the tarnishment of a mark by its use in the domain of a Web site containing pornographic or other materials with which the mark holder does not wish his mark associated. In addition, the ACPA has been used to combat gripe sites — Web sites critical of the mark holder set up at a domain containing his mark.
To successfully prosecute an ACPA claim, you must first establish that the defendant "registers, traffics in or uses" the offending domain name. "Registers" encompasses the act of registering the domain with a domain name registrar, such as Network Solutions or GoDaddy. The party that obtains this registration is known as the "domain name registrant." Registering a domain reserves it for the registrant's use, and enables him to display on the domain a Web site of his choosing. "Use" occurs when one operates a Web site at the challenged domain. Only "the domain name registrant or that registrant's authorized licensee" can be held liable for such "use." (§1125(D)(1)(d)). Finally, one "traffics in" an offending domain when he transfers or receives the domain in exchange for consideration, such as via a sale, purchase, loan, pledge or license. (§1125(D)(1)(e)).
Next, you must establish that the domain name is "identical or confusingly similar" to a "distinctive" mark, or identical, confusingly similar or dilutive of a "famous" mark. In comparing the mark to the domain name, courts do not consider the generic top-level domain component of the domain name, such as the .com in homedepot.com. Nor do they consider a domain name's path, such as the phrase "Kohler faucets" in the domain homedepot.com/kohlerfaucets, as paths are not deemed to be source identifiers of a Web site. Instead, courts compare the mark to the second-level domain component of the domain at issue, the Home Depot in homedepot.com.
Misspelling the Owner's Mark
Courts regularly find "typo" domains — domain names that misspell the owner's mark — to be confusingly similar and thus to trigger liability under the ACPA.  Courts have also found confusing similarity in names such as "drinkcoke.org," "mycoca-cola.com" and "pepsisays.com." 
The ACPA protects both registered and unregistered common-law marks. However, the mark must be "distinctive" (a trademark term of art) or "famous" (see §1125(c)) at the time the domain name is registered to receive the statute's protection. If your mark is "famous," you can prevail not only if the domain name at issue is identical or confusingly similar to your mark, but also if it is "dilutive." "Generic" terms are never protected as marks — think here of the term "baseball" as a mark for the sale of baseballs.
The final element you need to establish is the most difficult to demonstrate, namely the motivation for defendant's conduct. To prevail on an ACPA claim, you must show that defendant acted with "a bad faith intent to profit from [your] mark." The statute (§1125(d)(1)(b)(i)(I)-(IX)) supplies a nonexhaustive list of nine factors courts may, but do not have to consider, in determining if defendant acted with the requisite motivation.
Three of these factors focus on potential legitimate uses by the defendant of the domain, the presence of which support a finding that defendant did not act in bad faith. These include: (i) the trademark or other intellectual property rights of the defendant in the name; (ii) the extent to which the domain name consists of defendant's legal or nickname; and (iii) the defendant's prior use of the domain in connection with the bona fide offering of goods or services.
The same mark can legitimately be used by different concerns in different markets, or geographic areas. Application of this principle allowed a defendant to defeat an ACPA claim brought by plaintiff arising out of defendant's registration of the domain chambord.com, where defendant utilized the "Chambord" mark to sell coffee-makers, while plaintiff used the same "Chambord" mark to sell liquor and assorted food products. Chatam Intl. v. Bodum, Inc., 157 FSupp2d 549 (E.D. Pa. 2001).
Names or Nicknames
Similarly, individuals whose name or nickname are identical to a company's mark have been held to have legitimate claims on a domain containing that mark. See, e.g., Nissan Motor Co. v. Nissan Computer Corp., 61 USPQ2d 1839 (C.D. Cal. 2002) (Uzi Nissan, founder of Nissan Computer, held not to violate ACPA as a result of his registration of Nissan.com, incorporating the mark of plaintiff Nissan Motor Co.).
In determining whether a particular domain name was registered or used in good faith, the use made of the domain name prior to the commencement of the parties' dispute is particularly important. Switching after a dispute arises from an illegitimate to legitimate use will not cure the original bad faith registration. 
Switching uses after registration from a legitimate to illegitimate use can, however, evidence the requisite bad faith necessary to trigger ACPA liability. "Bad faith" "can arise either at the time of registration or at any time thereafter. Thus, a domain name initially registered legally can become illegal through bad faith actions which follow." McCarthy on Trademarks, §25:78, p. 25-296.11. 
Four of the statute's nine factors evidence a bad faith intent to improperly profit from another's mark. These include:
(i) defendant's offer to transfer a domain name to the mark holder for financial gain which has not been used in connection with a bona fide offering of goods or services;
(ii) defendant's provision of false contact information when registering the domain name, or failure to maintain accurate contact information thereafter;
(iii) defendant's registration of multiple domain names identical or confusingly similar to the marks of third parties; and
(iv) defendant's intent to divert consumers from the mark holder's online location to a site that harms the good will represented by the mark, whether for commercial gain, or to tarnish or disparage the mark.
Offers to Sell Domain Name
Most of these factors are self-explanatory and require little comment. As observed by the U.S. Court of Appeals for the Sixth Circuit "registering a famous trademark as a domain name and then offering it for sale to the trademark owner is exactly the wrong Congress intended to remedy when it passed the ACPA." Ford Motor Co. v. Catalanotte, 342 F3d 543 (6th Cir. 2003). Courts thus routinely look to offers by the defendant to sell the domain name as evidence of his bad faith. Such is also true of the submission of false contact information to a domain name registrar, which is taken as a sign the defendant neither wants to be identified nor held accountable for his conduct.
Registration of multiple domain names containing marks owned by third parties also evidences bad faith. Evidence of such registrations can be obtained by performing a reverse "who is" search. Unlike a typical "who is" search, which only identifies who registered a particular domain name, a reverse "who is" search allows you to find out each domain a particular individual registered.
The statute enumerates two final factors courts may consider in determining defendant's motivation. The first is the relative strength of the mark at issue. Use of a strong well-known mark evidences bad faith. Conversely, "the fact that a mark is not well-known may . . . suggest a lack of bad faith." Senate Section-by-Section Analysis, Congressional Record, p. S14717 (Nov. 17, 1999).
The final factor is whether defendant is making a "bona fide noncommercial or fair use of the mark on a site accessible under the domain name." Defendants typically claim that their noncommercial complaint site constitutes just such a use. While such a use is evidence of defendant's good faith, it is not dispositive as "to recognize such an exemption would eviscerate the protection of the bill by suggesting a blueprint for cybersquatters who would simply create criticism sites in order to immunize themselves from liability despite their bad faith intentions." Coca-Cola Co. v. Purdy, 382 F3d 774 (8th Cir. 2004).
Similarly, that defendant has made no commercial use of his domain, or the mark, is also not dispositive on this issue. See e.g., Bosley Medical Institute v. Kremer, 2005 USAppLexis 5329 (9th Cir. 2005).
Registered, Trafficked, Used
If you can establish each of these elements — that the defendant registered, trafficked in or used a mark identical or confusingly similar to a distinctive or famous mark with a bad faith intent to profit therefrom — you can use the ACPA to prevent the misuse of your mark in another's domain. That is, provided the court does not find that the defendant "believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful." §1125(d)(1)(B)(ii). Such a finding prevents a determination that defendant acted with the requisite "bad faith." McCarthy on Trademarks, §25:78, p. 25-296.6 says that this defense should be accepted "very sparingly and only in the most unusual cases . . . . Otherwise, every cybersquatter would solemnly aver that its conduct was lawful." 
But what if the domain registrant has provided false contact information, preventing you from knowing who to sue? Or what if the registrant resides outside of the United States? Relief can still be obtained under the ACPA's in rem provisions.
In in rem proceedings, the court's remedial powers are limited to directing that the domain name at issue be forfeited, cancelled or transferred to the mark holder. (§1125(d)(2)(D)(i)). The court cannot award monetary relief.
To proceed in rem, the mark holder must demonstrate that he cannot establish personal jurisdiction over the defendant. This can be done where the domain name registrant resides in a foreign country. Alternatively, for registrants whose identity is unknown, the mark holder must establish that he cannot locate the defendant both by sending notice to the address listed with the domain registrar, and by publishing notice of the lawsuit as directed by the court.
In rem proceedings can be commenced in a judicial district "in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name [at issue] is located." (§1125(d)(2)(c)).
Once in court, the mark holder must still establish, for a registered mark, that the defendant violated §1125(d). This requires proof of defendant's bad faith, even though he is not present before the court.  The burdens here may be less, however, if the identify of the defendant is unknown due to his false contact information. McCarthy on Trademarks, §25:79, pp. 25-305. An in rem action can also be used to address violations of 15 USC §1125(a) (infringement of unregistered mark); 1114 (infringement of a registered mark) or 1125(c) (dilution of a famous mark).
As shown above, the ACPA is a useful weapon against those who improperly register a domain containing your mark. For example, it was used by E. and J. Gallo Winery, owners of the "Ernest and Julio Gallo" mark, to obtain from defendants the domain name ernestandjuliogallo.com. Plaintiff prevailed despite the fact that defendants neither offered the domain for sale, nor used it to sell wine products. The court held defendants acted in bad faith because they had registered the domain as "real estate" on which they had intended to make a profit, and had registered some 2,000 additional domains containing the names of famous companies, cities and buildings. In addition to directing the defendants to transfer the domain to plaintiff, the court also awarded plaintiff $25,000 in statutory damages. 
Consumer Gripe Site
In Harrison v. Microfinancial Inc.,  the ACPA was used to successfully combat a consumer gripe site. There, the court found that a disgruntled customer violated the ACPA by registering a domain name containing defendant's trademark, at which he operated a Web site critical of defendant. The court's finding of bad faith rested in large part on its determination that plaintiff had offered to transfer the domain to defendant if it refunded certain lease payments plaintiff had made which were at the heart of his dispute with defendant, as well as funds plaintiff claimed defendant improperly received from third parties. A similar result was reached in Lamparello v. Falwell, 360 FSupp2d 768 (E.D. Va. 2004).
As shown by the foregoing, the ACPA can be an effective tool to prevent the misuse of your mark in another's domain.
1. Shields v. Zuccarini, 254 F3d 476 (3d Cir. 2001).
2. See, e.g., Shields v. Zuccarini, 254 F3d 476 (3d Cir. 2001) ("[T]he intentional registration of domain names that are misspellings of distinctive or famous names, causing an Internet user who makes a slight spelling or typing error to reach an unintended site . . . is a classic example of a specific practice the ACPA was designed to prohibit.")
3. Coca-Cola Co. v. Purdy, 382 F3d 774 (8th Cir. 2004).
4. McCarthy on Trademarks, §25:78, p. 25-295.
5. See e.g., Sporty's Farm LLC v. Sportsman's Market Inc., 202 F.3d 489 (2d Cir. 2000) (Plaintiff Sporty's Farm held to have registered domain containing defendant's "Sportys" trademark in bad faith despite the fact it sold non-competing Christmas trees at its site, where plaintiff initially registered sportys.com domain to sell competing products, and only switched uses after dispute arose).
6. See e.g., Storey v. Cello Holdings, LLC., 347 F3d 370 (2d Cir. 2003) (The right to use a domain name is not fixed at the time of registration, "instead, it is contingent on [the] ongoing legal use of that domain name.")
7. See Harrods Ltd. v. Sixty Internet Domain Names, 157 FSupp2d 658 (E.D.Va. 2001) aff'd. in part, rev'd in part on other grds, 302 F.3d 214 (4th Cir. 2002) ("All but the most blatant cybersquatters will be able to put forth at least some lawful motives for their behavior. To hold that all such individuals may qualify for the safe harbor would frustrate Congress' purpose by artificially limiting the statute's reach.").
8. See e.g., Broadbridge Media LLC v. Hypercd.com, 106 FSupp2d 505 (SDNY 2000).
9. E. and J. Gallo Winery v. Spider Webs Ltd., 129 FSupp2d 1033 (S.D. Tex. 2001) aff'd., 286 F3d 570 (5th Cir. 2002).
10. 2005 USDistLexis 2804 (D. Mass., Feb. 24, 2005).