gTLDs Pose New Threats in Cyberspace

On January 12, 2012, ICANN, the Internet’s domain name registration watch dog, began accepting applications for new generic Top-Level Domains (gTLDs) to add to those already in existence, including .com, .net, .biz and others. Under the new scheme, any company can apply for a gTLD, thereby expanding the domain name system (DNS). Ultimately, this expansion will change the Internet forever. Each new gTLD poses an incremental risk for trademark owners who are already under heavy assault in cyberspace from cybersquatting (registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark owner), brandjacking (assuming the online identity of another entity for the purposes of trading on another’s brand equity), and typosquatting (registering URLs with common misspellings) by those seeking to generate illicit profits. According to the Coalition Against Domain Name Abuse (CADNA), cybersquatting already costs trademark owners more than $1 billion each year due to lost sales, lost goodwill, and increased enforcement costs. However, with a major increase in gTLDs, many corporations fear an expansion in expensive litigation to enforce their brands and trademarks.

To safeguard its valuable marks, a company should be proactive. Steps to consider are: First, the company should register its service marks or trademarks with the USPTO. Second, the company should consider registering its marks with the newly created Trademark Clearinghouse and Claims Service, which will serve as a central repository for trademark information submitted by trademark owners. Third, the company should monitor the first round of gTLD applications published by ICANN and file a “Legal Rights Objection” to any gTLD that infringes its marks. Fourth, the company should consider a defensive strategy by registering gTLD domain name variants within the 30 days after each new gTLD is launched. Lastly, the company should actively monitor new gTLD registrations as it does existing TLDs for key terms and marks and challenge potentially infringing domain names utilizing the most appropriate means, namely the Federal Trademark Dilution Act (FTDA), the Anticybersquatting Consumer Protection Act (ACPA), the Uniform Domain Name Dispute Resolution Policy (UDRP), or the new Uniform Rapid Suspension System (URS).

Upon identification of an alleged infringer, a mark owner may first consider serving a cease and desist letter to the alleged infringing entity to halt an activity (cease) and not to take it up again later (desist) or else face legal action. In many instances, the cease and desist leads to a negotiated settlement. Failing that, trademark owners have three avenues of relief in cybersquatting cases. They can pursue legal action in federal court under the FTDA, Lanham Act or, more commonly, the ACPA. Alternatively, a trademark owner can seek to recover the domain name under ICANN’s UDRP. UDRP is a good option when there is evidence of bad faith by the domain name registrant. The UDRP allows a trademark owner to challenge domain name registrations in expedited administrative proceedings. UDRP proceedings can be faster and cheaper for trademark owners than litigation and outcomes tend to be pro-plaintiff. Lastly, the new URS process promises to provide trademark owners with an even faster and less expensive means of preventing trademark abuse. However, trademark owners in URS matters will face a higher burden of proof – clear and convincing evidence – and a finding against the trademark owner is always without prejudice. Thus, a secondary proceeding under URS, UDRP, or in federal court may be required.

Some trademark owners prefer to bring ACPA claims in the first instance because they offer more remedies than the cancellation or transfer of the domain name (the only remedies available under UDRP proceedings). In addition to corrective measures, a federal court can issue an injuction; award damages, including enhanced damages for willful infringement; and provide costs and/or attorney’s fees to a prevailing owner. A court ruling also provides a mark owner with final resolution of the matter and as such, a suit under the ACPA may deter future cybersquatters more effectively than a UDRP proceeding.

In order to prevail on a ACPA case, the trademark owner must prove that the domain name registrant (1) has a bad faith intent to profit from the mark and (2) registers, traffics in, or uses a domain name that is (a) identical to or confusingly similar to a distinctive mark, (b) identical to, confusingly similar to, or dilutive of a famous mark. In Mayflower Transit, L.L.C. v. Prince, the court found that while the plaintiff had a registered mark and that defendant’s domain “mayflowervanline.com” was confusingly similar, the court found that the defendant had a bona fide noncommercial use of the mark, therefore, the claim failed and the defendant was not liable for injunctive or monetary relief. 314 F. Supp. 2d 362, 367 (D.N.J. 2004). In contrast, in Verizon California, Inc. v. Navigation Catalyst Systems, the court found registration of numerous websites in a very short time that were confusingly similar to the Verizon mark was evidence of a bad faith intent to profit and held defendants liable. 568 F. Supp. 2d 1088, 1092-97 (C.D. Cal. 2008).

The impact of gTLDs on the Internet and their intersection with trademark law, among others, will be closely monitored.