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Is Cybersquatting Always Illegal?

15th July, 2021

Posted by ESQwire

Cybersquatting is the practice of registering another party’s or business’s trademark in a domain name, and doing so in bad faith, according to the Internet Corporation for Assigned Names and Numbers (ICANN). In many cases it is possible for a person or entity to register a domain name using someone else’s trademark without intending to profit from that trademark, or for a good faith legitimate purpose.  Rather, in order for a practice to fit the definition of cybersquatting, the party registering the domain name that uses someone else’s trademark must be doing so in bad faith and with the intention of profiting off of another entity’s name or mark.

Accordingly, if you are wondering if cybersquatting is always illegal or improper, the answer in general is “yes.”  However, it is important to understand complications that can arise in the process of holding a cybersquatter accountable, as well as nuances that can limit the application of anti-cybersquatting law.   As lawyers that have handled nearly 500 disputes, we understand those nuances and factual issues that can make a big difference in the outcome of a claim. 

Cybersquatting is Illegal Under the Federal Anticybersquatting Consumer Protection Act (ACPA)

The Anticybersquatting Consumer Protection Act, or ACPA, makes it illegal under U.S. federal law to engage in the practice of cybersquatting. Generally speaking, cybersquatting typically takes the form of one person or entity buying domain names that are linked to another business that already has a trademark and goodwill from customers. For example, in the early days of e-commerce, a cybersquatter might have purchased the domain names of “AmazonStore.com,” “AmazonMarketplace.com,” “AmazonSmile.com,” and other domain names that could be linked to the e-commerce site Amazon with the intention of selling these domain names back to Amazon at a higher price than Amazon would have paid if it had registered the domain names itself 

Yet a business that has been harmed by cybersquatting can only seek a financial remedy by filing a lawsuit under the ACPA. As such, under the ACPA, cybersquatting is illegal, but the party filing a claim will need to win that lawsuit in order to be eligible for damages. The burden of proof is typically on the defendant to show that there was a lawful reason to purchase the domain name, and to provide evidence that the purchase of the domain name was not in bad faith.

You should also know that, if you use the Uniform Domain Name Dispute Resolution Policy (UDRP) system to resolve a cybersquatting dispute instead of filing a lawsuit under the ACPA, the dispute resolution provider does not make a determination about illegality that can result in an award of damages. Instead, a successful UDRP usually results in a transfer of the domain name to the complainant.

When Cybersquatting is Not Actually Cybersquatting

It is important to keep in mind that fair use can be a valid defense to purchasing a domain name that includes an established mark. Indeed, if the defendant purchased the domain name with the intention of comparative advertising, parody, or criticism, the purchase of the domain name may not constitute cybersquatting and thus will not be seen as illegal. Cybersquatting is only illegal if the purchase of a domain name is actually cybersquatting (and not fair use, for example).

Contact a Domain Name Lawyer Today

If you need assistance filing a cybersquatting lawsuit or complaint, a cybersquatting attorney at our firm can assist you. We can discuss a variety of matters concerning cybersquatting, including typosquatting protection, filing a UDRP complaint, UDRP cost, UDRP proceedings, and other issues. Contact ESQwire for more information.

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