Ah, if only I had a dollar for every time a cybersquatter suggested a business partnership with the brand owner in response to one of my demand letters. Ally Financial, the Detroit-based bank holding company, decided it was fed up with such games and has filed a suit under the Anticybersquatting Consumer Protection Act (ACPA) against an Arizona man who attempted to profit off of domain names featuring the Ally name, according to a report by Domain Name Wire.
In its suit against Donald Jones, Ally states that he registered at least three domain names that used the Ally name, AllyBankLoans.com, AllyBancShares.com, and AllyNationalBank.com, and redirected them to VerteransNationalBank.us, which he owns.
Ally initially contacted Jones in writing, informing him of the bank's legal right to the domain names because of its established trademark, but Jones floated a "partnership proposal" in which he would only transfer the domain names if Ally agreed to work with him in a new banking venture. Ally rejected the proposal, and instead of handing over the domain names, Jones began redirecting the sites to the homepage of Ally's competitor Chase.
Ally states that Jones "attempted to engage in cyberpiracy" through his offer to sell Ally the domain names that it already had legal rights to. His intent to monetize these domain names that he had no claim to would confuse consumers and could cause Ally financial and reputational loss. In its suit, Ally seeks damages of between $1,000 and $100,000 per domain name, based on Court determinations.
Ally's actions in this case should be a model for brand owners suing cybersquatters. The company first attempted to regain the domain names out of court, but when it became clear that this tactic would be unsuccessful, it sued the cybersquatter under federal law and sought damages, something that UDRP cases do not provide.
A collective of enforcement agencies around the world joined forces recently to seize 132 domain names selling counterfeit goods as part of specific consumer protection operations. Dubbed "Project Cyber Monday" and "Project Transatlantic," the programs are part of a larger effort called Operation In Our Sites (IOS), which is responsible for 1,630 domain name seizures since its launch in June 2010.
For the third year in a row, the National Intellectual Property Rights Coordination Center (IPR Center) coordinated this joint effort around Cyber Monday, the largest online shopping day of the year. Of the 132 domain names, 101 were seized as part of Project Cyber Monday, while an additional 31 were taken through Project Transatlantic.
Officers from the U.S. Immigrations and Customs Enforcement's Homeland Security Investigations, Europol, and law enforcement agencies in France, Denmark, the UK, Belgium, and Romania made undercover purchases on websites suspected of selling counterfeit goods. Once copyright holders determined that the products purchased were counterfeit or illegal, authorities seized the domain names that sold the products. Associated PayPal accounts revealed more than $175,000 in received funds, which the same officers are currently working on gaining control of.
This news comes in the wake of the publication of the latest MarkMonitor Shopping Report, which revealed that one in five online bargain hunters has accidentally shopped on a website selling counterfeit goods. The report describes how shoppers simply looking for low prices on specific products are often duped by websites passing counterfeit goods off as legitimate wares. The report demonstrates the magnitude of the problem that programs like Project Cyber Monday look to address, as MarkMonitor reports that brand owners lost more than $200 billion to online brand abuse last year alone.
For every brand owner, it is critical to have a proactive reclaim strategy in order to protect both the brand itself and its customers online. Brand owners should also be reactive where necessary – prioritizing valuable reclaim opportunities and pursuing them via UDRP or other effective actions.
Pinterest, inarguably one of the fastest rising stars of the social media world this year (and the subject of a FairWinds Perspectives study this past spring), filed a comprehensive lawsuit against Chinese cybersquatter Qian Jin, citing a host of violations related to trademark infringement and cyberpiracy. The lawsuit, filed in a San Francisco court, accuses Qian of registering dozens of Pinterest-related domain names, using a number of different ccTLDs and misspellings of the Pinterest brand name, and attempting to trademark some of the names in both the United States and China.
The domains were registered over a six-month period in the second half of 2011, as Pinterest was just beginning to really hit its stride and gain widespread popularity. According to the lawyers for the Bay Area company, Pinterest is just the latest company in a long line of social networks that Qian has targeted. The lawsuit refers to Qian as a "serial cybersquatter who has registered and owns hundreds of infringing domain names," including some related to Facebook, Google, Twitter, and Foursquare.
The lawsuit seeks damages and an order preventing Qian or any associated parties from using the Pinterest name. Additionally, the company wants the trademark applications in U.S. courts for "Pinterest" and Pinterests" thrown out.
Although the practice of cybersquatting almost as old as the domain name system itself, squatters constantly seek new ways to capitalize on emerging trends or habits to make money. Cybersquatters like Qian, for example, are actively targeting rising tech companies that didn’t have the foresight to procure potentially valuable domain names when they first set up shop. This lawsuit will certainly be a lesson for Pinterest, as the company will want to ensure that they won't have to spend this amount of time or money on similar cases in the future.
Other brands, especially those with explosive success like Pinterest, should look at this as a cautionary tale. Keeping tabs on your domain portfolio from the outset will save you from having to go through legal battles to prevent opportunistic third parties from benefitting off of and potentially tarnishing your brand.
Given Qian’s history of cybersquatting and Pinterest's rights to the intellectual property in question, they should come out on top in this case, but legal battles like this are easily preventable with forward thinking.
The first UDRP decision involving a .XXX domain name was handed down by a National Arbitration Forum (NAF) Panelist on Tuesday. HEB Grocery Company, L.P. prevailed in its Complaint against Eric Gonzales over the domain name HEB.xxx. The decision itself was unremarkable as Mr. Gonzales clearly lacked rights or interests to the domain name. In fact, Mr. Gonzales admitted to registering HEB.xxx simply because the grocery chain had failed to "exhibit a proactive approach" towards registering in the new .XXX top-level domain.
Mr. Gonzales' move to register HEB.xxx reminded me of the early days of the Internet. Way back in 1994, when there were less than three full-time employees at the Internet Network Information Center ("InterNIC") handling domain registrations in .COM and only one-third of Fortune 500 companies had registered their main trademark in the .COM space, Josh Quittner wrote an article in Wired about corporate adoption of the Internet. In what now seems an almost quaint analysis, Quittner examined the practice of cybersquatting, which was burgeoning as companies that had yet to get the message about "the Next Big Thing" failed to register their domains and Internet intellectual property laws and domain dispute arbitration were still in their infancy. As Quittner saw it, companies that didn't register their .COM domain name should suffer the consequences. To prove his point, he registered McDonalds.com. Without a UDRP procedure or a precedent for domain recovery arbitration, Quittner was able to hold on to McDonalds.com for over three months, and only surrendered it to the fast food chain after extracting a $3,500 donation to a public school.
Fast-forward 18 years, and Mr. Gonzales' attempt to make a point about HEB Grocery's failure to register in .XXX was met with a swift and sound decision from the NAF Panelist. As ICANN paves the way for the introduction of hundreds, possibly thousands, of new gTLDs, the first .XXX UDRP decision is a reminder that we've come a long way since 1994. And, like the domain name space itself, the ways in which brand owners protect their online reputations are continuing to evolve.
The Russian Legal Information Agency (RAPSI) is reporting that the Russian Ninth Commercial Court of Appeals will hear an appeal from Tissot, the luxury Swiss watchmaker and member of the Swatch Group, over Holmrook Limited's use of the “Tissot” trademark and the domain name Tissot.ru. Back in December, the Moscow Commercial Court ruled against Tissot on the grounds that the Tissot.ru domain was operated by an authorized third party as an informational website about the French painter, James Tissot. Tissot (the brand) contended that this content was only put on the site after it had filed its suit.
Indeed, the Court's decision does seem curious given that it had previously ruled in favor of other Swatch Group brands Rado and Longines, against Holmrook Limited, over similar trademark and domain name issues. In September 2011, for example, the court ordered the Rado.ru domain transferred to Rado and commanded that Holmrook pay out 50,000 rubles (about $1,650) to Rado in damages. Given that the Tissot suit marks the third case in which Holmrook Limited has been the defendant in domain name disputes involving Swatch Group brands, all signs seem to point towards a bad faith registration. And yet, the Russian court did not see it that way.
Unfortunately, the inconsistencies in this case are (ironically enough) quite consistent with my experience with the .RU ccTLD. The bottom line is, thanks to lax copyright enforcement and a rampant counterfeiting industry, cybersquatting flourishes in the .RU space. Compounding the problem is the lack of any kind of dispute resolution policy (DRP) for .RU domains, which leaves trademark holders with the unpalatable choice of pursuing legal action through the expensive, slow, and inconsistent Russian court system, or attempting to purchase the domain directly from the domain owner.
For brand owners, the best defense is a strong offense: I advise registering all key trademarks in the .RU domain before cybersquatters can. If you're already too late, attempt to negotiate a sale of the disputed domain with the registrant. When all else fails, try the Russian courts as Tissot is now preparing to do for a second time. I will be closely following the appeal, which the court is scheduled to hear on February 8th.
With the biggest game of the football season – not to mention the most-watched television broadcast in the U.S. – just three days away, it should come as no surprise that scammers are seeking every opportunity to take advantage of Pats and Giants fans, as well as the more casual Super Bowl viewer, on the Internet. In addition to websites promising last-minute ticket sales and hawking counterfeit merchandise, government officials are swooping down on sites such as FirstRowSports.tv and FirstRowSports.com that advertise unauthorized streaming coverage of the big game itself. Such operations have become a predictable aspect of most major sporting events, including the 2011 Baseball World Series.
This morning, U.S. Immigration and Customs Enforcement (ICE) Director John Morton, U.S. Customs and Border Protection (CBP) Director of Field Operations in Chicago David Murphy, and NFL Vice President for Legal Affairs Anastasia Danias appeared in Indianapolis (the city hosting Sunday's game) to report that "Operation Fake Sweep" had led to the seizure of 307 infringing websites and one arrest. Fake Sweep comes as part of the broader "Operation In Our Sites" program, which, since its inception in June 2010, has reportedly led to the seizure of 669 domain names.
The ICE has promised that the domain crackdown will continue throughout the weekend. In the meantime, fans searching for Super Bowl XLVI memorabilia should be sure to only purchase merchandise from authorized vendors with familiar domains. And remember, for those without a TV like myself, the NFL and NBC will be streaming the game live – and legally – on NBCSports.com.
Things could be about to get real for Filipino cybersquatters. The Filipino Senate recently passed the Cybercrime Prevention Act of 2012. While still awaiting passage in the Filipino House of Representatives, the proposed legislation criminalizes cybersquatting, making it a "punishable act." Those found guilty could face six to twelve years in prison, a fine of up to 500,000 Philippine pesos (the equivalent of about $11,600), or both.
That's quite a contrast to the U.S.'s Anti-Cybersquatting Consumer Protection Act (ACPA) of 1999. Although ACPA allows for the awarding of damages between $1,000 and $100,000 for cases involving willful cybersquatting, research by FairWinds in 2008 revealed that courts have rarely assessed damages at the upper end of this range. Accordingly, trademark holders prefer the relative ease and lower cost of recovering cybersquatted domains through the Uniform Domain-Name Dispute-Resolution Policy (UDRP), which only has the power to transfer or cancel domains, and therefore provides little deterrent to cybersquatters. The result? Just about anybody can register a domain that is identical or confusingly similar to a registered trademark with relative impunity.
If the Cybercrime Prevention Act passes, it will be interesting to see what happens to cybersquatting in the Philippines. As for the U.S., I suspect that the risk of twelve years behind bars would be enough to deter all but the boldest of cybersquatters.
Scouring the Internet for an authentic Albert Pujols jersey to commemorate the 2011 World Series? Before you bust out your credit card, take careful note of the website hawking the goods. Just as the St. Louis Cardinals were orchestrating one of the greatest comebacks in baseball history, the U.S. Department of Homeland Security’s Immigration and Custom Enforcement (ICE) division cracked down on 58 websites hawking counterfeit goods that infringed on trademarks owned by Major League Baseball, as well as by the NBA, the NFL, and the NHL. The story, along with a complete list of the seized domains, was covered by Internet Retailer this week.
A quick look at the list of the seized domain names reveals that 31 out of the 58 contained team, league, or company trademarks, such as MinnesotaTwinsStore.com, CoolNFLJerseys.com, and CheapNikeDunksOnline.com. This underscores the wisdom that cybersquatting is sometimes a means to an end for cybercriminals; in this case, it was used to sell counterfeit goods, while in other cases, it is used to spread malware or phish for sensitive information.
As we so often see in our work here at FairWinds, by taking advantage of well-known, trusted brands and marks, cybersquatters are not only able to drive Internet traffic to their sites, but they can also manufacture a sense of legitimacy that woos customers into purchasing counterfeit items or divulging personal information. For brands, the problem is obvious: this practice infringes on their intellectual property, dilutes their brand, and leads to negative customer experiences.
As in baseball, the best defense is a strong offense. Brand owners must proactively register strategic domain names and then develop a systematic approach towards monitoring the domain landscape and recovering any infringing domains. Failure to do so may leave you down by two runs with only one strike left in Game 6. While the Cards pulled it off, I’m betting that’s a risk to your brand and your company that you’re just not willing to take.
“Bad faith” can some times be the trickiest element to prove when trying to demonstrate that a registrant has cybersquatted a domain name. Many times, whether a domain owner has acted in bad faith comes down to timing, specifically when he or she first registered the domain name. This principle was called into question during a recent cybersquatting lawsuit in a Los Angeles federal court.
Erik Bethke, the founder of the virtual pet game and social network GoPets Ltd., had attempted to purchase the domain name GoPets.com from its owner, Edward Hise. Bethke initially offered Hise $750 for the domain, but when Hise rejected the offer, Bethke filed a UDRP arbitration with the World Intellectual Property Organization (WIPO). Unfortunately for Bethke, because Hise had registered GoPets.com five years before Bethke created GoPets Ltd., the complaint lacked evidence of bad faith and the WIPO Panel denied Bethke’s request to transfer the domain.
After the failed UDRP, Bethke again offered to purchase the domain, this time for $40,000. Hise responded asking for $5 million and threatening to add metatags to the code of GoPets.com in order to redirect visitors to Bethke’s site back to Hise’s domain. After sending that demand, Hise transferred ownership of the GoPets.com domain to Digital Overture, the company that he co-owns with his brother. Through Digital Overture, the Hise brothers have registered over 1,000 domain names.
After Hise transferred the domain, Bethke took legal action, suing him in a Los Angeles federal court for cybersquatting and trademark infringement. He attempted to circumvent the issue of when the domain had originally been registered by arguing that Hise’s renewing the domain name registration and then transferring it to Digital Overture amounted to a new registration. The Los Angeles judge sided with Bethke, awarding him $100,000 in damages as well as the domain name GoPets.com.
However, a three-judge panel of the 9th Circuit judges partially reversed this ruling, on the grounds that the Anitcybersquatting Consumer Protection Act (ACPA) is very clear about its definition of “registration” as referring to the initial domain name registration. In the decision, Judge William Fletcher wrote, “We see no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner.”
The judges did agree that both Hise and his brother had shown bad faith after the UDRP proceedings, and had also violated unfair competition laws during their negotiations with Bethke. The Los Angeles judge is now left to decide what relief might be appropriate for these offenses. Whether this decision will have any impact on the way domain transfers are regarded under UDRP precedent has yet to be seen.
Aside from highlighting how complex domain name-related matters can be, this case opens up the question of whether or not ACPA needs to be adjusted to more adequately cover scenarios of domain name transfers, as well as other issues.
As of earlier this week, luxury retailer Chanel Inc. has filed a massive cyberpiracy and trademark infringement lawsuit against 399 websites hosted on domain names that contain Chanel’s trademarks. According to Chanel, the sites have been selling counterfeit goods like shoes, handbags, clothing, jewelry and other accessories.
The lawsuit is seeking an order to seize the domain names listed in the complaint. Domain name seizures have been a popular tactic used by the U.S. government, especially the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) division, to shut down the sales of counterfeit goods and pirated content online. The attorneys handling the Chanel case also filed a lawsuit on behalf of Tiffany & Co. back in April against 223 domain name owners. There are 19 defendants from the Tiffany suit that are named in the Chanel suit.
The lawsuit contends that the owners of these domains use search engine optimization strategies to rank highly in search results and make it easy for consumers to find their sites.
These two lawsuits are some of the biggest domain name-based lawsuits we have seen, and it will be interesting to watch how the Chanel case plays out. More than anything, instances like these should drive home to legislators the need to reform the Anticybersquatting Consumer Protection Act (ACPA).