Since the inception of the Internet bad faith domain name registrants, or “cyber-squatters”, have sought to capitalize on and interfere with the exclusive trademark rights of others. The traditional scam involves the cyber-squatter registering a domain name consisting of or containing the trademark of another party. When contacted by the trademark owner demanding a transfer of the domain name, the squatter then demands that the trademark owner pay an exorbitant amount, or “ransom”, to obtain the domain name.
While the Anti-Cybersquatting and Consumer Protection Act (ACPA) and the Uniform Domain Name Dispute Resolution Policy (UDRP) have done much to help combat this illegal activity and enable trademark owners to recover domain names registered by squatters, the squatters remain relentless and have become more savvy and sophisticated in perpetrating their schemes. They have even gone so far as to monitor the United States Patent and Trademark Office (USPTO) database for new federal trademark registration applications as a means of efficiently targeting trademark owners. For example, we are aware of one scheme in which a party files a trademark application with the USPTO and as soon as the application becomes publicly searchable around three days after filing, the squatter registers a .com domain name for the mark. When the applicant then seeks to register the .com domain name corresponding to the trademark, the applicant discovers that the domain name has already been registered and the squatter has advertised on the parked domain name web page that the domain name is for sale for $975.00. In lieu of paying the $975 ransom, an applicant with prior common law trademark rights may be able to compel transfer of the domain name through a legal proceeding, but the cost would most likely be well in excess of the domain name ransom price. Furthermore, it may be quite difficult for an applicant that has not yet used the trademark in question to compel transfer of the domain name, at least until the mark is used in commerce and a registration issues. This could take up to a year or even longer.
In view of these exploitative schemes, it is imperative for trademark owners to register their desired domain names, if available, before engaging in any activity that exposes the trademark to public view. It is also recommended that trademark owners obtain any desired social media handles, such as Twitter and Facebook handles, prior to public disclosure of the trademark, since similar schemes are perpetrated in the world of social media as well. Even if there is no need for a domain name or social media handle, registration should still be considered for defensive purposes to prevent a squatter from exploiting the trademark rights and goodwill built up in one’s business. Consultation with competent counsel to evaluate and implement a domain name and social media handle acquisition strategy is also recommended.