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Trademark Holders Enforcing Rights Against Cybersquatters


By
Smith & Hopen PA

The Uniform Domain-Name Dispute-Resolution Policy (UDRP) was approved by the Internet Corporation for Assigned Names and Numbers (ICANN) on October 24, 1999. The Internet Corporation began implementing procedures under those rules as of December 1999. As of the official launch date, WIPO Center has reported receiving over 25,500 UDRP-based cases covering approximately 47,000 domain names. As 2012 came to a close, the WIPO Center reported another record year for cases filed, citing 2,884 cases covering approximately 5,084 domain names. Thus far, the current calendar year 2013 is continuing the trend by showing strong numbers of domain dispute filings. One trend is becoming increasingly apparent – Internet Domain Name Dispute Resolution is a growing avenue for trademark holders to enforce rights against third parties holding confusingly similar domain names and acting in bad faith.

Typically, domain names are awarded under the "first-come, first-served" rule. In other words, domain names are awarded to the first purchaser of a domain name, regardless of trademark rights. This creates an apparent discrepancy between trademark rights and domain name rights. For example, a trademark holder may have rights in a specific mark, but no rights to a domain name that includes or uses the mark, or a confusingly similar equivalent, if the domain name was purchased by a third party. Cybersquatting generally refers to third parties that take advantage of this discrepancy by registering domain names relating to trademarks, famous names, and famous marks. Oftentimes cybersquatters attempt to sell the domain name to competitors or other businesses for exorbitant prices. In other circumstances, cybersquatters set up a competing website that sells and advertises confusingly similar goods and services. UDRP arbitrations attempt to prevent cybersquatting from affecting those trademark holders whose rights are being violated by bad faith use of registered domain names. Initiating a UDRP arbitration places this issue in front of independent panelists.

Unlike traditional avenues for enforcing trademark rights, domain disputes concern ownership of the disputed domain name. There are no monetary damages applied and no injunctive relief available for the prevailing party. Instead, a domain name dispute results in the domain name being transferred to the complainant or remaining in possession of the respondent. In some cases it is also possible for a party to seek cancellation of a domain name. Thus, the remedy for domain disputes is over the ownership of the disputed domain name, as opposed to damages incurred through its use.

Perhaps one of the most telling factors into the increasing popularity of domain name disputes is the success rate of the cases. The WIPO Center reported that in 2012, one out of five cases were able to settle before panelists ever had to make a decision. When not settled, approximately 91% of all decided cases found evidence of cybersquatting. These numbers firmly establish domain name disputes as a very real and very enforceable avenue for trademark holders to enforce their rights over domain name ownership. With new gTLD domain extensions becoming available, one can predict that the amount of domain name disputes will continue to rise at an increasing rate.






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