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Brand Owners v. Cybersquatters: Getting to the Root of the Problem

Almost as soon as the figurative switch for the Internet was turned on, mal-intended (even if creative) individuals targeted brand owners for their own personal profit.  The first rendition of this scheme involved the purchase of a domain name that incorporated another’s trademark only to resell the domain to its rightful owner.  This form of cyber-extortion was wildly successful until Congress enacted the Anticybersquatting Consumer Protection Act (“ACPA”) in 1999, which outlawed this exact behavior.

Not to be deterred, these individuals (and now companies) found alternative ways to profit from the brands of others online.  A recent variation involves the purchase of a domain name incorporating another’s trademark in order to house a website there which is populated by pay-per-click advertisements, often associated with products offered under the exploited brand.  The idea is to attract consumers to a website they believe belongs to the brand owner.  Each time a consumer clicks on the link associated with these advertisements, the domain owner (and others) receives revenue.  By assembling domain portfolios with hundreds or thousands of such domains, these individuals can amass a significant sum of money from the number of clicks across all of their websites.  In fact, “domaining” has become a cottage industry.

Louis Vuitton has been at the forefront of enforcing and protecting its valuable brand against these “cybersquatters.”  As the laws catch up with these practices, it provides companies with new weapons to protect their brands.  Since 1999, brand owners have attacked cybersquatting through the ACPA or the Uniform Domain Name Dispute Resolution Policy (“UDRP”).  While the ACPA provides for both injunctive relief (i.e., forfeiture, cancellation, or transfer of the domain name) as well as monetary relief (i.e., actual or statutory damages), it is more costly on the front end because it requires filing a federal lawsuit.  The UDRP, on the other hand, only permits injunctive remedies, but it is generally less costly than filing and pursuing a complaint under the ACPA.  However, neither remedy is typically cost effective when   the brand owner is facing only a single bad actor involving control of a single domain.  Consequently, trademark owners watch the weeds pop up in droves without adequate tools to uproot them.  Moreover, even if they decide to attack a single cybersquatter, they often see two more arise in its place.

Fortunately, new strategies to combat the problem continue to emerge.  In Louis Vuitton Malletier S.A. v., S.D., Louis Vuitton successfully borrowed a strategy from the copyright owner’s playbook by seeking to join a multitude of seemingly unrelated defendants (674 to be exact) into a single lawsuit because the defendants were (separately) infringing the company’s trademarks or selling counterfeit Louis Vuitton products at domain names, most of which incorporated its brand.  Rather than picking these bad actors off one at a time, Louis Vuitton was permitted to  uproot a large number of these bad actors in a single setting.  The economies of filing a federal lawsuit become more reasonable when this strategy is employed. 

The court ultimately issued a temporary restraining order barring the defendants from infringing Louis Vuitton’s marks and to transfer their domain names to the company.  Also important, the court required the domain registrars to actively participate in the transfer process and required the privacy services to reveal the true identities and contact information of the unscrupulous domain registrants.  This novel strategy by Louis Vuitton arms brand owners with an effective new weapon in cybersquatting actions.  This strategy could become increasingly important as the new Generic Top Level Domains, scheduled to launch in January 2013, give cybersquatters a potentially unlimited number of new fields to populate.



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