October 1999

Senate Passes Cybersquatter Legislation

By Wayne Whalen

The U.S. Senate unanimously passed the Anti-Cybersquatting Consumer Protection Act (S. 1255) which makes it a crime for individuals to acquire Internet domain names that closely resemble trademarked words or phrases solely for the purpose of selling the names for profit.

This practice, known as cybersquatting, currently allows individuals to legally purchase domain (or web) addresses and hold them for what amounts to ransom. In many cases, cybersquatters use these addresses to confuse consumers and turn a quick profit. Many companies settle out of court with cybersquatters since legal costs can escalate and often cost more than settlements. Companies' decisions not to protect their corporate intellectual property has allowed cybersquatters to remain in business but the pending legislation may soon begin to diminish the practice. A related bill is pending in the House of Representatives.

Sponsored by Senator Orrin Hatch (R-Utah), the Senate bill will allow trademark owners to interpret the goodwill associated with trademark names. The legislation considers it wrongful conduct for domain name registrations to apply for such trademark names in an attempt to gain profit as a result.

The bill permits trademark owners to sue for financial damages and recover up to $100,000 per domain name in statutory damages and to seek the forfeiture, cancellation, or transfer of a domain name. Repeat offenders can face fines up to $300,000 for each violation; however, there are no criminal penalties stipulated in the bill. The legislation also encourages registrars of domain addresses to assist in preventing cybersquatting.

Society Fights Its Own Squatter

The NYSSCPA is well aware of cybersquatters after filing a lawsuit last April against the Eric-Louis Internet website for unauthorized reproduction of Society copyrighted material. (See the May 1999 issue of The Trusted Professional.)

Eric-Louis Associates purchased the domain address www.nysscpa.com in January, engaging in practices such as linking to the Society's site, www.nysscpa.org. The NYSSCPA successfully obtained an injunction to stop Eric-Louis Associates' use of the Society's service mark, "nysscpa," and prohibit the "framing" of the Society's website. At present, the NYSSCPA seeks attorney's fees from the court.

The Society joins trademarked brand names such as Walt Disney Company, Porsche, AT&T, Dell Computers, and Gateway 2000 as victims of cybersquatting practices. Even politicians have encountered trouble with cybersquatters, including Senator Hatch and San Francisco Mayor Willie Brown.