Given the telephone conversation I had yesterday with a potential client I thought it a good idea to revisit the issue of cybersquatting.

First, cybersquatting, according to a US federal law (known as the Anticybersquatting Consumer Protection Act), is registering, trafficking in, or using a domain name with bad faith or the intent to profit from the goodwill of a trademark belonging to someone else. Frequently, a cybersquatter offers to sell the domain to the person or company who owns a trademark contained within the name at an inflated price.

So yesterday I receive a call from a potential client (I have changed the names of the parties to protect the innocent), I will call him John. John informed me that he had previously registered the domain name bmwofhouston.com. John did in fact previously own a BMW dealership but he did not register this domain name for use with that business but rather to later sell it for a profit.

Several years after he registered the domain he received a solicitation from a BMW dealer owner requesting to purchase the domain. John told him $5000 and that offer was declined. Another year passes and John contacts this dealer owner and offers to sell it for $2500, the offer is again declined. John then forwards all his traffic for the site bmwofhouston.com to the local Audi dealership website.

John now informs me that he has received a letter from a law firm, who represents BMW, demanding that 1) he immediately cease the use of the domain bmwofhouston.com and 2) that he turn over the domain to BMW. The letter goes on to spell out how what John has done is a violation of the Anticybersquatting Consumer Protection Act.

John’s position was, how can this be? I bought this as an asset to appreciate over time and then sell it. I explained to him that BMW is a registered trademark and that his domain contained that registered trademark. He did not have a license or other authorization to use the trademarked name, consequently, his use of the BMW name was both an infringement and an violation of the Anticybersquatting Consumer Protection Act, both of which carry severe penalties.

But, but, but, he says, there are so many people doing this. Buying up a domain so no one else can use it and then selling it to a business using that name or in that industry for a profit. Are you saying that they are all violating federal law? Well, every case is certainly fact specific, however, if the intent when the domain is purchase is to make a profit by selling it to the trademark owner of that name, yes, it is a violation.

I explained that this would be no different than if he had purchased the domain named “nike.com” (if it was available), and then tried to sell it to Nike. It would not matter if he was in the business of selling used Nike shoes. The fact is that Nike is a registered trademark and there would be a likelihood of confusion in the marketplace that his business was affiliated or authorized by Nike. You cannot simply trade on the goodwill of others by using a trademarked name in a domain name. Cybersquatting is a serious problem that can seriously and adversely effect a business.

Had John read my previous articles on this subject he would have known that an unsolicited offer to purchase a domain name could often be an attempt to collect evidence of a violation of the ACPA.

Now, instead of making a profit John is faced with significant liability and that will likely require more attorney fees, than if he had consulted with a qualified IP attorney when he had decided to purchase domains. So perhaps purchasing googleloans.com is not the best idea after all.

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