Cyber-Squatting Bill Ready for Full Senate Vote

Senate bill S.1255 could go down in history as one of the fastest bills to move through the Senate, but is that a testament to the importance of ending “cyber-squatting” or to the efficiency of a simply worded bill?

Thursday, the Senate Judiciary Committee passed the “Anticybersquatting Consumer Protection Act,” just five weeks after Senator Spencer Abraham (R-Michigan) introduced it. The version passed, however, was a substitute bill offered by Judiciary Chairman Orrin Hatch (R-Utah) during Thursday’s markup.

“As anyone who has walked down the aisle in the grocery store knows, trademarks serve as the primary indicators of source, quality, and authenticity in the minds of consumers. These brand names are valuable in that they convey to the consumer reliable information regarding the source and quality of goods and services, thereby facilitating commerce and spurring confidence in the marketplace,” Hatch said. “Conversely, unauthorized uses of others’ marks undercut the market and harm consumers by eroding consumer confidence and the communicative value of the brand names we all rely on.”

The bill is now in line for listing on the full Senate’s calendar, but it will languish there until at least mid-September. The full Congress, and therefore most of Washington, leaves town for the annual August recess August 6th, returning September 8th.

The Price of Riding Coattails

While the House Subcommittee on Courts and Intellectual Property mulls over yesterday’s testimony on the problem of “cyber-squatting” — the practice of deliberately registering domain names using widely recognized trademarks — the Senate Judiciary bill lays out a few succinct changes to current law.

In an adjustment to the Trademark Act of 1946, trademark holders would be allowed to sue an accidental “cyber-squatter” for a minimum of $1,000 and a maximum of $100,000 per trademark per infringement. If the court determines the offender misused the trademark intentionally, the penalties climb to a minimum of $3,000 and a maximum of $300,000. The bill would also make the willful registration of a domain name using someone else’s trademark a criminal offense. The first offense is a Class B misdemeanor, but it becomes a Class E felony for all subsequent offenses.

War of the Domains

Thanks to Hatch’s alterations, the bill would also allow a trademark owner to apply to the courts to have the infringing domain name canceled or transferred if the owner of the domain name cannot be found. “A significant problem faced by trademark owners in the fight against cyber-squatting is the fact that many cyber-squatters register domain names under aliases or otherwise provide false information in their registration applications in order to avoid identification and service of process by the mark owner,” Hatch argued.

The bill also provides domain name registrars a limited exemption from liability if they suspend, cancel, or transfer domain names pursuant to a court order or their own policy prohibiting the registration of infringing domain names. By establishing such an exemption, Hatch says the bill will encourage domain name registrars to work with trademark owners to prevent cyber-squatting. On the other hand, if a trademark owner falsely claims that a domain name infringes the owner’s trademark, causing the domain name registrar to cancel the domain name, the registrar can sue the trademark owner for damages resulting from that loss of business or negative publicity.