U.S. Congress To Vote On Cyber-Squatter Law

A U.S. House of Representatives bill to bancyber-squatting, the use of trademarked names as Internet domain names by people who do not hold the trademarks, has passed the Judiciary Committee and could come up for a vote as early as tomorrow. The bill, introduced in the House on October 6th, is largely unchanged from the text of a bill sent over from the Senate on September 8th. That bill moved through the Senate in just five weeks, sustaining only minor alterations and little debate. The House version includes the same general prohibition against cyber-squatting, adding a section defining the illegal use of trademarks in Internet domain names to the Trademark Act of 1946.

The cyber-squatting bill joins two other Internet-related bills awaiting action by the full House this week — the electronic signatures bill, H.R.1714, and a House Concurrent Resolution urging the United States to push for a moratorium on e-commerce tariffs and discriminatory taxes.

Quick House Action

Copyright and trademark owners are up in arms over Web site owners’ unauthorized uses of their trademarks in domain names. While some of them are legitimate businesses that may not have known they were appropriating someone else’s trademark, others — so-called “cyber-squatters” — are accused of deliberately registering domain names using widely recognized trademarks.

Such domain names are either used to attract visitors to the site or to force the trademark holders to buy the domain name in order to gain control over what content appears on the site.

The Judiciary Committee condemned cyber-squatters as “cyberpirates” who reserve domain names “expressly to extort financial profit” from trademark holders. Because current legal remedies are “expensive and uncertain,” the committee said, a law clearly stating the benefits of such legal actions is necessary.

Additionally, the committee complained that “cyberpiracy” hurts business by diverting consumers away from the legitimate trademarked business, resulting in lost business opportunities. “Cyber-squatting may tarnish the goodwill associated with the trademark when linked to other Internet activities such as pornography,” the committee said. Perhaps the most prominent example of this practice is whitehouse.com, an adult Internet site often discovered by people looking for the home of the U.S. president.

Financial Considerations

The House bill would allow trademark holders to sue a cyber-squatter for a minimum of $1,000 (US$) and a maximum of $100,000 per trademark per infringement. If the court determines that 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.

As in the Senate version, the House bill would also permit trademark holders to sue the domain name registrar that registered the infringing name if the trademark holders fail to locate the domain name registrant. The domain name registrar would not be liable for damages if the registrar can show it made sufficient efforts to check the trademark of a domain name being registered and to warn the registrant of possible infringement claims.

Unlike in the Senate version, the House bill contains an amendment to make registering trademarks a bit easier, lowering the registration fee by $50. It also lowers the trademark maintenance fee by $110.