Cybersquatters in Professional Sports

The following article was written by Benjamin Haynes, Esq.

Cybersquatting is the registering, trafficking in, or using a domain name with the bad faith intent to profit from the goodwill of a trademark belonging to someone else. The cybersquatter typically offers to sell a domain to a person or company who owns a trademark contained within the name at an inflated price.

Today, Darren Heitner wrote an article on the Brooklyn Nets, and how Nets.com is a domain name purchased and retained by Cyber Mesa Computer Systems, a telecommunications company with headquarters in Santa Fe, New Mexico. So while most people who type in Nets.com think they will access the Brooklyn Nets basketball website, they are diverted to a different website that has no affiliation with the Brooklyn Nets. Instead, the Brooklyn Nets (specifically NBA Media Ventures, LLC, which owns all NBA team domain names) has control of the domain BrooklynNets.com. Why is this a big deal? As mentioned in Darren’s article, “This will equate to a lot of lost traffic, which in turn could mean a lot of missed revenue opportunities” for the Brooklyn Nets.

There are remedies for trademark owners when a person registers a domain name that is registered in bad faith with no intention to create a legitimate web site, but instead registers such a name for the sole purpose to sell the domain back to the trademark owner for an excessive profit.

What must be established in order for a professional sports team to establish the foundation for a claim of cybersquatting against a domain registrant? Let’s assess the situation:

The Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d), is an American law enacted in 1999  that established a cause of action for registering, trafficking in, or using a domain name confusingly similar to, or dilutive of, a trademark or personal name.

In order to establish a cause of action under the ACPA, a few factors have to be established:

1)    It must be established that the registrant of the domain name has acted in bad faith with an intent to profit from the mark; and

2)    The registrant registers, traffics in, or uses a domain name that is (a) identical or confusingly similar to a distinctive mark, (b) identical or confusingly similar to or dilutive of a famous mark, or (c) is a trademark protected by 18 U.S.C. § 706.

While many ACPA claims in the past have been able to establish the second prong of the ACPA cause of action, the first prong has been the most difficult burden for a plaintiff to overcome. “Bad faith” is a term most everyone has heard of. However, bad faith is an extremely ambiguous term that has several interpretations. The ACPA set out several factors in order to determine whether or not bad faith has occurred with regards to cybersquatting. Those factors are as follows:

A)  the registrant’s trademark or other intellectual property rights in the domain name;

B)   whether the domain name contains the registrant’s legal or common name;

C)   the registrant’s prior use of the domain name in connection with the bona fide offering of goods or services;

D)  the registrant’s bona fide noncommercial or fair use of the mark in a site accessible by the domain name;

E)   the registrant’s intent to divert customers from the mark owner’s online location that could harm the goodwill represented by the mark, for commercial gain or with the intent to tarnish or disparage the mark;

F)    the registrant’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or a third party for financial gain, without having used the mark in a legitimate site;

G)  the registrant providing misleading false contact information when applying for registration of the domain name;

H)  the registrant’s registration or acquisition of multiple domain names that are identical or confusingly similar to marks of others; and

I)  the extent to which the mark in the domain is distinctive or famous.

If factor “E” is supported by evidence, the plaintiff would most likely overcome the burden of establishing bad faith on the part of the registrant. Applying these factors to Nets.com, the major question that would be asked is whether Nets.com was established in order to divert customers from the trademark owner’s online location for commercial gain. This type of evidence can be presented through testimony, or better yet, applying factor “C” above, which would assess whether Nets.com has been used in connection with the bona fide offering of goods or services. If it is established that the above bad faith factors are established, there is a possibility that the professional sports team could be victorious on an ACPA claim.

The ACPA allows for extensive remedies if a cause of action is established and judgment is entered. Those remedies include injunctive relief; ordering the forfeiture or transfer of the domain name; awarding damages (either actual or statutory, including defendant’s profits), and the cost of bringing the action.

When applying the potential remedies in a professional sports setting, the amount of damages could easily reach into the seven-to-eight figure regions.

The ACPA is not the only method in which one can bring a cybersquatting claim. A trademark owner can choose to pursue an administrative proceeding under ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP). The UDRP allows a trademark owner to challenge domain name registrations in expedited administrative proceedings. The reason most prefer to bring a cybersquatting claim under the ACPA as opposed to the UDRP is because the UDRP only allows a remedy of cancelling or transferring of the domain name.

In applying the above laws to the Brooklyn situation, it is difficult to assess whether Nets would be able to establish a cause of action under the ACPA or UDRP. This is the difficulty that arises when dealing with an ACPA or UDRP claim. If a domain owner can show that it uses its domain name for a purpose that fails to fit within the realm of bad faith, the lawsuit will fail as a matter of law. Speaking in broader terms, if an ACPA or UDRP judgment is ever entered in a professional sports context, like the one with Nets.com, the damages incurred would likely be so grand as to deter other cybersquatters from venturing down a similar path, in fear of having to pay such damages as well. This was one of the main goals in establishing the ACPA legislation.