On Your Side - Fake Domain Names Can Be Trouble

July 2, 2004
Business First

Fake domain names can be trouble

Question: My business is small and just starting out, so to attract customers to my company's Internet site -- and, in particular, to take advantage of Web surfers with less than perfect typing skills -- I have registered a domain name that is a misspelling of a famous domain name and trademark.

Would there be any legal consequences to this?

Answer: The practice you have described is commonly referred to as typosquatting -- a form of cybersquatting that involves the registration of several possible spellings of the URL (the "Uniform Resource Locator," which is simply the address of a certain file or resource on the World Wide Web) of an Internet site known for its high traffic in order to divert Web surfers to the misspelled domain name site.

Typosquatters typically make money from this practice by selling advertising for sites that receive a high volume of this accidental traffic. However, typosquatting also can be used, as you indicate in your question, to divert customers with poor and careless typing skills to your company's Internet site.

The Anticybersquatting Consumer Protection Act (ACPA), which was enacted by Congress in November 1999, makes it illegal for a person to register or to use, with the bad faith intent to profit from, an Internet domain name that is identical or confusingly similar to the distinctive or famous trademark of another person or company.

One application of the ACPA is to prevent people from registering trademarks of other companies as domain names and then selling these back to the owners.

Although the ACPA was first intended to prevent cybersquatting, this law has also been applied to prevent the practice of typosquatting.

In a seminal case on this issue, the owner of the domain name joecartoon.com sued a wholesaler of Internet domain names -- i.e. someone involved in the practice of acquiring multiple domain names with the intent to profit from them -- for the wholesaler's registration of several substantially similar domain names, such as joescartoon.com, joe carton.com, joescartons.com, joescartoons.com, and even cartoonjoe.com.

Anyone who entered one of these misspelled variations of the joecartoon.com Web site was mousetrapped into a series of click-through advertisements for which the wholesaler was paid per click, earning him between $800,000 and $1 million annually -- much of which came from this typosquatting practice.

The court determined that the "joecartoon.com" Web site, which had been in use for 15 years and received some 700,000 "hits" -- or visits -- a month, was distinctive and famous and, as such, qualified for protection under the ACPA.

The court applied the ACPA to the acts of the wholesaler and entered an injunction that required the wholesaler to transfer the infringing domain names to the "joecartoon.com" owner and to refrain from using any other such domain names.

The court also fined the wholesaler $10,000 per domain name and ordered him to pay the other side's attorney fees of $40,000.

This decision by the trial court was upheld on appeal and thus sent a strong message to anyone thinking of registering a misspelled variation of someone else's domain or trade name with the bad faith intent to profit from this practice: Think again.

Peter J. Stavros is an attorney in the intellectual property practice group of Frost Brown Todd LLC, and vice chairman of the Louisville Bar Association's intellectual property section.

© 2004 American City Business Journals Inc.