By Gerald M. Levine, Esq.
Unlike typical arbitrations in which awards are final and binding online dispute resolution of domain names under the Uniform Domain Name Dispute Resolution Policy, the UDRP, can proceed to de novo actions in federal district courts under the Anticybersquatting Consumer Protection Act, the ACPA. The ACPA is a section of the Trademark Act of 1946, the Lanham Act. There are two possible claims under the ACPA. In both, the losing party is aggrieved by the award; either the domain name holder forfeits the domain name which is cancelled or transferred to the trademark owner; or trademark owners fail to prove domain name holders lack rights or legitimate interests in the domain names or are guilty of abusive registrations of the domain names.
There have been a number of notable UDRP awards that have moved to federal court. Unlike the UDRP in which injunction is the sole substantive remedy, under the ACPA the winning party is entitled to damages and attorneys' fees, whether it be to the trademark owner or the domain name holder. Taking the situations one at the time. There are actually three possibilities, in two of which the trademark owner becomes a defendant in ACPA actions.
Domain name holders have litigated in two situations; one is defensible and the other not. In the defensible case domain name holders lose under the UDRP and prevail under the ACPA because they have priority in registering domain names earlier than first use of any trademarks in commerce. In other words, the first to register a domain name has a right to it regardless whether it corresponds to a later acquired trademark. In the indefensible case, holders lose because their choices of domain names are identical or confusingly similar to trademarks, lack rights or legitimate interests in the domain names, and are found to have registered and are using the domain names in bad faith.
Parties have a right to vindicate their claims under the ACPA but it comes at a price. Under the ACPA the court has discretion to award damages up to $100,000 per domain name. In a recent case of the indefensible kind filed in the Federal District Court for the Eastern District of New York, for example, involving two domain names incorporating the word "Trump plus the name of real estate ventures in India" the domain name holder was on the wrong end of a damage award of $32,000. There are similar awards against misguided domain name holders in other federal cases in which their grievances were mere mirage.
But, there are also misguided trademark owners who overreach their rights, abuse the UDRP proceedings-- enabled it has to be said by Panels who misapply domain name jurisprudence--and find themselves as defendants in indefensible cases under the ACPA. Two recent examples will suffice to illustrate the problem of overreaching. The disputes were initiated with UDRP complaints and were granted even though the trademarks were not in commerce when domain names were registered. They were clearly overreaching trademark owners, but the domain name holders commenced action respectively in the Federal District Court for the District of Columbia and the District Court for the District of Colorado, with the not startling result that the trademark owners quickly entered into stipulated settlements and consent judgments for $25,000 and $50,000 respectively including permanent injunctions to get out of their bad situations.