by Andrew Jacobson

[caption id="attachment_1362" align="aligncenter" width="150"] Petronas Towers[/caption]

The cybersquatter is a parasite that benefits from an internet user’s confusion who thinks that they are accessing a popular website, when they really get something else. The US banned cybersquatting in 1999's Anticybersquatting Consumer Protection Act (“ACPA”) and is codified at 15 U.S.C. § 1125(d).

Malaysia’s oil company, Petronas, discovered a cybersquatter who used the name of Petronas’ iconic twin towers in a domain name that forwarded to more adult-oriented fare. Petronas quickly demanded that the registrar for the cybersquatting domain name, Go Daddy, take down the “petronastower” website because Go Daddy was allegedly infringing upon Petronas’ mark. However, the website that Go Daddy hosted (but did not create) did not have any infringing content; only the domain name was infringing, and domain name disputes are subject to the Uniform Domain Name Dispute Resolution Policy (“UDRP”), an internet-wide policy required by the body that runs the internet, ICANN. While Petronas wanted Go Daddy to immediately shut down the cybersquatter, under UDRP rules, Go Daddy could not do so until it receives orders to do so from UDRP arbitration or a local court.

Petronas ended up suing Go Daddy for direct and contributory cybersquatting. In the trial court the claim of direct cybersquatting against Go Daddy died a quick and well-deserved death. Go Daddy only registered the site; it did not create it or its contents. Further, under the ACPA, a bad faith intent to profit from the cybersquatting is required, but Petronas had no evidence that Go Daddy (as opposed to the actual cybersquatter) had profited from the confusion. This profit requirement for a claim is not normal for intellectual property cases; in trademark and copyright infringement cases, intent to profit is a factor in deciding damages, not whether the defendant is liable.

The claim of contributory cybersquatting was more interesting from a legal perspective. Contributors to intellectual property infringement do not directly do any infringing; rather, they make it possible for others to do so. In 2000, the recording industry went after Napster, the first website that made it possible for users to (illegally) copy each other’s music. Napster did none of the copying itself. Instead, Napster made it possible for users to do the illegal copying themselves. Napster was found liable for contributory copyright infringement, and its illegal ways were soon shut down. (It maintains a diminished, albeit legal, presence on Rhapsody).

The Petronas trial court found that in the Ninth Circuit (covering from Idaho and Montana to all points of the United States west), “one is liable for contributory trademark infringement when he has knowledge of another's infringement, and either materially contributes to or induces that infringement.” However, it concluded that Go Daddy’s actions did not contribute to the cybersquatting. While the Ninth Circuit affirmed the trial court’s decision, the Ninth Circuit ruled that without a specific ACPA provision allowing a suit for contributory cybersquatting, there could be no such claim:
“the ACPA does not include a cause of action for contributory cybersquatting because: (1) the text of the Act does not apply to the conduct that would be actionable under such a theory; (2) Congress did not intend to implicitly include common law doctrines applicable to trademark infringement because the ACPA created a new cause of action that is distinct from traditional trademark remedies; and (3) allowing suits against registrars for contributory cybersquatting would not advance the goals of the statute.“

Examining the ACPA, the Ninth Circuit found that the requirement of a bad faith intent to profit from cybersquatting prevented it from finding an implied contributory cybersquatting claim. Adding a claim for contributory cybersquatting, which would include a registrar’s normal activities, “would expand the range of conduct prohibited by the [ACPA] from a bad faith intent to cybersquat on a trademark to the mere maintenance of a domain name by a registrar, with or without an intent to profit.” The Ninth Circuit also found that the ACPA’s purpose of protecting consumers would not be served by creating contributory liability. It overturned several lower court decisions that have found a limited claim for contributory cybersquatting.

Justice was still done: Petronas got the cybersquatter shut down early. But Petronas also took a shot at Go Daddy, a deep and easily located pocket from which it could try to recover damages. Claims against Internet registrars like Go Daddy for contributory cybersquatting would force registrars into the role of policemen and guarantors. ICANN and the UDRP already act as the Internet’s domain name police, and forcing registrars into guarantors for those who would violate the rules would skyrocket costs and chill the freedoms for which the Internet is valued.