Domaining Industry is facing a Crisis! Olympia Snow has introduced a bill which, if passed, will be a disaster for the domaining industry. Here’s the summary of the bill –
Summary of the Legislation
Notwithstanding its title, the proposed legislation goes far beyond targeting “phishing” – the criminal misuse of e-mail and websites to falsely solicit financial information for fraudulent purposes – an activity that is already illegal and subject to enforcement under a variety of state and federal laws. It also establishes a parallel trademark-like infringement enforcement system that goes far beyond the provisions of ICANN’s Uniform Dispute Resolution Policy (UDRP) arbitration procedures as well as the U.S. Anti-Cybersquatting Protection Act (ACPA).
The proposed law would make it illegal for any person to use a website in violation of the anti-dilution provisions of U.S. Trademark law to solicit any information facilitating the purchase of goods and services by use of false or fraudulent pretenses or “misleading representations” that the solicitation was being made by or on behalf of a government office, nonprofit organization, business, or other entity.
It would also make it unlawful for any person to use a domain name in connection with the display of a webpage or an advertisement on a webpage if—
- The domain name was identical or confusingly similar to the name or brand name of a government office, nonprofit organization, business or other entity.
- The person had actual or implied knowledge that the domain name would likely mislead a computer user about any material fact regarding the webpage or advertisement.
In determining whether the person had actual or implied knowledge of likely misleading effect the courts could look to a variety of factors, including the person’s “intent to divert consumers from the brand name or trademark owner’s online location…that could harm the goodwill…by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the website.” Another factor would be whether the person had offered to sell the domain name to any third party “without having used…the domain name in the bona fide offering of goods and services”, a provision that appears to be aimed directly at “parked” websites consisting solely of advertising links.
Again, despite the bill’s title, none of these trademark-related provisions contain any requirement that the domain name and website had actually been utilized to facilitate a criminal “phishing” scheme. They address essentially the same harms for which the UDRP and ACPA already provide remedies, but in a more expansive manner with the registrant at greater legal disadvantage and subject to harsher penalties.
Enforcement of the APCPA could be undertaken by –
- A state attorney general or any other official of a state
- The Federal Trade Commission (and any violation of the APCPA would be considered to be a violation of the Federal Trade Commission Act as an unfair and deceptive trade practice, and subject to its additional penalties and remedies)
- Federal banking and securities agencies, state insurance commissioners, and the Federal Communications Commission
- Interactive computer services (e.g., ISPs)
- Trademark owners
All of these parties could seek injunctions, enforcement, and recovery of actual monetary damages. In addition, interactive computer services and trademark owners could seek punitive damages for willful and knowing violations – the private right of action granted to these parties in a bill ostensibly aimed at criminal activity is highly questionable. In cases filed by the FTC, FCC, and state officials, cease and desist orders and injunctions could be obtained without any requirement to allege, much less prove, that the domain name registrant had actual or implied knowledge of likely misleading effect.
In actions brought by a state attorney general or other state official monetary damages could be sought in the amount of actual monetary losses or, in the alternative, statutory damages of $250 per violation up to a maximum of $2 million. However, a court could triple the statutory damages award, up to a maximum of $6 million, if it found that the defendant had willfully and knowingly violated the Act or if the unlawful activity included the use of a domain name in violation of the anti-dilution provisions of the Trademark Act. The court could also award attorney fees where a successful suit was brought by a state attorney general or other state official.
Story Developing. Stay Tuned for Updates.