The Wayward Anti-Cybersquatter Consumer Protection Act: A Survey of 11 Years of ACPA Caselaw
43 Pages Posted: 25 Jan 2012
Date Written: September 24, 2011
The Anti-Cybersquatting Consumer Protection Act (ACPA) has lost its way. The ACPA was passed in an era of domain name land grabs, where nefarious individuals would register and warehouse oodles of valuable domain names, and then extract ransom from bewildered trademark owners. Interstellar Starship Servs., Ltd. v. Epix, Inc., 304 F.3d 936, 946 (9th Cir. 2002). These nefarious individuals are known as "cybersquatters," and, according to Congress, they are bad. Sen. Spencer Abraham, sponsor of the ACPA, stated, "On-line extortion in any form is unacceptable and outrageous. Whether it's people extorting companies by registering company names, misdirecting Internet users to inappropriate sites, or otherwise attempting to damage a trademark that a business has spent decades building into a recognizable brand, anyone engaging in cyber-squatting activity should be held accountable for their actions."
The Federal Courts echoed Congressional intent, stating, “[t]he paradigmatic harm that the [ACPA] was enacted to eradicate [was] the practice of cybersquatters registering several hundred domain names in an effort to sell them to the legitimate owners of the mark." Lucas Nursery & Landscaping, Inc. v. Grosse, 359 F.3d 806, 810 (6th Cir. 2004).
The ACPA was enacted to rectify situations that involved oodles of domain names, nefarious individuals, the registration of domain names before bewildered trademark owners realized they needed them, and extortion.
But that's not how the ACPA is being used today. The ACPA has become yet another weapon in nefarious trademark owners' arsenals to use against domain name owners that the trademark owners generally wish, for whatever reason, would go away. And the Courts have facilitated this evolution by their misapplication of the ACPA, permitting ACPA actions to succeed where evidence of warehousing, multiple domains, or extortion is lacking.
In order to establish a cause of action under the ACPA, the court must find that the defendant acted in bad faith. In order to make this determination, Congress provided the courts with nine non-exclusive factors (guidelines really). These factors can be divided into two groups: factors 1-4 address reasonable justifications on the part of the domain name owner for registering that domain name, and factors 5-8 address actions taken by the domain name owner that constitute bad faith.
This paper surveys several years of caselaw, creating a statistical analysis of court decisions noting how the courts handle these factors, which factors are considered, which factors are emphasized or ignored, and whether there are any patterns to the decisions.
Initial research reveals that the courts have wandered from the ACPA’s original mission. Plaintiffs have been victorious on facts devoid of bad faith cybersquatting factors. Trademark owners have succeeded in cases where there is no extortion (no offer to sell), no intent to redirect, no fraudulent registrations, one domain name in dispute, and little that reeks of “nefariousness.” Some courts have transformed the ACPA from a tool to address the problem of nefarious cybersquatting, to a tool of trademark owners who pry domain names out of the hands of defendants. The problem with Congress granting courts wide discretion on how to apply factors is that the courts can liberally utilize that discretion, applying the law in situations that were initially not anticipated. The ACPA has wandered from the problematic fact patterns contemplated by Congress at the time of passage.
Suggested Citation: Suggested Citation