As we mentioned in our Weekly News Brief, last week, a federal court in California ordered OnlineNIC to pay Verizon $33.15 million in damages for cybersquatting. OnlineNIC, a domain name registrar, had registered over 600 domain names that infringed on the Verizon trademark, which it used to host ad links and pop-under advertisements that earned them revenue. The ruling was initially handed down in December of 2008, but OnlineNIC protested, claiming that the value of the damages [$50,000 per domain] was disproportionate and that only a jury trial could determine what amount of damages would be appropriate. The district court judge rejected both of these claims, and ordered OnlineNIC to pay Verizon’s attorneys’ fees and cost in addition to the $33.15 million in damages.
A law firm that FairWinds has worked with for years once told me that they researched ACPA (Anti-Cybersquatting Consumer Protection Act) damages and found that, on average, judges awarded just $2,000 per domain. That is ridiculous – on a regular basis we find infringing domains that cost our clients well over $100,000 per year. Keep in mind that ACPA provides judges with discretion to award between $1,000 and $100,000 per domain.
The Verizon OnlineNIC ruling represents a huge victory in the ongoing battle against cybersquatters. Sarah Deutsch, Vice President & Associate General Counsel of Verizon and representative in the Coalition Against Domain Name Abuse (CADNA), is a prominent advocate for the elimination of cybersquatting and other abusive practices online. The ruling is great for Verizon and for all companies that have to deal with parasitic infringement. It shows that courts are taking cybersquatting and related offenses seriously, and raises the awareness level of the risks associated with cybersquatting.
However, while this verdict is a bite-back for registrars that allow cybersquatting (which is important – enabling cybersquatting should be punishable just as cybersquatting itself is), it is often difficult to get the cybersquatters themselves. I blogged about this back in December, but there are so few “big-time” cybersquatters who own thousands of names. Most cybersquatters own only a few names, which wouldn’t bring in substantial damages in a court. Given the amount of time and money required to file suit in the U.S. against cybersquatters and how unlikely it is that the damages awarded will be substantial, it often isn’t economically practical to pursue them. As a result brand owners often opt for UDRP, which at best orders a transfer of the domain name to the brand owner—there are no damages awarded through a UDRP.
In order to make the fight against cybersquatting easier, there need to be greater remedies available to trademark holders in the U.S. courts. Raising the threshold of damages would in turn establish more of a deterrent.
In addition, ICANN, as the organization in charge of the domain name system, must provide better guidelines prohibiting infringements and abuses of all kinds. So the question stands – is ICANN going to step up and disaccredit OnlineNic for its activities?