Don’t Get Caught in the Legal Crossfire

Despite the fact that it is 2016 and the laws regarding cybersquatting on well known brands are well established, some people still seem a bit too cavalier when it comes to owning infringing domain names. My guess is that some people either don’t know about the protections given to brands or they believe the risk/reward analysis is in their favor.

This morning, Andrew Hazen called attention to a lawsuit that was filed by fashion brand Christian Dior. According to the article in World IP Review, in addition to injunctive relief and the transfer of the infringing domain names, “It is also seeking an account of all profits made by the defendants in their unlawful acts, and statutory damages for wilful counterfeiting for each use of the Dior trademarks ($2 million per infringement, tripled) and $100,000 for each domain name.”

The company, like many other large brands, is going after counterfeiters and their domain names. While this specific case may not impact people who simply own infringing domain names, people who own trademark or grey area domain names should be on notice. Brands have the ability to seek damages for owning trademark infringing domain names, and the penalties can be quite high, not even factoring in the legal fees.

Some  people believe that companies are more likely to file a UDRP proceeding rather than litigate. As a domain owner, the risk with a UDRP is the loss of the domain name and perhaps a bit of a reputational hit. There are no additional fines with a UDRP, and the penalty is not all that stiff. With litigation, the costs can be much, much higher.

I don’t recall hearing about  any major cybersquatting lawsuits since the big Verizon lawsuit. That doesn’t mean they don’t happen or that they are rare. It just means I have not heard about it. When major brands litigate against counterfeiters who use infringing domain names, it can  be very easy for people who simply own infringing domain names to get caught in the crossfire.

My opinion is that some people need to be less cavalier about buying trademark domain names, especially in the new gTLDs. It is highly unlikely that a brand will not participate in the sunrise periods and then pay a premium to a domain investor for their non-generic branded domain name. It is also highly unlikely that the infringing domain name will generate the revenue necessary to tip the risk / reward analysis in favor of the domain owner. Buying trademark names in 2016, when PPC revenue is well below its highs, seems far too risky to me.

I monitor the UDRP filings on a daily basis. There are a ton of obvious trademark infringing domain names that become the subject of UDRP proceedings. I think these could just as easily become cybersquatting lawsuits if the brands have the desire. It seems like it could be easy to get caught in the legal crossfire of a major counterfeiting and trademark infringement lawsuit.