What is Anti-Cybersquatting?

The Anti-Cybersquatting Piracy Act (ACPA) gives trademark holders a cause of action against anyone who, with a bad faith intent to profit from the goodwill of another’s trademark, registers, traffics in, or uses a domain name that is identical to, or confusingly similar to a distinctive mark, or dilutive of a famous mark, without regard to the goods or services of the parties.

One of the primary goals of this Act was to prevent Anticipator cybersquatting. Anticipatory cybersquatting is the practice of registering domain names with minimal present value in the hopes that these names will become desirable, and therefore increasingly valuable, in the future. Anticipatory cybersquatters register domains that have no connection with the registrant for the sole purpose of selling them at a later stage to companies that have a legitimate connection to that domain for a profit.

However, the Act has a “safe harbor” provision that applies where a court finds that a defendant “believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii). The legislation specifically provides that bad faith intent shall not be found in any case in which the court determines that the person believed, and had reasonable grounds to believe, that the use of the domain name was a fair use or otherwise lawful. The legislation fails to address whether knowledge of the existence of an unrelated business using the same or similar mark will constitute bad faith.