Merchandising; Cybersquatting

Intro to IP – Prof Merges

3.31.09

Merchandising: “Extension by Contract”

• Merchandising and basic trademark theory

• What consumer associations are protected by a “merchandising right”?

• What other benefits follow from such a right?

How does franchising work?

• National headquarters: centralized assets– Recipes, standard procedures, logos, other

resources

• Local franchise locations– Owners of real estate, contractual share of

revenue

“Cybersquatting”

• Two different legal regimes deal with this

• Domestic US law: ACPA

– “bad faith”; “legitimate interest”

Shields v. Zuccarini

• ACPA Case

• “Typosquatting” at issue

Joe’s Cartoons site

• http://joecartoon.atom.com/

• Post-Google environment may be a bit different . . .

John Zuccarini (born c. 1947) is an American businessman who served time in federal prison for violating the Truth in Domain Names Act. Zuccarini operated a domain name speculation business. He is reported as owning 5500 domains before his arrest.

John Zuccarini was charged under "truth in domains" legislation

Domain name speculation

Zuccarini registered thousands of domains that were close misspellings or "typos" of popular sites such as Cartoon Network and Homestar Runner or even acquired domains identical to well known brands such as Hot Wheels. Speculators normally place a pay-per-click web page in place of the legitimate website visitors expect to find. A PPC page looks similar to a search engine page but the design additionally blankets the home page with a copious amount of links that are often related to the subject of the domain name. Under the normal model of business, the speculator profits from the money obtained from visitors clicking on these links. However, Zuccarini deviated from this business convention by redirecting his audience of largely children to pornographic websites.

John Zuccarini

Cybersquatting and speculation

• Markets and legitimacy

• Crucial role for law in determining and policing what are legitimate markets

Society determines which transactions are legitimate, and

which are not

• The existence of a market does not, by itself, confer legitimacy

Protection rackets: Russian “krysha”

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Domain Name Tasting

• Spin Off on Old Fashioned Act of Cybersquatting• Domain Name Tasting –Exploits a Loophole in

ICANN’s Domain Name Registration Process• You can Register Unlimited Domain Names for 5

Days and Return them for a Full Refund.• “Tasted Names” Infringe and Dilute famous

Trademarks• Infringing Domain Names are “Parked” on

Temporary Websites Loaded with PPC Ads

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Other New Domain Name Abuses

• Domain Name Kiting – Registrars Taste, Park Domain Name in Bulk and Drop Them. Using an Automated Process, They Automatically Re-Register Them Again and Again.

• Domain Name Spying – Cybersquatters See Name You Search and Grab Them Before You Can Register Them.

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How Bad is the Problem?

• March 2005 – Nearly 43 million .com and net domain names registered.

• Only 2.5 million names were deleted that same month.

• In April of 2006, 35 million names registered.

• Of those names 32.7 million were used again and again but never registered permanently!

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Connecting the Dots: We Have Problem

• In April of 2006, only 2 Million Names Were Actually Purchased, Meaning that over 92% of all Domain Names Registered Were Part of Tasting Schemes!

• Of the 32 Million Domain Names Registered That Month, 50% infringed on the Rights of Trademark Owners

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Recent Litigation

• Dotster sued by Neiman Marcus and Bergdorf Goodman -- case settled

• Over 120 infringing variations of Verizon trademarks were included as an exhibit to the Dotster complaint

• March, 2007 – Neiman Marcus sues Name.Com, another Registrar

• Many new cases from brand owners, including new Verizon suits

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They Meant What They Said

• 1999 – Anti-Cybersquatting Consumer Protection Act.

• Senate Report:“Specifically, legislation is needed to clarify the rights of trademark owners with respect to bad faith, abusive conduct, and to provide adequate remedies for trademark owners…”

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Peta v. Doughney

• Initial interest confusion on the web

• Parody?