Typosquatter Liable for Statutory Damages of $10,000 per Domain Name & Attorneys' Fees of $39,109

On June 15, 2001, the United States Court of Appeals for the 3rd Circuit, in the case of Shields v. Zuccarini, upheld a federal district court award of statutory damages of $50,000 plus attorneys' fees of $39,109 in the court's first case involving the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d) (the "Act").  This case is good news for trade mark owners, but very bad news for typosquatters and cybersquatters.  It provides a lot of ammunition for owners of famous trade marks who desire to obtain infringing domain names plus obtain money damages and attorneys' fees from cybersquatters and typosquatters.

A "typosquatter" is a person who registers a domain name that is a misspelled variation of a trade mark or service mark.  Typosquatting includes variations of marks resulting from adding or subtracting punctuation in a domain name such as "widget-world.com" to get viewers who mistakenly add a hyphen when typing "widgetworld.com." 

Background Facts
Joe Shields is a famous cartoonist who markets cartoons under the names "Joe Cartoon" and "The Joe Cartoon Co."  Shields also created the "Frog Blender," "Micro-Gerbil" and "Live and Let Dive" animations. For the past fifteen years, Joe has licensed his cartoon images for display on T-shirts, coffee mugs and other products using the "Joe Cartoon" label.  Shields registered the domain name joecartoon.com on June 12, 1997.  Visitors to Joe's web site may purchase Joe Cartoon products and download animations.  The joecartoon.com web site averages over 700,000 visits per month.

In November 1999, John Zuccarini  registered joescartoon.com, joecarton.com, joescartons.com, joescartoons.com and cartoonjoe.com, all of which were variations of the joecartoon.com domain name.  Zuccarini's web sites only contained advertisements for other sites. People who mistakenly typed joecartoon.com and accessed Zuccarini's web sites became "mousetrapped,"  an HTML trick that prevents the visitor from exiting the web site until the visitor has clicked on a succession of advertisements. Advertisers paid Zuccarini $.10 to $.25 for every click.

Zuccarini was a wholesaler of Internet domain names.  He operated more than 3,000 web sites that earned between $800,000 - $1,000,000 a year.  From March 22, 2000, through the date of the hearing to determine statutory damages and attorneys' fees and costs, Zuccarini registered 1,644 domain names that were common misspellings of the names of other famous companies or celebrities. 

In December of 1999, Shields sent cease and desist letters to Zuccarini, which Zuccarini ignored.  Shields then sued Zuccarini alleging violations of the Act.  Immediately after Shields filed his complaint, Zuccarini changed the five web sites to contain political statements and statements critical of Joe Cartoon, which Zuccarini claimed were protected by the First Amendment.

Trial Court's Orders
The district court issued a preliminary injunction against Zuccarini that required him to transfer the infringing domain names to Shields and to refrain from using or abetting the use of the infringing domain names or any other domain names substantially similar to Shields' trade marks.  On June 5, 2000, the district court granted summary judgment in favor of Shields and issued an order finding that Zuccarini had registered five variations of Shields' name willfully, in bad faith, and in violation of the Act.  The district court also entered an order and judgment awarding statutory damages to Shields of $10,000 for each infringing domain name plus attorneys' fees and costs in the amount of $39,109.46.

Court of Appeals' Findings
The 3rd Circuit Court of Appeals affirmed the district court's findings of the following facts:

Joe Cartoon is a famous trade mark entitled to protection under the Act.

Zuccarini's domain names were "confusingly similar" to the Joe Cartoon trade mark.  Zuccarini admitted that he registered domain names because they are likely misspellings of famous marks or personal names.

Because Zuccarini never used the infringing domain names as trademarks or service marks, he had no intellectual property rights in the domain names.

The domain names did not contain any variation of Zuccarini's name or any other name commonly used to identify him.

Zuccarini never used the infringing domain names in connection with the bona fide offering of goods or services.

Zuccarini did not use the domain names for a non-commercial or "fair use" purpose.

Zuccarini deliberately maintained the domain names to divert consumers from Shields' web site, which harmed the goodwill associated with the Joe Cartoon mark.  

Zuccarini diverted consumers from the joecartoon.com web site either for commercial gain or with the intent to tarnish or disparage Shields' mark by creating a likelihood of confusion. 

Zuccarini knowingly registered thousands of domain names that are identical to or confusingly similar to the distinctive marks of others, without the permission of the mark holders to do so.

Zuccarini's first amendment defense of good faith and fair use was a "spurious explanation cooked up purely for this suit."

Zuccarini acted with a bad faith intent to profit when he registered and used the domain names.

Court of Appeals' Interpretation of the Anticybersquatting Consumer Protection Act
In upholding the decisions of the district court, the 3rd Circuit Court of Appeals shed the following light on the Anticybersquatting Consumer Protection Act:

The Act applies to "typosquatting" in addition to "cybersquatting."

The legislative intent of the Act was to protect trade mark owners from a person who registers a domain name anticipating that consumers will make a mistake typing a domain name that includes a trade mark, which increases the number of hits to the person's site and the person's advertising revenue.

Zuccarini's conduct is a classic example of cybersquatting that the Act was intended to prevent.

A person who unlawfully registers, traffics in, or uses a domain name after the Act's date of enactment, November 29, 1999, is subject to the Act and may be liable for damages and other remedies thereunder.

The district court properly exercised its discretion in awarding $10,000 damages for each infringing domain name, even though Zuccarini only used the domain names for sixty days after the Act became law.

The court upheld the district court's finding that Zuccarini's conduct was "exceptional" under the Act and merited the award of attorneys' fees of $39,109.

More Bad News for Cybersquatters & Typosquatters
Shields v. Zuccarini is another nail in the coffin for cybersquatters and typosquatters.  The Anticybersquatting Consumer Protection Act and ICANN's Uniform Domain Name Dispute Resolution Policy together give trade mark and service mark owners two powerful weapons with which to wrest control of domain names from cybersquatters and typosquatters.  

For more information about the John Zuccarini and his typosquatting, see Notorious Cybersquatter Liable for $500,000 under the Anticybersquatting Consumer Protection Act and KEYTLaw's list of John Zuccarini's ICANN Uniform Dispute Resolution Policy Arbitrations

(Author) Richard Keyt
http://www.keytlaw.com/urls/typosquatter.htm

2007-06-17