On Cybersquatting, Product Safety and Trademark Protection

Cybersquatting
Cybersquatting occurs when a person registers an Internet domain name that incorporates a famous trademark and then “squats” on it until an opportunity arises to profit from ownership. Until the late ’90s, it was unclear whether existing U.S. trademark law prohibited this practice.

But in 1999, ICANN, the organization that functions as the de facto governing body of Internet infrastructure, rolled out a contractual method for resolving disputes over ownership of domain names. One of the current requirements for registering a domain name is that the registrant agrees to submit to an alternative dispute resolution process to determine whether it’s entitled to maintain a domain name that includes, or plays off, another company’s trademark. This process has greatly benefited trademark owners and provides a relatively quick (six to eight weeks) and affordable ($5,000 or less) means of recovering domain names.

Also that year, Congress enacted the Anti-cybersquatting Consumer Protection Act of 1999, which enables trademark owners to sue in federal court to recover domain names, including the right to bring an action against the domain name itself, even if the registrant is beyond the jurisdictional reach of the federal courts.

Consumer Product Safety
The federal Consumer Product Safety Act requires catalogers and other retailers to report to the Consumer Product Safety Commission (CPSC) any product defect that “could create a substantial product hazard.” This regulatory scheme heavily relies on self-reporting with large penalties for failure to do so. Many catalog merchants are unaware of the act’s record-keeping requirements, what events trigger a reporting obligation to the CPSC, the extent to which a company can negotiate with the staff of the CPSC the terms of a consumer recall notice, or the possibility of offsetting recall responsibilities onto the manufacturer or supplier.

Establishing a formal and closely monitored compliance program is critical to assuring that your company meets the requirements of the law. In addition, the very existence of a documented compliance program may be helpful in avoiding or reducing penalties in the event of an inadvertent failure to report a substantial product hazard
to the CPSC.

International Trademark Protection
In this era of global e-commerce, the opportunities for widespread, low-cost promotion of a valuable brand have never been greater. Ensure your brand has appropriate protection in each of the jurisdictions where it’s likely to receive exposure. In many countries, trademark rights are available for the asking, regardless of whether applicants make any actual use of the marks in question.

The result can be perilous for U.S. trademark owners who fail to seek timely registration in foreign countries. They could find themselves infringing the rights of trademark pirates who are clever enough to obtain a prior registration of the same marks. U.S. companies may be forced to repurchase their own trademarks or, even worse, not be able to use their trademarks in overseas markets.

Such a scenario is notably possible in such high-growth economies as China and other Southeast Asian countries. The key to avoiding this dilemma is developing a plan for managing valuable trademarks. Protection should be obtained not only in countries where you’re engaged in marketing activities, but also in those countries where you source product. U.S. retailers can take advantage of opportunities for multijurisdictional registrations, such as the Community trade mark, which covers all the nations in the European Union. In addition, the U.S. is now party to a treaty that enables U.S. trademark registrations to be filed simultaneously, for an additional fee, in a number of other jurisdictions. — George S. Isaacson