Anticybersquatting Consumer Protection Act - Domaining and The ACPA

Domaining and The ACPA

While the ACPA contemplated the purchase of domain names for resale to trademark owners, it did not contemplate the more modern practice of domaining. Domaining is the business of registering a domain name and parking it or placing pay-per-click ads on it. Domainers rely on type-in traffic, which is when Internet surfers type in the domain name rather than using a search engine to find what they are looking for. Domainers can make a lot of money in this business of buying and selling domain names.

Some domainers relied on domain tasting, which involves placing pay-per-click ads on the domain for five days (or less) to determine whether the ads will make more than the annual cost of the domain. If the domain is dropped within the five day grace period, no fee is incurred. An industry has grown up out of this business with domainers taking part in these mass registrations. This practice was largely eliminated by 2009, when ICANN began raising fees to registrars with excessive domain tasting.

In Verizon California, Inc. v. Navigation Catalyst Systems, 568 F. Supp. 2d 1088 (C.D. Cal. 2008), the domainer lost under the ACPA. One of the defendants, Basic Fusion, Inc. argued that they were not cybersquatters, but as an Internet registrar accredited by ICANN they could register domain names on behalf of its customers and it specialized in "bulk registration." Navigation Catalyst Systems, another defendant and a customer of Basic Fusion, used their "proprietary automated tool" to find domain names that were not already registered and then registered them using Basic Fusion. Navigation used the five days following the registration (the "add grace period") to put advertisements on the websites making money from the advertisements even when they dropped the domain name registration before the five day window closed. Plaintiff Verizon argued that defendants "registered" 1,392 domain names that were confusingly similar to plaintiff's trademarks. The Court found that defendants used the confusingly similar domain names with a bad faith intent to profit.