Cybersquatting and Large Corporations

There has been recent legal action on behalf of Adidas, as a company not in possession of the Adidas trademark created a domain using the Adidas name and was selling counterfeit Adidas goods. Creating and using a domain name with false intent with a trademark that is owned by another is known as cybersquatting, which is what was being done with the Adidas trademark in this case. Cybersquatting claims have also been made by the company behind the online retailer Temu.

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Cybersquatting is the legal term for when someone other than the trademark owner uses a trademark as an Internet domain name, then ransoms it back to, or diverts online traffic, from the original trademark owner. A trademark owner can establish a cybersquatting claim if three criteria are met: (1) the trademark owner has a distinctive or famous mark that is either registered or protected by trademark common law; (2) the cybersquatter’s domain name is identical or confusingly similar to the trademark; and (3) the cybersquatter registered the domain name with bad faith intent to profit from the use of the trademark, as outlined under the Anticybersquatting Consumer Protection Act, 15 U.S.C § 1125(d) and under the federal Lanham Act, 15 U.S.C §§ 1114, 1125.

The Anticybersquatting Consumer Protection Act was passed in 1999 to provide protection to American companies and allow more security for online commerce. The Anticybersquatting Consumer Protection Act created a civil remedy for cybersquatting, otherwise known and defined as registering a domain name with bad faith intent to profit from a “confusingly similar” trademark.

Cybersquatting is normally one component of a series of claims, usually accompanied by trademark infringement, as the improper use of the trademark to create a false website is also trademark infringement.

Recently, Adidas faced a cybersquatting issue where the domain name “adidasnosko.com” was used to sell counterfeit goods bearing the Adidas trademark. Adidas sued adidasnosko.com for cybersquatting, and the court found the site liable under the Anticybersquatting Consumer Protection Act for using the Adidas logo and name to create a domain website and e-commerce store to sell counterfeit Adidas goods. The court also held adidasnosko.com liable for trademark infringement, counterfeiting, and false designation of origin under federal law, and unfair competition and trademark infringement under Florida common law, where the lawsuit was filed.

Within the actual court filings, Adidas secured a default final judgment against adidasnosko.com, requesting the court to cancel or transfer the adidasnosko.com domain, permanently disable, delist, or deindex its URLs, and assign all the rights, titles, and interests in the domain name to Adidas. The court granted these requests. The owners of adidasnosko.com never responded to Adidas’s filed complaint, which led Adidas to file a motion for Clerk’s Entry of Default. The Florida Southern District Court subsequently granted the motion. Additionally, Adidas was awarded statutory damages of $10,000 for each domain name used for cybersquatting.

Earlier this year, another well-known company also dealt with cybersquatting. Whaleco, a Chinese online marketplace that uses the trademarked name “Temu” recently sued multiple unidentified defendants who had created domain names similar to Temu, such as “temuapp.me” and “temuapp.space”. Whaleco has put a considerable amount of marketing behind the Temu name in the United States and has been using that trademarked name in its business since September 1, 2022. In the court filings, Whaleco demonstrates that multiple people using fake domain names substantially similar to Temu.com used the Temu trademark in bad faith to divert consumers from Temu.com’s website to another site to sell other goods, unaffiliated with Whaleco or Temu using the Temu trademark. Whaleco established a cybersquatting claim under the Anti Cybersquatting Consumer Protection Act, in addition to a trademark dilution claim, and won in all of their claims. Whaleco was also awarded the domain names that infringed on their trademarked domain name that was identified in this case.

Cybersquatting is a common issue for large, well-known companies like Adidas and Temu. Federal legislation like the Anticybersquatting Consumer Protection Act and the Lanham Act help both large and small companies protect their trademarks from bad faith online use.