Cybersquatting refers to the registration of a domain name in which the person has no legitimate interest. Cybersquatting is the attempt to profit by reserving and later reselling the domain name to the companies or individuals that have the trademarked right to the domain name. This can happen because domain names are registered on a first come, first serve basis. As an example, a cybersquatter may register the name “Exxon.com” and attempt to sell this name back to the Exxon corporation, or alternatively, may attempt to block Exxon from using Exxon.com as an address to conduct business on the Internet. The cybersquatter may use the Exxon.com address to post disparaging information about Exxon or to try to defraud consumers wishing to do business with Exxon into thinking they have accessed the official Exxon site.

In response to the tremendous amount of litigation that occurred as a result of cybersquatting, the Anticybersquatting Consumer Protection Act (ACPA) was passed in 1999. This law provides that persons are liable for civil damages if they register, use, or traffic in domain names that are identical or confusingly similar to a distinctive or famous mark owned by the plaintiff and the person has a bad faith intent to profit from such activity.

The ACPA is a fairly broad act that prevents many of the actions of cybersquatters discussed above. To assist in the bad faith determination, the court provides a non-exhaustive list of factors the court may examine in looking at a person’s registration of a domain name. These include:

• The trademark or other intellectual property rights of the person in the domain name
• The extent to which the domain name consists of the legal name of the person or a name that is commonly used to identify that person
• The person’s prior use of the domain name for a commercial purpose
• The person’s prior use of the domain name for noncommercial purposes
• The person’s intent to divert consumers from the mark owner’s online location to a site that could harm the good will represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark
• The person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used the domain name in the bona fide offering of any goods or services
• The person’s provision of material and misleading false contact information when applying for the registration of the domain name
• The person’s registration or acquisitions of multiple domain names that the person knows are identical or confusingly similar to the marks of others
• The extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous.