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E-Commerce News
Dell Tries New Weapon In Battle With Cybersquatters; FTC Takes A Swing At Sites For Swingers
January 8, 2008
DELL TRIES NEW WEAPON IN BATTLE WITH CYBERSQUATTERS
Dell, the personal computer giant, may have found a new weapon to fight cybersquatters – a charge of counterfeiting. Dell recently filed a complaint asserting this novel theory in a federal court in Florida.
Dell contends in its complaint that three domain name registrars strategically purchased and manipulated more than a thousand domain names that were closely related to various Dell trademarks. According to Dell, the sites connected to these names served pay-per-click ads and pop-up windows promoting Dell's competitors.
In many cases, the cybersquatters took advantage of a five day grace period that allows registrants to change their mind on a registration without incurring a fee. According to the complaint, many of the offending names were dropped within five days, then re-registered. This technique is known as "domain tasting."
Although Dell’s complaint included claims traditionally asserted in these type of cases, such as trademark infringement and dilution, Dell asserted that the defendants' registrations constituted counterfeits of Dell's marks.
By asserting claims for counterfeiting, Dell was able to request seizure of the defendants' computers and other materials, and to file the complaint under seal as provided under federal law. Good news for Dell, too -- the court granted these requests.
The complaint also seeks a permanent injunction, a transfer of all infringing or likely infringing domains, corrective advertising, treble damages, punitive damages, and costs.
The hammer provided by federal counterfeiting law may serve as an effective tool in the ongoing battle between legitimate trademark holders and cybersquatters. Given that cybersquatters rank just above telemarketers on almost any "most obnoxious" list, we are rooting for Dell on this one.
The Federal Trade Commission recently filed a complaint in a federal court in California against Various Inc., a California corporation. According to the complaint, consumers, including minors, who used "innocuous" search terms such as "flowers," "travel," and "vacations" were "forced ... to view unsolicited sexually explicit online advertisements. . ."
Various Inc. does business under several trade names, including but not limited to AdultFriendFinder, AdultFriendFinder.com, Cams.com, ALT.com, Passion.com, OutPersonals.com, GayFriendFinder.com, AIIPersonals.com, and NudeCards.com. The sites market and sell online adult-oriented social networking services to consumers. According to Various, it is the site of choice for "The World's Largest Sex & Swingers Personals Community."
The complaint contends that Various has "used ad-serving software, often referred to as 'spyware' or 'adware,' that has been installed on consumers' computers, often without consumers' knowledge or consent, to cause sexually explicit, full-screen advertisements to 'pop-up' on consumers' computer screens." The ads "contain graphic images of fully or partially nude persons ... and in many cases engaging in actual or simulated sexual conduct." These ads were "displayed to computer users, including minors, who do not want to and who are not seeking out sexually explicit material."
The FTC contends that Various committed an unfair act or practice in violation of Section 5 of the FTC Act. The FTC also filed a proposed settlement with the complaint. If approved by the court, the settlement would prohibit Various from displaying the challenged ads to consumers unless those consumers are actively seeking out sexually explicit content or have consented to viewing such sexually explicit content. Various would also be required to establish an Internet-based mechanism for consumers to submit complaints.
It’s never a good idea to force content on unsuspecting and unwilling consumers. When it’s sexually explicit materials, it’s sure to get the FTC’s attention.
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.