By Jeffrey Pietsch

Google may soon be facing an expensive and damaging class action lawsuit. A federal court ruled last month that Google can be sued for its role in serving ads on websites that use domain names that violate trademark and cybersquatting laws. This case is significant because Google is not the owner or user of the infringing domain names. Google is simply providing advertising services to these domain names. Google, seeking dismissal of the case, argued along these lines. The court, however, held that Google may be liable for cybersquatting.

This case was brought against Google by Vulcan Golf, a golf club manufacturer. Vulcan Golf claims that Google is encouraging and profiting from owners and users of domain names that violate cybersquatting laws. Vulcan Golf has sued Google on the basis that Google is benefitting from and encouraging cybersquatters by capitalizing on valid trademarks, such as Vulcan Golf.

The Anticybersquatting Consumer Protection Act (ACPA), established in 1999, provides trademark holders protection from cybersquatters. Cybersquatting is registering and using a domain name in bad faith with the intent of profiting from the goodwill created by another’s trademark. Cybersquatters often seek to sell the domain name to the trademark holder at an inflated price. In the early days of the internet, who ever registered a domain first had rights to that domain name. Many individuals bought names hoping to later sell them for exorbitant sums of money. For example, the generic domain name sold for 7.5 million dollars in 1999. Concerned about this environment as it relates to federally registered trademarks, Congress passed the ACPA. The ACPA gives trademark owners legal remedies against defendants who cybersquat.

In this case, Vulcan Golf is not concerned with cybersquatters who seek to sell domain names, but, rather, they are concerned with cybersquatters who are providing empty sites that feature advertisements from Google’s AdSense program. For example, a cybersquatter may own a web address that is similar to the trademark but slightly misspelled. When a user mistakenly types in the wrong web address, an empty page appears featuring ads from Google. These ads will be targeted to the audience that typed in the incorrect domain name. If the user clicks on the ads, the domain name owner and Google earn money. Vulcan Golf claims since Google is benefiting from the illegal domain names, they are violating the ACPA.

In order to show a violation of the ACPA, the plaintiff must show that the defendant:

1.      has a bad faith intent to profit from the registered trademark; and

2.      registers, traffics in, or uses a domain name that is identical, confusingly similar, or, in cases of famous marks, dilutive of a mark that is distinctive or famous at the time the domain name was registered.

Google requested that the case be dismissed because the plaintiffs failed to show these two elements. Google’s main defense was that they can’t be found liable for violations under the ACPA because Google did not register, own or use the infringing domain names. Google argued that their role was merely providing advertising through their AdSense programs.

Despite these arguments, the court ruled that Google may be liable under the ACPA even if they do not own, register or use the infringing domain names. The court found it is plausible that Google participated in the “trafficking in” of an infringing domain name. The Court stated, “Google pays registrants for its use of the purportedly deceptive domain names, provides domain performance reporting, participates in the testing of domain names, uses semantics technology to analyze the meaning of domain names and select revenue maximizing advertisements and controls and maintains that advertising.”

It is this broad interpretation of “trafficking in” that may lead to a flood of lawsuits under the ACPA. Before this ruling, only owners and users of domain names were held liable under the ACPA. If Google, with its deep pockets, is now liable under the ACPA, expect to see many more lawsuits filed against them under the ACPA.