[Congressional Record Volume 145, Number 88 (Monday, June 21, 1999)]
[Senate]
[Pages S7334-S7336]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ABRAHAM (for himself, Mr. Torricelli, Mr. Hatch, and Mr. 
        McCain):
  S. 1255. A bill to protect consumers and promote electronic commerce 
by amending certain trademark infringement, dilution, and 
counterfeiting laws, and for other purposes; to the Committee on the 
Judiciary.


               Anticybersquatting Consumer Protection Act

  Mr. ABRAHAM. Mr. President, I rise today to introduce the 
Anticybersquatting Consumer Protection Act on behalf of myself, Senator 
Torricelli, Senator Hatch, and Senator McCain. This legislation will 
combat a new form of high-tech fraud that is causing confusion and 
inconvenience for consumers, increasing costs for people doing business 
on the internet, and posing an enormous threat to a century of pre-
Internet American business efforts. The fraud is commonly called 
``cybersquatting,'' a practice whereby individuals reserve internet 
domain names or other identifiers of online locations that are similar 
or identical to trademarked names. The easiest prey for cybersquatters 
has turned out to be computer-unsavvy trademark-owners in the non-
internet world. Once a ``brick and mortar'' trademark is registered as 
an on-line identifier or domain name, the ``cybersquatter'' can engage 
in a variety of nefarious activities--from the relatively-benign parody 
of a business or individual, to the obscene prank of redirecting an 
unsuspecting consumer to pornographic content, to the destructive 
worldwide slander of a centuries-old brand name. For the enterprising 
cybersquatter, holding out a domain name for extortionate compensation 
is a tried-and-true business practice, and the net effect of this 
behavior is to undermine consumer confidence, discourage consumer use 
of the internet, and destroy the value of brand-names and trademarks of 
this nation's businesses.
  Many companies simply pay extortionate prices to cybersquatters in 
order to rid themselves of a headache with no certain outcome. For 
example, Gateway recently paid $100,000 to a cybersquatter who had 
placed pornographic images to the website ``www.gateway20000''. Rather 
than simply give up, several companies already have instead sought 
protection from cybersquatters through the legal system. For example, 
the investment firm Paine Webber was forced to sue an internet Web 
site, wwwpainewebber.com'' and its creator. The domain name at issue 
took advantage of a typographical error--the missing ``.'' (dot) 
between ``www'' and ``painewebber''--in order to direct consumers 
desiring to do business with Paine Webber to a website containing 
pornographic images. As with much of the pre-internet law that is 
applied to this post-internet world, precedent is still developing, and 
at this point, one cannot predict with certainty which party to a 
dispute will win, and on what grounds, in the future.
  Mr. President, some Americans continue to do a thriving, if 
unethical, business collecting and selling internet addresses 
containing trademarked names. Whether perpetrated to defraud the public 
or to extort the trademark owner, squatting on internet addresses using 
trademarked names is wrong. It must be stopped for the sake of 
consumers, for the sake of trademark owners and for the sake of the 
vast, growing electronic commerce that is doing so much to spur 
economic growth and innovation in this country.
  Mr. President, the Anticybersquatting Consumer Protection Act will 
help to establish uniform rules for dealing with this attack on 
interstate commerce. This legislation would establish penalties for 
criminal use of a counterfeit trademark as a domain name. Using a 
company's trademark or its variant as the address of an internet site 
would constitute criminal use of a counterfeit trademark if the 
defendant registered the address either knowingly and fraudulently or 
in bad faith. Among the evidence establishing bad faith would be 
registry of a domain name with (1) intent to cause confusion

[[Page S7335]]

or mistake or deception, to dilute the distinctive quality of a famous 
trademark, or intent to divert consumers from the trademark owner's 
domain to one's own; and (2) providing false information on the 
application to register the identifier, or offering to transfer the 
registration to a rightful owner for consideration for any thing of 
value. Bad faith could not be shown where the identifier is the 
defendant's legal first name or surname or where the defendant used the 
identifier in legitimate commerce before the earlier of either the 
first use of the registered trademark or the effective date of its 
registration. Violation of this prohibition would constitute a Class B 
misdemeanor for the first offense; subsequent offenses would be 
classified as Class E felonies.
  In addition, Mr. President, the Anticybersquatting Consumer 
Protection Act provides for statutory civil damages in trademark cases 
of at least $1,000, but not more than $100,000 ($300,000 if the 
registration or use of the trademark was willful) per trademark per 
identifier. The plaintiff may elect these damages in lieu of actual 
damages or profits at any time before final judgment.
  These provisions will discourage anyone from ``squatting'' on 
addresses in cyberspace to which they are not entitled. In the process 
it will protect consumers from fraud, protect the value of countless 
trademarks, and encourage continued growth in our electronic commerce 
industry.
  Mr President, the growth of the Internet has provided businesses and 
individuals with unprecedented access to a worldwide source of 
information, commerce, and community. Unfortunately, those bad actors 
seeking to cause harm to businesses and individuals have seen their 
opportunities increase as well. In my opinion, on-line extortion in 
this form is unacceptable and outrageous. Whether it's people extorting 
companies by registering company names, misdirecting Internet users to 
inappropriate sites, or otherwise attempting to damage a trademark that 
a business has spent decades building into a recognizable brand, 
persons engaging in cybersquatting activity should be held accountable 
for their actions.
  I urge my colleagues to support this important legislation, and I ask 
unanimous consent that the full text of the bill, a section by section 
analysis and additional materials be printed in the Record.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                                S. 1255

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Anticybersquatting Consumer 
     Protection Act''.

     SEC. 2. FINDINGS.

       Congress finds that the unauthorized registration or use of 
     trademarks as Internet domain names or other identifiers of 
     online locations (commonly known as ``cybersquatting'')--
       (1) results in consumer fraud and public confusion as to 
     the true source or sponsorship of products and services;
       (2) impairs electronic commerce, which is important to the 
     economy of the United States; and
       (3) deprives owners of trademarks of substantial revenues 
     and consumer goodwill.

     SEC. 3. TRADEMARK REMEDIES.

       (a) Recovery for Violation of Rights.--Section 35 of the 
     Act entitled ``An Act to provide for the registration and 
     protection of trade-marks used in commerce, to carry out the 
     provisions of certain international conventions, and for 
     other purposes'', approved July 5, 1946, (commonly referred 
     to as the ``Trademark Act of 1946'') (15 U.S.C. 1117) is 
     amended by adding at the end the following:
       ``(d)(1) In this subsection, the term `Internet' has the 
     meaning given that term in section 230(f)(1) of the 
     Communications Act of 1934 (47 U.S.C. 230(f)(1)).
       ``(2)(A) In a case involving the registration or use of an 
     identifier described in subparagraph (B), the plaintiff may 
     elect, at any time before final judgment is rendered by the 
     trial court, to recover, instead of actual damages and 
     profits under subsection (a)--
       ``(i) an award of statutory damages in the amount of--
       ``(I) not less than $1,000 or more than $100,000 per 
     trademark per identifier, as the court considers just; or
       ``(II) if the court finds that the registration or use of 
     the registered trademark as an identifier was willful, not 
     less than $3,000 or more than $300,000 per trademark per 
     identifier, as the court considers just; and
       ``(ii) full costs and reasonable attorney's fees.
       ``(B) An identifier referred to in subparagraph (A) is an 
     Internet domain name or other identifier of an online 
     location that is--
       ``(i) the trademark of a person or entity other than the 
     person or entity registering or using the identifier; or
       ``(ii) sufficiently similar to a trademark of a person or 
     entity other than the person or entity registering or using 
     the identifier as to be likely to--
       ``(I) cause confusion or mistake;
       ``(II) deceive; or
       ``(III) cause dilution of the distinctive quality of a 
     famous trademark.''.
       (b) Remedies for Dilution of Famous Marks.--Section 
     43(c)(2) of the Act entitled ``An Act to provide for the 
     registration and protection of trade-marks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946, 
     (commonly referred to as the ``Trademark Act of 1946'') (15 
     U.S.C. 1125(c)(2)) is amended by striking ``35(a)'' and 
     inserting ``35 (a) and (d)''.

     SEC. 4. CRIMINAL USE OF COUNTERFEIT TRADEMARK.

       (a) In General.--Section 2320(a) of title 18, United States 
     Code, is amended--
       (1) by inserting ``(1)'' after ``(a)'';
       (2) by striking ``section that occurs'' and inserting 
     ``paragraph that occurs''; and
       (3) by adding at the end the following:
       ``(2)(A) In this paragraph, the term `Internet' has the 
     meaning given that term in section 230(f)(1) of the 
     Communications Act of 1934 (47 U.S.C. 230(f)(1)).
       ``(B)(i) Except as provided in clause (ii), whoever 
     knowingly and fraudulently or in bad faith registers or uses 
     an identifier described in subparagraph (C) shall be guilty 
     of a Class B misdemeanor.
       ``(ii) In the case of an offense by a person under this 
     paragraph that occurs after that person is convicted of 
     another offense under this section, that person shall be 
     guilty of a Class E felony.
       ``(C) An identifier referred to in subparagraph (B) is an 
     Internet domain name or other identifier of an online 
     location that is--
       ``(i) the trademark of a person or entity other than the 
     person or entity registering or using the identifier; or
       ``(ii) sufficiently similar to a trademark of a person or 
     entity other than the person or entity registering or using 
     the identifier as to be likely to--
       ``(I) cause confusion or mistake;
       ``(II) deceive; or
       ``(III) cause dilution of the distinctive quality of a 
     famous trademark.
       ``(D)(i) For the purposes of a prosecution under this 
     paragraph, if all of the conditions described in clause (ii) 
     apply to the registration or use of an identifier described 
     in subparagraph (C) by a defendant, those conditions shall 
     constitute prima facie evidence that the registration or use 
     was fraudulent or in bad faith.
       ``(ii) The conditions referred to in clause (i) are as 
     follows:
       ``(I) The defendant registered or used an identifier 
     described in subparagraph (C)--
       ``(aa) with intent to cause confusion or mistake, deceive, 
     or cause dilution of the distinctive quality of a famous 
     trademark; or
       ``(bb) with the intention of diverting consumers from the 
     domain or other online location of the person or entity who 
     is the owner of a trademark described in subparagraph (C) to 
     the domain or other online location of the defendant.
       ``(II) The defendant--
       ``(aa) provided false information in the defendant's 
     application to register the identifier; or
       ``(bb) offered to transfer the registration of the 
     identifier to the trademark owner or another person or entity 
     in consideration for any thing of value.
       ``(III) The identifier is not--
       ``(aa) the defendant's legal first name or surname; or
       ``(bb) a trademark of the defendant used in legitimate 
     commerce before the earlier of the first use of the 
     registered trademark referred to in subparagraph (C) or the 
     effective date of the registration of that trademark.
       ``(iii) The application of this subparagraph shall not be 
     exclusive. Nothing in this subparagraph may be construed to 
     limit the applicability of subparagraph (B).''.
       (b) Sentencing Guidelines.--
       (1) In general.--Pursuant to the authority granted to the 
     United States Sentencing Commission under section 994(p) of 
     title 28, United States Code, the United States Sentencing 
     Commission shall--
       (A) review the Federal sentencing guidelines for crimes 
     against intellectual property (including offenses under 
     section 2320 of title 18, United States Code); and
       (B) promulgate such amendments to the Federal Sentencing 
     Guidelines as are necessary to ensure that the applicable 
     sentence for a defendant convicted of a crime against 
     intellectual property is sufficiently stringent to deter such 
     a crime.
       (2) Factors for consideration.--In carrying out this 
     subsection, the United States Sentencing Commission shall--
       (A) take into account the findings under section 2; and
       (B) ensure that the amendments promulgated under paragraph 
     (1)(B) adequately provide for sentencing for crimes described 
     in paragraph (2) of section 2320(a) of title 18, United 
     States Code, as added by subsection (a).

[[Page S7336]]



     SEC. 5. LIMITATION OF LIABILITY.

       Section 39 of the Act entitled ``An Act to provide for the 
     registration and protection of trade-marks used in commerce, 
     to carry out the provisions of certain international 
     conventions, and for other purposes'', approved July 5, 1946, 
     (commonly referred to as the ``Trademark Act of 1946'') (15 
     U.S.C. 1121) is amended by adding at the end the following:
       ``(c)(1) In this subsection, the term `Internet' has the 
     meaning given that term in section 230(f)(1) of the 
     Communications Act of 1934 (47 U.S.C. 230(f)(1)).
       ``(2)(A) An Internet service provider, domain name 
     registrar, or registry described in subparagraph (B) shall 
     not be liable for monetary relief to any person for a removal 
     or transfer described in that subparagraph, without regard to 
     whether the domain name or other identifier is ultimately 
     determined to be infringing or dilutive.
       ``(B) An Internet service provider, domain name registrar, 
     or registry referred to in subparagraph (A) is a provider, 
     registrar, or registry that, upon receipt of a written notice 
     from the owner of a trademark registered in the Patent and 
     Trademark Office, removes from domain name service (DNS) 
     service or registration, or transfers to the trademark owner, 
     an Internet domain name or other identifier of an online 
     location alleged to be infringing or dilutive, in compliance 
     with--
       ``(i) a court order; or
       ``(ii) the reasonable implementation of a policy 
     prohibiting the unauthorized registration or use of another's 
     registered trademark as an Internet domain name or other 
     identifier of an online location.''.
                                  ____


  The Anticybersquatting Consumer Protection Act--Section-by-Section 
                                Analysis

       A bill to protect consumers and promote electronic commerce 
     by amending certain trademark infringement, dilution, and 
     counterfeiting laws, and for other purposes.


                         section 1: short title

       This Act may be cited as the ``Anticybersquatting Consumer 
     Protection Act.''


                          section 2: findings

       This section sets out Congressional findings concerning the 
     effect of ``unauthorized registration or use of trademarks as 
     Internet domain names or other identifiers of online 
     locations'' (``cybersquatting''). Cyber- squatting (1) 
     results in consumer fraud, (2) impairs electronic interstate 
     commerce, and (3) deprives trademark owners of revenue and 
     consumer goodwill.


                     section 3: trademark remedies

     (a) Recovery for violation of rights
       The Trademark Act of 1946 (15 U.S.C. 1117) shall 
     incorporate the definition of ``Internet'' used in the 
     Communications Act of 1934 (47 U.S.C. 230 (f) (1)).
       An ``identifier'' refers to an Internet domain name or 
     another identifier of an online location that is (i) the 
     plaintiff's trademark, or (ii) so sufficiently similar to the 
     plaintiff's trademark as to be likely to ``cause confusion or 
     mistake,'' ``deceive,'' or ``cause dilution of the 
     distinctive quality of a famous trademark.''
       This section expands civil penalties for cybersquatting by 
     providing that before final judgment in a case involving the 
     registration or use of an identifier, a plaintiff may--
     instead of seeking actual damages or profits--elect to 
     recover statutory damages of at least $1,000, but not more 
     than $100,000 (at least $3,000, but not more than $300,000 if 
     court finds that the registration or use of the trademark was 
     willful) per trademark per identifier, as the court considers 
     just. Furthermore, the plaintiff may recover full costs and 
     reasonable attorney's fees.
     (b) Remedies for dilution of famous marks
       This section amends the Trademark Act of 1946 (15 U.S.C. 
     1125 (c) (2)) by making the remedies set forth in section 3 
     (a) also available for the willful dilution of famous marks 
     or trade on the owner's reputation.


            section 4: criminal use of counterfeit trademark

     (a) In general
       This section amends 18 U.S.C. 2320 (a) (``Trafficking in 
     Counterfeit Goods or Services'') by adding criminal penalties 
     for the use of a counterfeit trademark on the Internet. Like 
     section 3 (a), this section incorporates the definition of 
     Internet used in the Communications Act of 1934 (47 U.S.C. 
     230 (f) (1)). It also incorporates the same definition of 
     ``identifier'' found in section 3 (a).
       Under this section, whoever knowingly and fraudulently or 
     in bad faith registers or uses the trademark of another would 
     be guilty of a Class B misdemeanor. Repeat offenders would be 
     guilty of Class E felony.
       Prima facie evidence that a registration or use was 
     fraudulent or in bad faith would require satisfaction of the 
     following elements:
       (1) the defendant registered or used an identifier with 
     intent to (a) cause confusion or mistake, deceive, or cause 
     dilution of the distinctive quality of a famous trademark, or 
     (b) with intention of diverting consumers from the trademark 
     owner to the defendant; and
       (2) the defendant provided false information in its 
     application to register the identifier or offered to transfer 
     the identifier's registration to the trademark owner or other 
     person or entity for something of value; and
       (3) the identifier is not the defendant's legal first name 
     or surname or the defendant had not used the identifier in 
     legitimate commerce before the earlier of either the first 
     use of the registered trademark or the effective date of its 
     registration.
     (b) Sentencing guidelines
       (1) In general
       The United States Sentencing Commission shall provide for 
     penalties for the criminal use of counterfeit trademarks by 
     amending the sentencing guidelines in accordance with the 
     guidelines for crimes against intellectual property (18 
     U.S.C. 2320).
       (2) Factors for consideration
       The United States Sentencing Commission shall take into 
     account the Findings promulgated in Section 2 and ensure that 
     the amendments to the sentencing guidelines adequately 
     provide penalties for the crimes described in this Act.


                   Section 5: limitation of liability

       An Internet service provider (ISP) or domain name registrar 
     shall not be liable for monetary damages to any person if it 
     removes an infringing identifier from domain name server 
     (DNS) service or from registration, or transfers it to the 
     trademark owner: (1) upon written notice from the trademark 
     owner and (2) in compliance with either a court order or the 
     reasonable implementation of a policy prohibiting the 
     unauthorized registration or use of another's registered 
     trademark.
       This limitation shall apply without regard to whether the 
     domain name or other identifier is ultimately determined to 
     be infringing or dilutive.
                                  ____

                                            Information Technology


                                             Industry Council,

                                    Washington, DC, June 21, 1999.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: On behalf of ITI's member companies, 
     I am writing to thank you, Senator Hatch and Senator 
     Torricelli for your leadership in introducing the Anti-
     Cybersquatting Consumer Protection Act today.
       ITI is the association of leading U.S. providers of 
     information technology products and services. It advocates 
     growing the economy through innovation and supports free-
     market policies. ITI members had worldwide revenue of more 
     than $440 billion in 1998 and employ more than 1.2 million 
     people in the United States.
       Over the past several years, trademark holders have found 
     it difficult and expensive to prevent infringement and 
     dilution of their marks online, especially as 
     ``cybersquatters'' have made a cottage industry out of 
     intentionally registering others' trademarks as domain names 
     and seeking to sell the domain name back to the rightful 
     owners. Such activity damages electronic commerce by sowing 
     confusion among consumers and other Internet users.
       While some ITI members have concerns about the bill's 
     criminal provisions, we believe the importance of federal 
     legislation to stop cybersquatting should not be 
     underestimated and we look forward to working with you as 
     this legislation is considered by the Senate.
           Best regards,

                                                 Phillip Bond,

                                            Senior Vice President,
     Government Relations.

                          ____________________