[Senate Report 106-140]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 240
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-140

======================================================================



 
             THE ANTICYBERSQUATTING CONSUMER PROTECTION ACT

                                _______
                                

                 August 5, 1999.--Ordered to be printed

                                _______


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                         [To accompany S. 1255]

    The Committee on the Judiciary, to which was referred the 
bill (S. 1255) to protect consumers and promote electronic 
commerce by amending certain trademark infringement, dilution, 
and counterfeiting laws, and for other purposes, having 
considered the same, reports favorably thereon, with an 
amendment in the nature of a substitute, and recommends that 
the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................4
 II. Legislative history..............................................4
III. Discussion.......................................................4
 IV. Vote of the Committee...........................................12
  V. Section-by-section analysis.....................................12
 VI. Cost estimate...................................................18
VII. Regulatory impact statement.....................................18
VIII.Changes in existing law.........................................19


    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; REFERENCES.

    (a) Short Title.--This Act may be cited as the ``Anticybersquatting 
Consumer Protection Act.''.
    (b) References to the Trademark Act of 1946.--Any reference in this 
Act to the Trademark Act of 1946 shall be a reference to 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 (15 U.S.C. 1501 et seq.).

SEC. 2. FINDINGS.

    Congress finds the following:
    (1) The registration, trafficking in, or use of a domain name that 
is identical to, confusingly similar to, or dilutive of a trademark or 
service mark of another that is distinctive at the time of registration 
of the domain name, without regard to the goods or services of the 
parties, with the bad-faith intent to profit from the goodwill of 
another's mark (commonly referred to as ``cyberpiracy'' and 
``cybersquatting'')--
    (A) results in consumer fraud and public confusion as to the true 
source or sponsorship of goods and services;
    (B) impairs electronic commerce, which is important to interstate 
commerce and the United States economy;
    (C) deprives legitimate trademark owners of substantial revenues 
and consumer goodwill; and
    (D) places unreasonable, intolerable, and overwhelming burdens on 
trademark owners in protecting their valuable trademarks.
    (2) Amendments to the Trademark Act of 1946 would clarify the 
rights of a trademark owner to provide for adequate remedies and to 
deter cyberpiracy and cybersquatting.

SEC. 3. CYBERPIRACY PREVENTION.

    (a) In General.--Section 43 of the Trademark Act of 1946 (15 U.S.C. 
1125) is amended by inserting at the end the following:
    ``(d)(1)(A) Any person who, with bad-faith intent to profit from 
the goodwill of a trademark or service mark of another, registers, 
traffics in, or uses a domain name that is identical to, confusingly 
similar to, or dilutive of such trademark or service work, without 
regard to the goods or services of the parties, shall be liable in a 
civil action by the owner of the mark, if the mark is distinctive at 
the time of the registration of the domain name.
    ``(B) In determining whether there is a bad-faith intent described 
under subparagraph (A), a court may consider factors such as, but not 
limited to--
    ``(i) the trademark or other intellectual property rights of the 
person, if any, in the domain name;
    ``(ii) the extent to which the domain name consists of the legal 
name of the person or a name that is otherwise commonly used to 
identify that person;
    ``(iii) the person's prior use, if any, of the domain name in 
connection with the bona fide offering of any goods or services;
    ``(iv) the person's legitimate noncommercial or fair use of the 
mark in a site accessible under the domain name;
    ``(v) the person's intent to divert consumers from the mark owner's 
online location to a site accessible under the domain name that could 
harm the goodwill represented by the mark, either for commercial gain 
or with the intent to tarnish or disparage the mark, by creating a 
likelihood of confusion as to the source, sponsorship, affiliation, or 
endorsement of the site;
    ``(vi) the person's offer to transfer, sell, or otherwise assign 
the domain name to the mark owner or any third party for substantial 
consideration without having used, or having an intent to use, the 
domain name in the bona fide offering of any goods or services;
    ``(vii) the person's intentional provision of material and 
misleading false contact information when applying for the registration 
of the domain name; and
    ``(viii) the person's registration or acquisition of multiple 
domain names which are identical to, confusingly similar to, or 
dilutive of trademarks or service marks of others that are distinctive 
at the time of registration of such domain names, without regard to the 
goods or services of such persons.
    ``(C) In any civil action involving the registration, trafficking, 
or use of a domain name under this paragraph, a court may order the 
forfeiture or cancellation of the domain name or the transfer of the 
domain name to the owner of the mark.
    ``(2)(A) The owner of a mark may file an in rem civil action 
against a domain name if--
    ``(i) the domain name violates any right of the registrant of a 
mark registered in the Patent and Trademark Office, or section 43 (a) 
or (c); and
    ``(ii) the court finds that the owner has demonstrated due 
diligence and was not able to find a person who would have been a 
defendant in a civil action under paragraph (1).
    ``(B) The remedies of an in rem action under this paragraph shall 
be limited to a court order for the forfeiture or cancellation of the 
domain name or the transfer of the domain name to the owner of the 
mark.''.
    (b) Additional Civil Action and Remedy.--The civil action 
established under section 43(d)(1) of the Trademark Act of 1946 (as 
added by this section) and any remedy available under such action shall 
be in addition to any other civil action or remedy otherwise 
applicable.

SEC. 4. DAMAGES AND REMEDIES.

    (1) Injunctions.--Section 34(a) of the Trademark Act of 1946 (15 
U.S.C. 1116(a)) is amended in the first sentence by striking ``section 
43(a)'' and inserting ``section 43 (a), (c), or (d)''.
    (2) Damages.--Section 35(a) of the Trademark Act of 1946 (15 U.S.C. 
1117(a)) is amended in the first sentence by inserting ``, (c), or 
(d)'' after ``section 43 (a)''.
    (b) Statutory Damages.--Section 35 of the Trademark Act of 1946 (15 
U.S.C. 1117) is amended by adding at the end the following:
    ``(d) In a case involving a violation of section 43(d)(1), the 
plaintiff may elect, at any time before final judgment is rendered by 
the trial court, to recover, instead of actual damages and profits, an 
award of statutory damages in the amount of not less than $1,000 and 
not more than $100,000 per domain name, as the court considers just. 
The court shall remit statutory damages in any case in which an 
infringer believed and had reasonable grounds to believe that use of 
the domain name by the infringer was a fair or otherwise lawful use.''.

SEC. 5. LIMITATION ON LIABILITY.

    Section 32(2) of the Trademark Act of 1946 (15 U.S.C. 1114) is 
amended--
    (1) in the matter preceding subparagraph (A) by striking ``under 
section 43(a)'' and inserting ``under section 43 (a) or (d)''; and
    (2) by redesignating subparagraph (D) as subparagraph (E) and 
inserting after subparagraph (C) the following:
    ``(D)(i) A domain name registrar, a domain name registry, or other 
domain name registration authority that takes any action described 
under clause (ii) affecting a domain name shall not be liable for 
monetary relief to any person for such action, regardless of whether 
the domain name is finally determined to infringe or dilute the mark.
    ``(ii) An action referred to under clause (i) is any action of 
refusing to register, removing from registration, transferring, 
temporarily disabling, or permanently canceling a domain name--
    ``(I) in compliance with a court order under section 43(d); or
    ``(II) in the implementation of a reasonable policy by such 
registrar, registry, or authority prohibiting the registration of a 
domain name that is identical to, confusingly similar to, or dilutive 
of another's mark registered on the Principal Register of the United 
States Patent and Trademark Office.
    ``(iii) A domain name registrar, a domain name registry, or other 
domain name registration authority shall not be liable for damages 
under this section for the registration or maintenance of a domain name 
for another absent a showing of bad faith intent to profit from such 
registration or maintenance of the domain name.
    ``(iv) If a registrar, registry, or other registration authority 
takes an action described under clause (ii) based on a knowing and 
material misrepresentation by any person that a domain name is 
identical to, confusingly similar to, or dilutive of a mark registered 
on the Principal Register of the United States Patent and Trademark 
Office, such person shall be liable for any damages, including costs 
and attorney's fees, incurred by the domain name registrant as a result 
of such action. The court may also grant injunctive relief to the 
domain name registrant, including the reactivation of the domain name 
or the transfer of the domain name to the domain name registrant.''.

SEC. 6. DEFINITIONS.

    Section 45 of the Trademark Act of 1946 (15 U.S.C. 1127) is amended 
by inserting after the undesignated paragraph defining the term 
``counterfeit'' the following:
    ``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)).
    ``The term `domain name' means any alphanumeric designation which 
is registered with or assigned by any domain name registrar, domain 
name registry, or other domain name registration authority as part of 
an electronic address on the Internet.''.

SEC. 7. SAVINGS CLAUSE.

    Nothing in this Act shall affect any defense available to a 
defendant under the Trademark Act of 1946 (including any defense under 
section 43(c)(4) of such Act or relating to fair use) or a person's 
right of free speech or expression under the first amendment of the 
United States Constitution.

SEC. 8. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstances is held to be unconstitutional, the remainder of this 
Act, the amendments made by this Act, and the application of the 
provisions of such to any person or circumstance shall not be affected 
thereby.

SEC. 9. EFFECTIVE DATE.

    This Act shall apply to all domain names registered before, on, or 
after the date of enactment of this Act, except that statutory damages 
under section 35(d) of the Trademark Act of 1946 (15 U.S.C. 1117), as 
added by section 4 of this Act, shall not be available with respect to 
the registration, trafficking, or use of a domain name that occurs 
before the date of enactment of this Act.

                               I. Purpose

    The purpose of the bill is to protect consumers and 
American businesses, to promote the growth of online commerce, 
and to provide clarity in the law for trademark owners by 
prohibiting the bad-faith and abusive registration of 
distinctive marks as Internet domain names with the intent to 
profit from the goodwill associated with such marks--a practice 
commonly referred to as ``cybersquatting.''

                        II. Legislative History

    On June 21, 1999, Senator Abraham introduced S. 1255 as the 
``Anticybersquatting Consumer Protection Act.'' The bill was 
cosponsored by Senators Torricelli, Hatch, McCain, and Breaux. 
A hearing was held by the Judiciary Committee on July 22, 1999. 
The Committee heard testimony from Anne H. Chasser, president 
of International Trademark Association; Gregory D. Phillips, a 
trademark practitioner with Howard, Phillips & Anderson in Salt 
Lake City, UT; and Christopher D. Young, president and chief 
operating officer of Cyveillance, Inc.
    On July 29, 1999 the Judiciary Committee met in executive 
session to consider the bill. The Chairman, Senator Hatch, and 
Ranking Member, Senator Leahy, offered an amendment in the 
nature of a substitute, which was cosponsored by Senators 
Abraham, Torricelli, DeWine, Kohl, and Schumer, and which 
reflected the text of S. 1462, which was introduced the same 
day by the Chairman and the Ranking Member, with the same 
Senators listed as cosponsors. The substitute amendment was 
considered and agreed to by unanimous consent. The bill, as 
amended, was then ordered favorably reported to the Senate by 
unanimous consent.

                            III. Discussion

    Trademark owners are facing a new form of piracy on the 
Internet caused by acts of ``cybersquatting,'' which refers to 
the deliberate, bad-faith, and abusive registration of Internet 
domain names in violation of the rights of trademark owners. 
For example, when Mobil and Exxon announced their proposed 
merger in December, 1998, a speculator registered every 
variation of the possible resulting domain name, i.e., mobil-
exxon.com, exxon-mobil.com, mobilexxon.com, etc., ad infinitum. 
In another example of bad-faith abuses of the domain name 
registration system, Network Solutions--the domain name 
registry that administers the Internet's ``.com,'' ``.net,'' 
``.org,'' and ``.edu'' top level domains--pulled on a London 
computer club in May, 1999, that had registered over 75,000 
domain names using an automated computer program.1 
Their aim was to lock up all available four letter domains by 
systematically reserving every possible combination of letters, 
starting with aaaa.com, then aaab.com, aaac.com, up to 
zzzz.com, until every available combination had been reserved.
---------------------------------------------------------------------------
    \1\  Run on Domain Names Foiled, Wired News, May 27, 1999, 
available at http://www.wired.com/news/news/business/story/19913.html 
(last visited Aug. 2, 1999).
---------------------------------------------------------------------------
    The practice of cybersquatting harms consumers, electronic 
commerce, and the goodwill equity of valuable U.S. brand names, 
upon which consumers increasingly rely to locate the true 
source of genuine goods and services on the Internet. Online 
consumers have a difficult time distinguishing a genuine site 
from a pirate site, given that often the only indications of 
source and authenticity of the site, or the goods and services 
made available thereon, are the graphical interface on the site 
itself and the Internet address at which it resides. As a 
result, consumers have come to rely heavily on familiar brand 
names when engaging in online commerce. But if someone is 
operating a web site under another brand owner's trademark, 
such as a site called ``cocacola.com'' or ``levis.com,'' 
consumers bear a significant risk of being deceived and 
defrauded, or at a minimum, confused. The costs associated with 
these risks are increasingly burdensome as more people begin 
selling pharmaceuticals, financial services, and even groceries 
over the Internet. Regardless of what is being sold, the result 
of online brand name abuse, aswith other forms of trademark 
violations, is the erosion of consumer confidence in brand name 
identifiers and in electronic commerce generally.
    Cybersquatters target distinctive marks for a variety of 
reasons. Some register well-known brand names as Internet 
domain names in order to extract payment from the rightful 
owners of the marks, who find their trademarks ``locked up'' 
and are forced to pay for the right to engage in electronic 
commerce under their own brand name. For example, several years 
ago a small Canadian company with a single shareholder and a 
couple of dozen domain names demanded that Umbro International, 
Inc., which markets and distributes soccer equipment, pay 
$50,000 to its sole shareholder, $50,000 to an Internet 
charity, and provide a free lifetime supply of soccer equipment 
in order for it to relinquish the ``umbro.com'' 
name.2 The Committee also heard testimony that 
Warner Bros. was reportedly asked to pay $350,000 for the 
rights to the names ``warner-records.com'', ``warner-bros-
records.com'', ``warner-pictures.com'', ``warner-bros-
pictures'', and ``warnerpictures.com''.3
---------------------------------------------------------------------------
    \2\  See Umbro International, Inc. v. 3263851 Canada, Inc., 1999 WL 
117760 (Va. Cir. Ct., Feb. 3, 1999).
    \3\  Cybersquatting and Consumer Protection: Ensuring Domain Name 
Integrity, 1999: Hearings Before the Senate Comm. on the Judiciary, 
106th Cong., 1st Sess. (1999) (Statement of Anne Chasser, President, 
International Trademark Association).
---------------------------------------------------------------------------
    Others register well-known marks as domain names and 
warehouse those marks with the hope of selling them to the 
highest bidder, whether it be the trademark owner or someone 
else. For example, the Committee heard testimony regarding an 
Australian company operating on the Internet under the name 
``The Best Domains,'' which was offering such domain names as 
``911porsche.com,'' at asking prices of up to $60,911, with a 
caption that reads ``PORSCHE: DO I NEED TO SAY ANYTHING?'' 
4 The Committee also heard testimony regarding a 
similarly enterprising cybersquatter whose partial inventory of 
domain names--the listing of which was limited by the fact that 
Network Solutions will only display the first 50 records of a 
given registrant--includes names such as Coca-Cola, Pepsi, 
Burger King, KFC, McDonalds, Subway, Taco Bell, Wendy's, BMW, 
Chrysler, Dodge, General Motors, Honda, Hyundai, Jaguar, Mazda, 
Mercedes, Nissan, Porsche, Rolls-Royce, Saab, Saturn, Toyota, 
and Volvo, all of which are available to the highest bidder 
through an online offer sheet. 5
---------------------------------------------------------------------------
    \4\  Cybersquatting and Consumer Protection: Ensuring Domain Name 
Integrity, 1999: Hearings Before the Senate Comm. on the Judiciary, 
106th Cong., 1st Sess. (1999) (Statement of Gregory D. Phillips, 
trademark practitioner and outside trademark counsel for Porsche Cars 
North America, Inc.).
    \5\  Id.
---------------------------------------------------------------------------
    In addition, cybersquatters often register well-known marks 
to prey on consumer confusion by misusing the domain name to 
divert customers from the mark owner's site to the 
cybersquatter's own site, many of which are pornography sites 
that derive advertising revenue based on the number of visits, 
or ``hits,'' the site receives. For example, the Committee was 
informed of a parent whose child mistakenly typed in the domain 
name for ``dosney.com,'' expecting to access the family-
oriented content of the Walt Disney home page, only to end up 
staring at a screen of hardcore pornography because a 
cybersquatter had registered that domain name in anticipation 
that consumers would make that exact mistake. Other instances 
of diverting unsuspecting consumers to pornographic web sites 
involve malicious attempts to tarnish a trademark owner's mark 
or to extort money from the trademark owner, such as the case 
where a cybersquatter placed pornographic images of celebrities 
on a site under the name ``pentium3.com'' and announced that it 
wouldsell the domain name to the highest bidder.6 
Others attempt to divert unsuspecting consumers to their sites in order 
to engage in unfair competition. For example, the business operating 
under the domain name ``disneytransportation.com'' greets online 
consumers at its site with a picture of Mickey Mouse and offers shuttle 
services in the Orlando area and reservations at Disney hotels, 
although the company is in no way affiliated with the Walt Disney 
Company and such fact is not clearly indicated on the site. Similarly, 
the domain name address ``wwwcarpoint.com,'' without a period following 
``www'', was used by a cybersquatter to offer a competing service to 
Microsoft's popular Carpoint car buying service.
---------------------------------------------------------------------------
    \6\ See Statement of Anne Chasser, supra note 3.
---------------------------------------------------------------------------
    Finally, and most importantly, cybersquatters target 
distinctive marks to defraud consumers, including to engage in 
counterfeiting activities. For example, the Committee heard 
testimony regarding a cybersquatter who registered the domain 
names ``attphonecard.com'' and ``attcallingcard.com'' and used 
those names to establish sites purporting to sell calling cards 
and soliciting personally identifying information, including 
credit card numbers.7 We also heard the account of a 
cybersquatter purporting to sell Dell Computer products under 
the name ``dellspares.com'', when in fact Dell does not 
authorize online resellers to market its products, and a 
similar account of someone using the name 
``levis501warehouse.com'' to sell Levis jeans despite the fact 
that Levis is the only authorized online reseller of its 
jeans.8 Of even greater concern was the example of 
an online drug store selling pharmaceuticals under the name 
``propeciasales.com'' without any way for online consumers to 
tell whether what they are buying is a legitimate product, a 
placebo, or a dangerous counterfeit.9
---------------------------------------------------------------------------
    \7\ See id.
    \8\ Cybersquatting and Consumer Protection: Ensuring Domain Name 
Integrity, 1999: Hearings Before the Senate Comm. on the Judiciary, 
106th Cong., 1st Sess. (1999) (Statement of Christopher D. Young, 
President and Co-founder, Cyveillance, Inc.).
    \9\ See id.
---------------------------------------------------------------------------

The need for legislation banning cybersquatting

    Current law does not expressly prohibit the act of 
cybersquatting. The World Intellectual Property Organization 
(WIPO) has identified cybersquatting as a global problem and 
recognized in its report on the domain name process that, 
``[f]amous and well-known marks have been the special target of 
a variety of predatory and parasitical practices on the 
Internet.'' 10 Trademark holders are battling 
thousands of cases of cybersquatting each year, the vast 
majority of which cannot be resolved through the dispute 
resolution policy set up by Internet domain name registries.
---------------------------------------------------------------------------
    \10\ World Intellectual Property Organization, Management of 
Internet Names and Addresses: Intellectual Proerty Issues 8 (1999).
---------------------------------------------------------------------------
    Instances of cybersquatting continue to grow each year 
because there is no clear deterrent and little incentive for 
cybersquatters to discontinue their abusive practices. While 
the Federal Trademark Dilution Act has been useful in pursuing 
cybersquatters, cybersquatters have become increasingly 
sophisticated as the case law has developed and now take the 
necessary precautions to insulate themselves from liability. 
For example, many cybersquatters are now careful to no longer 
offer the domain name for sale in any manner that could 
implicate liability under existing trademark dilution case law. 
And, in cases of warehousing and trafficking in domain names, 
courts have sometimes declined to provide assistance to 
trademark holders,leaving them without adequate and effective 
judicial remedies. This uncertainty as to the trademark law's 
application to the Internet has produced inconsistent judicial 
decisions and created extensive monitoring obligations, unnecessary 
legal costs, and uncertainty for consumers and trademark owners alike.
    In cases where a trademark owner can sue, the sheer number 
of domain name infringements, the costs associated with 
hundreds of litigation matters, and the difficulty of obtaining 
damages in standard trademark infringement and dilution actions 
are significant obstacles for legitimate trademark holders. 
Frequently, these obstacles lead trademark owners to simply 
``pay off'' cybersquatters, in exchange for the domain name 
registration, rather than seek to enforce their rights in 
court.
    Legislation is needed to address these problems and to 
protect consumers, promote the continued growth of electronic 
commerce, and protect the goodwill of American businesses. 
Specifically, legislation is needed to clarify the rights of 
trademark owners with respect to bad faith, abusive domain name 
registration practices, to provide clear deterrence to prevent 
bad faith and abusive conduct, and to provide adequate remedies 
for trademark owners in those cases where it does occur.

The Committee substitute amendment

    The Internet remains a relatively new and exciting medium 
for communication, electronic commerce, education, 
entertainment, and countless other yet-to-be-determined uses. 
It is a global medium whose potential is only just beginning to 
be understood. Abusive conduct, like cybersquatting, threatens 
the continued growth and vitality of the Internet as a platform 
for all these uses. But in seeking to curb such abuses, 
Congress must not cast its net too broadly or impede the growth 
of technology, and it must be careful to balance the legitimate 
interests of Internet users with the other interests sought to 
be protected.
    Prior to Committee consideration of the bill, the Chairman 
and Ranking Member, in cooperation with the sponsors of the 
bill, engaged in many hours of discussions with Senators and 
affected parties on all sides to refine the bill and to clarify 
its application with respect to noninfringing trademark uses. 
The result is a balanced Committee substitute amendment to the 
bill that protects the rights of Internet users and the 
interests of all Americans in free speech and protected uses of 
trademarked names for such things as parody, comment, 
criticism, comparative advertising, news reporting, etc. * * * 
At the same time, the amendment is true to the aim of the 
underlying bill by providing clarity in the law for trademark 
owners and much needed protections for American consumers 
online.

      Balancing cybersquatting deterrence with protected trademark uses 
        online

    Like the underlying bill, the Committee substitute allows 
trademark owners to recover statutory damages in cybersquatting 
cases, both to deter wrongful conduct and to provide adequate 
remedies for trademark owners who seek to enforce their rights 
in court. The substitute goes beyond simply stating the remedy, 
however, and sets forth a substantive cause of action, based in 
trademark law, to define the wrongful conduct sought to be 
deterred and to fill in the gaps and uncertainties of current 
trademark law with respect to cybersquatting. Under the bill, 
as amended, the abusive conduct that is made actionable is 
appropriately limited just to bad-faith registrations and uses 
of others' marks by persons who seek to profit unfairly from 
the goodwill associated therewith. Specifically, the bill 
prohibits ``the registration, trafficking in, or use of a 
domain name that is identical to, confusingly similar to, or 
dilutive of '' a mark that is distinctive (i.e., had attained 
trademark status) at the time the domain name is registered, 
``with bad-faith intent to profit from the goodwill'' 
associated with that mark.
    The Committee intends the prohibited ``use'' of a domain 
name to describe the use of a domain name by the domain name 
registrant, with the bad-faith intent to profit from the 
goodwill of the mark of another. The concept of ``use'' does 
not extend to uses of the domain name made by those other than 
the domain name registrant, such as the person who includes the 
domain name as a hypertext link on a web page or as part of a 
directory of Internet addresses.
    In addition, the bill, as amended, balances the property 
interests of trademark owners with the interests of Internet 
users who would make fair use of others' marks or otherwise 
engage in protected speech online. First, the bill sets forth a 
number of balancing factors that a court may wish to consider 
in deciding whether the requisite bad-faith intent is present 
in any given case:
          (i) The trademark rights of the domain name 
        registrant in the domain name;
          (ii) Whether the domain name is the legal or nickname 
        of the registrant;
          (iii) The prior use by the registrant of the domain 
        name in connection with the bona fide offering of any 
        goods or services;
          (iv) The registrant's legitimate noncommercial or 
        fair use of the mark at the site under the domain name;
          (v) The registrant's intent to divert consumers from 
        the mark's owner's online location in a manner that 
        could harm the mark's goodwill, either for commercial 
        gain or with the intent to tarnish or disparage the 
        mark, by creating a likelihood of confusion as to the 
        source, sponsorship, affiliation or endorsement of the 
        site;
          (vi) The registrant's offer to sell the domain name 
        for substantial consideration without having or having 
        an intent to use the domain name in the bona fide 
        offering of goods or services;
          (vii) The registrant's intentional provision of 
        material false and misleading contact information when 
        applying for the registration of the domain name; and
          (viii) The registrant's registration of multiple 
        domain names that are identical or similar to or 
        dilutive of another's trademark.
    Each of these factors reflect indicators that, in practice, 
commonly suggest bad-faith intent or a lack thereof in 
cybersquatting cases. The Committee understands that the 
presence or absence of any of these factors may not be 
determinative. For example, while noncommercial uses of a mark, 
such as for comment, criticism, parody, news reporting, etc. * 
* *, are beyond the scope of the bill's prohibitions, the fact 
that a person uses the domain name at issue in connection with 
a site that makes a noncommercial or fair use of the mark does 
not necessarily mean that the domain name registrant lacked bad 
faith. To recognize such an exemption would eviscerate the 
protections of the bill by suggesting a blueprint for 
cybersquatters who would simply create criticism sites in order 
to immunize themselves from liability despite their bad-faith 
intentions. By the same token, the fact that a defendant 
provided erroneous information in applying for a domain name 
registration or registered multiple domain names that were 
identical to, confusingly similar to, or dilutive of 
distinctive marks does not necessarily show bad-faith. The 
Committee recognizes that such false information may be 
provided without a bad-faith intent to trade on the goodwill of 
another's mark, and that there are likely to be instances in 
which multiple domain name registrations are consistent with 
honest business practices. Similar caveats can be made for each 
of the eight balancing factors, which is why the list of 
factors is nonexclusive and nonexhaustive. Courts must 
ultimately weigh the facts of each case and make a 
determination based on those facts whether or not the defendant 
registered, trafficked in, or used the domain name with bad-
faith intent to profit from the goodwill of the mark of 
another.
    Second, the amended bill underscores the bad-faith 
requirement by requiring a court to remit statutory damages in 
any case where a defendant believed, and the court finds that 
the defendant had reasonable grounds to believe, that the 
registration or use of the domain name was a fair or otherwise 
lawful use. In addition, the bill makes clear that the newly 
created statutory damages shall apply only with respect to bad-
faith conduct occurring on or after the date of enactment of 
the bill.
            Definition of ``domain name''
    The bill, as amended, provides a narrow definition of the 
term ``domain name'' in order to tailor the bill's reach 
narrowly to the problem sought to be addressed. Thus, the term 
``domain name'' describes any alphanumeric designation which is 
registered with or assigned by any domain name registrar, 
domain name registry, or other domain name registration 
authority as part of an electronic address on the Internet. 
This definition essentially covers the second-level domain 
names assigned by domain name registration authorities (i.e., 
the name located immediately to the left of the ``.com,'' 
``.net'', ``.edu,'' and ``.org'' generic top level domains), 
but is technology neutral enough to accommodate names other 
than second-level domains that are actually registered with 
domain name registration authorities, as may be the case should 
Internet domain name registrars begin to issue third or fourth 
level domains. The limited nature of the definition is 
important in that it excludes such things as screen names, file 
names, and other identifiers not assigned by a domain name 
registrar or registry, which have little to do with 
cybersquatting in practice.
            In rem jurisdiction
    As amended, the bill provides for in rem jurisdiction, 
which allows a mark owner to seek the forfeiture, cancellation, 
or transfer of an infringing domain name by filing an in rem 
action against the name itself, provided the domain name itself 
violates substantive Federal trademark law, where the mark 
owner has satisfied the court that it has exercised due 
diligence in trying to locate the owner of the domain name but 
is unable to do so. A significant problem faced by trademark 
owners in the fight against cybersquatting is the fact that 
many cybersquatters register domain names under aliases or 
otherwise provide false information in their registration 
applications in order to avoid identification and service of 
process by the mark owner. The bill, as amended, will alleviate 
this difficulty, while protecting the notions of fair play and 
substantial justice, by enabling a mark owner to seek an 
injunction against the infringing property in those cases 
where, after due diligence, a mark owner is unable to proceed 
against the domain name registrant because the registrant has 
provided false contact information and is otherwise not to be 
found.
    Additionally, some have suggested that dissidents and 
others who are online incognito for legitimate reasons might 
give false information to protect themselves and have suggested 
the need to preserve a degree of anonymity on the Internet 
particularly for this reason. Allowing a trademark owner to 
proceed against the domain names themselves, provided they are, 
in fact, infringing or diluting under the Trademark Act, 
decreases the need for trademark owners to join the hunt to 
chase down and root out these dissidents or others seeking 
anonymity on the Net. The approach in the amended bill is a 
good compromise, which provides meaningful protection to 
trademark owners while balancing the interests of privacy and 
anonymity on the Internet.
            Encouraging cooperation and fairness in the effort to 
                    combat cybersquatting
    Like the underlying bill, the substitute amendment 
encourages domain name registrars and registries to work with 
trademark owners to prevent cybersquatting by providing a 
limited exemption from monetarydamages for domain name 
registrars and registries that suspend, cancel, or transfer domain 
names pursuant to a court order or in the implementation of a 
reasonable policy prohibiting the registration of infringing domain 
names. The amended bill goes further, however, in order to protect the 
rights of domain name registrants against overreaching trademark 
owners. Under the amended bill, a trademark owner who knowingly and 
materially misrepresents to the domain name registrar or registry that 
a domain name is infringing is liable to the domain name registrant for 
damages, including costs and attorneys' fees, resulting from the 
suspension, cancellation, or transfer of the domain name. In addition, 
the court may award injunctive relief to the domain name registrant by 
ordering the reactivation of the domain name or the transfer of the 
domain name back to the domain name registrant. The bill, as amended, 
also promotes the continued ease and efficiency users of the current 
registration system enjoy by codifying current case law limiting the 
secondary liability of domain name registrars and registries for the 
act of registration of a domain name.11
---------------------------------------------------------------------------
    \11\ See Panavision Int'l v. Toeppen, 141 F.3d 1316, 1319 (9th Cir. 
1998) (holding that NSI is not responsible for making ``a determination 
about registrant's right to use a domain name.''); Lockheed Martin 
Corporation v. Networks Solutions, Inc., 985 F.Supp. 949 (C.D. Ca. 
1997) (holding registrar not liable); Academy of Motion Picture Arts 
and Science v. Network Solutions, Inc., 989 F.Supp. 1276, (C.D.Ca. 
1997)(holding that holder of registered trademarks could not obtain a 
preliminary injunction against domain name registrar).
---------------------------------------------------------------------------
            Preservation of first amendment rights and trademark 
                    defenses
    Finally, the substitute amendment includes an explicit 
savings clause making clear that the bill does not affect 
traditional trademark defenses, such as fair use, or a person's 
first amendment rights, and it ensures that any new remedies 
created by the bill will apply prospectively only.
    In summary, the legislation is a balanced approach to 
protecting the legitimate interests of businesses, Internet 
users, e-commerce, and consumers.

                       IV. Vote of the Committee

    The Senate Committee on the Judiciary, with a quorum 
present, met on Thursday, July 29, 1999, at 2:30 p.m., to 
consider the ``Anticybersquatting Consumer Protection Act.'' 
The Committee considered and accepted by unanimous consent an 
amendment in the nature of a substitute offered by the Chairman 
(for himself, Mr. Leahy, Mr. Abraham, Mr. Torricelli, Mr. 
DeWine, Mr. Kohl, and Mr. Schumer). The Committee then ordered 
the ``Anticybersquatting Consumer Protection Act'' reported 
favorably to the Senate, as amended, by unanimous consent, with 
a recommendation that the bill do pass.

                     V. Section-by-Section Analysis


Section 1. Short title; references

    This section provides that the act may be cited as the 
``Anticybersquatting Consumer Protection Act'' and that any 
references within the bill to the Trademark Act of 1946 shall 
be a reference to the act entitled ``An Act to provide for the 
registration and protection of trademarks used in commerce, to 
carry out the provisions of certain international conventions, 
and for other purposes,'' approved July 5, 1946 (15 U.S.C. 1051 
et seq.), also commonly referred to as the Lanham Act.

Section 2. Findings

    This section sets forth Congress' findings that 
cybersquatting and cyberpiracy--defined as the registration, 
trafficking in, or use of a domain name that is identical to, 
confusingly similar to, or dilutive of a distinctive trademark 
or service mark of another with the bad faith intent to profit 
from the goodwill of that mark--harms the public by causing 
consumer fraud and public confusion as to the true source or 
sponsorship of goods or services, by impairing electronic 
commerce, by depriving trademark owners of substantial revenues 
and consumer goodwill, and by placing unreasonable, 
intolerable, and overwhelming burdens on trademark owners in 
protecting their own marks. Amendments to the Trademark Act 
would clarify the rights of trademark owners to provide for 
adequate remedies for the abusive and bad faith registration of 
their marks as Internet domain names and to deter cyberpiracy 
and cybersquatting.

Section 3. Cyberpiracy prevention

    Subsection (a). In General. This subsection amends section 
the Trademark Act to provide an explicit trademark remedy for 
cybersquatting under a new section 43(d). Under paragraph 
(1)(A) of the new section 43(d), actionable conduct would 
include the registration, trafficking in, or use of a domain 
name that is identical to, confusingly similar to, or dilutive 
of the trademark or service mark of another, provided that the 
mark was distinctive (i.e., enjoyed trademark status) at the 
time the domain name was registered. The bill is carefully and 
narrowly tailored, however, to extend only to cases where the 
plaintiff can demonstrate that the defendant registered, 
trafficked in, or used the offending domain name with bad-faith 
intent to profit from the goodwill of a mark belonging to 
someone else. Thus, the bill does not extent to innocent domain 
name registrations by those who are unaware of another's use of 
the name, or even to someone who is aware of the trademark 
status of the name but registers a domain name containing the 
mark for any reason other than with bad faith intent to profit 
from the goodwill associated with that mark.
    Paragraph (1)(B) of the new section 43(d) sets forth a 
number of nonexclusive, nonexhaustive factors to assist a court 
in determining whether the required bad-faith element exists in 
any given case. These factors are designed to balance the 
property interests of trademark owners with the legitimate 
interests of Internet users and others who seek to make lawful 
uses of others' marks, including for purposes such as 
comparative advertising, comment, criticism, parody, news 
reporting, fair use, etc. The bill suggests a total of eight 
factors a court may wish to consider. The first four suggest 
circumstances that may tend to indicate an absence of bad-faith 
intent to profit from the goodwill of a mark, and the last four 
suggest circumstances that may tend to indicate that such bad-
faith intent exists.
    First, under paragraph (1)(B)(i), a court may consider 
whether the domain name registrant has trademark or any other 
intellectual property rights in the name. This factor 
recognizes, as does trademark law in general, that there may be 
concurring uses of the same name that are noninfringing, such 
as the use of the ``Delta'' mark for both air travel and sink 
faucets. Similarly, the registration of the domain name 
``deltaforce.com'' by a movie studio would not tend to indicate 
a bad faith intent on the part of the registrant to trade on 
Delta Airlines or Delta Faucets' trademarks.
    Second, under paragraph (1)(B)(ii), a court may consider 
the extent to which the domain name is the same as the 
registrant's own legal name or a nickname by which that person 
is commonly identified. This factor recognizes, again as does 
the concept of fair use in trademark law, that a person should 
be able to be identified by their own name, whether in their 
business or on a web site. Similarly, a person may bear a 
legitimate nickname that is identical or similar to a well-
known trademark, such as in the well-publicizedcase of the 
parents who registered the domain name ``pokey.org'' for their young 
son who goes by that name, and these individuals should not be deterred 
by this bill from using their name online. This factor is not intended 
to suggest that domain name registrants may evade the application of 
this act by merely adopting Exxon, Ford, or other well-known marks as 
their nicknames. It merely provides a court with the appropriate 
discretion to determine whether or not the fact that a person bears a 
nickname similar to a mark at issue is an indication of an absence of 
bad-faith on the part of the registrant.
    Third, under paragraph (1)(B)(iii), a court may consider 
the domain name registrant's prior use, if any, of the domain 
name in connection with the bona fide offering of goods or 
services. Again, this factor recognizes that the legitimate use 
of the domain name in online commerce may be a good indicator 
of the intent of the person registering that name. Where the 
person has used the domain name in commerce without creating a 
likelihood of confusion as to the source or origin of the goods 
or services and has not otherwise attempted to use the name in 
order to profit from the goodwill of the trademark owner's 
name, a court may look to this as an indication of the absence 
of bad faith on the part of the registrant.
    Fourth, under paragraph (1)(B)(iv), a court may consider 
the person's legitimate noncommercial or fair use of the mark 
in a web site that is accessible under the domain name at 
issue. This factor is intended to balance the interests of 
trademark owners with the interests of those who would make 
lawful noncommercial or fair uses of others' marks online, such 
as in comparative advertising, comment, criticism, parody, news 
reporting, etc. Under the bill, the use of a domain name for 
purposes of comparative advertising, comment, criticism, 
parody, news reporting, etc., even where done for profit, would 
not alone satisfy the bad-faith intent requirement. The fact 
that a person may use a mark in a site in such a lawful manner 
may be an appropriate indication that the person's registration 
or use of the domain name lacked the required element of bad-
faith. This factor is not intended to create a loophole that 
otherwise might swallow the bill, however, by allowing a domain 
name registrant to evade application of the Act by merely 
putting up a noninfringing site under an infringing domain 
name. For example, in the well know case of Panavision Int'l v. 
Toeppen, 141 F.3d 1316 (9th Cir. 1998), a well known 
cybersquatter had registered a host of domain names mirroring 
famous trademarks, including names for Panavision, Delta 
Airlines, Neiman Marcus, Eddie Bauer, Lufthansa, and more than 
100 other marks, and had attempted to sell them to the mark 
owners for amounts in the range of $10,000 to $15,000 each. His 
use of the ``panavision.com'' and ``panaflex.com'' domain names 
was seemingly more innocuous, however, as they served as 
addresses for sites that merely displayed pictures of Pana 
Illinois and the word ``Hello'' respectively. This bill would 
not allow a person to evade the holding of that case--which 
found that Mr. Toeppen had made a commercial use of the 
Panavision marks and that such uses were, in fact, diluting 
under the Federal Trademark Dilution Act--merely by posting 
noninfringing uses of the trademark on a site accessible under 
the offending domain name, as Mr. Toeppen did. Similarly, the 
bill does not affect existing trademark law to the extent it 
has addressed the interplay between first amendment protections 
and the rights of trademark owners. Rather, the bill gives 
courts the flexibility to weigh appropriate factors in 
determining whether the name was registered or used in bad 
faith, and it recognizes that one such factor may be the use 
the domain name registrant makes of the mark.
    Fifth, under paragraph (1)(B)(v), a court may consider 
whether, in registering or using the domain name, the 
registrant intended to divert consumers away from the trademark 
owner's website to a website that could harm the goodwill of 
the mark, either for purposes of commercial gain or with the 
intent to tarnish or disparage the mark, by creating a 
likelihood of confusion as to the source,sponsorship, 
affiliation, or endorsement of the site. This factor recognizes that 
one of the main reasons cybersquatters use other people's trademarks is 
to divert Internet users to their own sites by creating confusion as to 
the source, sponsorship, affiliation, or endorsement of the site. This 
is done for a number of reasons, including to pass off inferior goods 
under the name of a well-known markholder, to defraud consumers into 
providing personally identifiable information, such as credit card 
numbers, to attract eyeballs to sites that price online advertising 
according to the number of ``hits'' the site receives, or even just to 
harm the value of the mark. Under this provision, a court may give 
appropriate weight to evidence that a domain name registrant intended 
to confuse or deceive the public in this manner when making a 
determination of bad-faith intent.
    Sixth, under paragraph (1)(B)(vi), a court may consider a 
domain name registrant's offer to transfer, sell, or otherwise 
assign the domain name to the mark owner or any third party for 
substantial consideration, where the registrant has not used, 
and did not have any intent to use, the domain name in the bona 
fide offering of any goods or services. This factor is 
consistent with the court cases, like the Panavision case 
mentioned above, where courts have found a defendant's offer to 
sell the domain name to the legitimate mark owner as being 
indicative of the defendant's intent to trade on the value of a 
trademark owner's marks by engaging in the business of 
registering those marks and selling them to the rightful 
trademark owners. It does not suggest that a court should 
consider the mere offer to sell a domain name to a mark owner 
or the failure to use a name in the bona fide offering of goods 
or services is sufficient to indicate bad faith. Indeed, there 
are cases in which a person registers a name in anticipation of 
a business venture that simply never pans out. And someone who 
has a legitimate registration of a domain name that mirrors 
someone else's domain name, such as a trademark owner that is a 
lawful concurrent user of that name with another trademark 
owner, may, in fact, wish to sell that name to the other 
trademark owner. This bill does not imply that these facts are 
an indication of bad-faith. It merely provides a court with the 
necessary discretion to recognize the evidence of bad-faith 
when it is present. In practice, the offer to sell domain names 
for exorbitant amounts to the rightful mark owner has been one 
of the most common threads in abusive domain name 
registrations.
    Seventh, under paragraph (1)(B)(vii), a court may consider 
the registrant's intentional provision of material and 
misleading false contact information in an application for the 
domain name registration. Falsification of contact information 
with the intent to evade identification and service of process 
by trademark owners is also a common thread in cases of 
cybersquatting. This factor recognizes that fact, while still 
recognizing that there may be circumstances in which the 
provision of false information may be due to other factors, 
such as mistake or, as some have suggested in the case of 
political dissidents, for purposes of anonymity. This bill 
balances those factors by limiting consideration to the 
person's contact information, and even then requiring that the 
provision of false information be material and misleading. As 
with the other factors, this factor is nonexclusive and a court 
is called upon to make a determination based on the facts 
presented whether or not the provision of false information 
does, in fact, indicate bad-faith.
    Eighth, under paragraph (1)(B)(viii), a court may consider 
the domain name registrant's acquisition of multiple domain 
names that are identical to, confusingly similar to, or 
dilutive of others' marks. This factor recognizes the 
increasingly common cybersquatting practice known as 
``warehousing'', in which a cybersquatter registers multiple 
domain names--sometimes hundreds, even thousands--that mirror 
the trademarks of others. By sitting on these marks and not 
making the first move to offer to sell them to the mark owner, 
these cybersquatters have been largely successful in evading 
the case law developed under the Federal Trademark Dilution 
Act. This bill does not suggest that the mere registration of 
multiple domain names is an indication of bad faith, but allows 
a court to weigh the fact that a person has registered multiple 
domain names that infringe or dilute the trademarks of others 
as part of its consideration of whether the requisite bad-faith 
intent exists.
    Paragraph (1)(C) makes clear that in any civil action 
brought under the new section 43(d), a court may order the 
forfeiture, cancellation, or transfer of a domain name to the 
owner of the mark.
    Paragraph (2)(A) provides for in rem jurisdiction, which 
allows a markowner to seek the forfeiture, cancellation, or 
transfer of an infringing domain name by filing an in rem 
action against the name itself, where the markowner has 
satisfied the court that it has exercised due diligence in 
trying to locate the owner of the domain name but is unable to 
do so. As indicated above, a significant problem faced by 
trademark owners in the fight against cybersquatting is the 
fact that many cybersquatters register domain names under 
aliases or otherwise provide false information in their 
registration applications in order to avoid identification and 
service of process by the markowner. This bill will alleviate 
this difficulty, while protecting the notions of fair play and 
substantial justice, by enabling a markowner to seek an 
injunction against the infringing property in those cases 
where, after due diligence, a markowner is unable to proceed 
against the domain name registrant because the registrant has 
provided false contact information and is otherwise not to be 
found, provided the markowner can show that the domain name 
itself violates substantive Federal trademark law (i.e., that 
the domain name violates the rights of the registrant of a mark 
registered in the Patent and Trademark Office, or section 43 
(a) or (c) of the Trademark Act). Paragraph (2)(B) limits the 
relief available in such an in rem action to an injunction 
ordering the forfeiture, cancellation, or transfer of the 
domain name.
    Subsection (b). Additional civil action and remedy. This 
subsection makes clear that the creation of a new section 43(d) 
in the Trademark Act does not in any way limit the application 
of current provisions of trademark, unfair competition and 
false advertising, or dilution law, or other remedies under 
counterfeiting or other statutes, to cybersquatting cases.

Section 4. Damages and remedies

    This section applies traditional trademark remedies, 
including injunctive relief, recovery of defendant's profits, 
actual damages, and costs, to cybersquatting cases under the 
new section 43(d) of the Trademark Act. The bill also amends 
section 35 of the Trademark Act to provide for statutory 
damages in cybersquatting cases, in an amount of not less than 
$1,000 and not more than $100,000 per domain name, as the court 
considers just. The bill requires the court to remit statutory 
damages in any case where the infringer believed and had 
reasonable grounds to believe that the use of the domain name 
was a fair or otherwise lawful use.

Section 5. Limitation on liability

    This section amends section 32(2) of the Trademark Act to 
extend the Trademark Act's existing limitations on liability to 
the cybersquatting context. This section also creates a new 
subparagraph (D) in section 32(2) to encourage domain name 
registrars and registries to work with trademark owners to 
prevent cybersquatting through a limited exemption from 
liability for domain name registrars and registries that 
suspend, cancel, or transfer domain names pursuant to a court 
order or in the implementation of a reasonable policy 
prohibiting cybersquatting. The bill anticipates a reasonable 
policy against cybersquatting will apply only to marks 
registered on the Principal Register of the Patent and 
Trademark Office in order to promote objective criteria and 
predictability in the dispute resolution process.
    This section also protects the rights of domain name 
registrants against overreaching trademark owners. Under a new 
section subparagraph (D)(iv) in section 32(2), a trademarkowner 
who knowingly andmaterially misrepresents to the domain name 
registrar or registry that a domain name is infringing shall be liable 
to the domain name registrant for damages resulting from the 
suspension, cancellation, or transfer of the domain name. In addition, 
the court may grant injunctive relief to the domain name registrant by 
ordering the reactivation of the domain name or the transfer of the 
domain name back to the domain name registrant. Finally, in creating a 
new subparagraph (D)(iii) of section 32(2), this section codifies 
current case law limiting the secondary liability of domain name 
registrars and registries for the act of registration of a domain name, 
absent bad-faith on the part of the registrar and registry.

Section 6. Definitions

    This section amends the Trademark Act's definitions section 
(section 45) to add definitions for key terms used in this act. 
First, the term ``Internet'' is defined consistent with the 
meaning given that term in the Communications Act (47 U.S.C. 
230(f)(1)). Second, this section creates a narrow definition of 
``domain name'' to target the specific bad-faith conduct sought 
to be addressed while excluding such things as screen names, 
file names, and other identifiers not assigned by a domain name 
registrar or registry.

Section 7. Savings clause

    This section provides an explicit savings clause making 
clear that the bill does not affect traditional trademark 
defenses, such as fair use, or a person's first amendment 
rights.

Section 8. Severability

    This section provides a severability clause making clear 
Congress' intent that if any provision of this act, an 
amendment made by the act, or the application of such provision 
or amendment to any person or circumstances is held to be 
unconstitutional, the remainder of the Act, the amendments made 
by the act, and the application of the provisions of such to 
any person or circumstance shall not be affected by such 
determination.

Section 9. Effective date

    This section provides that new statutory damages provided 
for under this bill shall not apply to any registration, 
trafficking, or use of a domain name that took place prior to 
the enactment of this act.

                           VI. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 5, 1999.
Hon. Orrin G. Hatch, Chairman,
Committee on the Judiciary, U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1255, the 
Anticybersquatting Consumer Protection Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for Federal costs) and Shelley Finlayson (for the State and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).

                    VII. Regulatory Impact Statement

    In compliance with paragraph 11(b)(1), rule XXVI of the 
Standing Rules of the Senate, the Committee, after due 
consideration, concludes that S. 1255 will not have significant 
regulatory impact.

               congressional budget office cost estimate

S. 1255--Anticybersquatting Consumer Protection Act

    Cybersquatting (or cyberpiracy) consists of registering, 
trafficking in, or using domain names (Internet addresses) that 
are identical or confusingly similar to trademarks with the 
bad-faith intent to profit from the goodwill of the trademarks. 
S. 1255 would allow trademark owners to sue anyone who engages 
in such conduct for the higher of actual damages or statutory 
damages of $1,000 to $100,000 for each domain name. The bill 
also would allow the courts to order the forfeiture, 
cancellation, or transfer of domain names in such instances.
    Because S. 1255 would not significantly affect the workload 
of the Patent and Trademark Office or the court system, CBO 
estimates that implementing the bill would not have a 
significant effect on the Federal budget. S. 1255 would not 
affect direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    S. 1255 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
could benefit State, local, or tribal governments to the extent 
that these governments would be able to sue and recover damages 
from infringement or dilution of trademarks based on the 
provisions of the bill. Any such benefits are expected to be 
minimal based on the potential damage awards and the costs of 
litigating such suits.
    The CBO staff contacts are Mark Hadley (for Federal costs) 
and Shelley Finlayson (for the State and local impact). This 
estimate was approved by Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                     VIII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 1255, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                      THE TRADEMARK ACT OF 1946

           *       *       *       *       *       *       *



                                remedies

    Section 32. [15 U.S.C. Sec. 1114](1) Any person who shall, 
without the consent of the registrant--
          (a) use in * * *

           *       *       *       *       *       *       *

    (2) Notwithstanding any other provision of this Act, the 
remedies given to the owner of a right infringed under this Act 
or to a person bringing an action [under section 43(a)] under 
section 43 (a) or (d) [15 U.S.C. Sec. 1125(a)] shall be limited 
as follows:

           *       *       *       *       *       *       *

          (A) Where * * *

           *       *       *       *       *       *       *

          (D)(i) A domain name registrar, a domain name 
        registry, or other domain name registration authority 
        that takes any action described under clause (ii) 
        affecting a domain name shall not be liable for 
        monetary relief to any person for such action, 
        regardless of whether the domain name is finally 
        determined to infringe or dilute the mark.
          (ii) An action referred to under clause (i) is any 
        action of refusing to register, removing from 
        registration, transferring, temporarily disabling, or 
        permanently canceling a domain name--
                  (I) in compliance with a court order under 
                section 43(d); or
                  (II) in the implementation of a reasonable 
                policy by such registrar, registry, or 
                authority prohibiting the registration of a 
                domain name that is identical to, confusingly 
                similar to, or dilutive of another's mark 
                registered on the Principal Register of the 
                United States Patent and Trademark Office.
          (iii) A domain name registrar, a domain name 
        registry, or other domain name registration authority 
        shall not be liable for damages under this section for 
        the registration or maintenance of a domain name for 
        another absent a showing of bad faith intent to profit 
        from such registration or maintenance of the domain 
        name.
          (iv) If a registrar, registry, or other registration 
        authority takes an action described under clause (ii) 
        based on a knowing and material misrepresentation by 
        any person that a domain name is identical to, 
        confusingly similar to, or dilutive of a mark 
        registered on the Principal Register of the United 
        States Patent and Trademark Office, such person shall 
        be liable for any damages, including costs and 
        attorney's fees, incurred by the domain name registrant 
        as a result of such action. The court may also grant 
        injunctive relief to the domain name registrant, 
        including the reactivation of the domain name or the 
        transfer of the domain name to the domain name 
        registrant.
          [(D)](E) As used in this paragraph--

           *       *       *       *       *       *       *

    Section 34. [15 U.S.C. Sec. 1116] (a) The several courts 
vested with jurisdiction of civil actions arising under this 
act shall have power to grant injunctions, according to the 
principles of equity and upon such terms as the court may deem 
reasonable, to prevent the violation of any right of the 
registrant of a mark registered in the Patent and Trademark 
Office or to prevent a violation under [section 43(a)] section 
43(a), (c), or (d) [15 U.S.C. Sec. 1125(a)]. Any such 
injunction may include a provision directing the defendant to 
file with the court and serve on the plaintiff within thirty 
days after the service on the defendant of such injunction, or 
such extended period as the court may direct, a report in 
writing under oath setting forth in detail the manner and form 
in which the defendant has complied with the injunction. Any 
such injunction granted upon hearing, after notice to the 
defendant, by any district court of the United States, may be 
served on the parties against whom such injunction is granted 
anywhere in the United States where they may be found, and 
shall be operative and may be enforced by proceedings to punish 
for contempt, or otherwise, by the court by which such 
injunction was granted, or by any other United States district 
court in whose jurisdiction the defendant may be found.

           *       *       *       *       *       *       *

    Section 35. [15 U.S.C. Sec. 1117] (a) When a violation of 
any right of the registrant of a mark registered in the Patent 
and Trademark Office, or a violation under section 43 (a), (c), 
or (d) [15 U.S.C. Sec. 1125(a)], shall have been established in 
any civil action arising under this act, the plaintiff shal be 
entitled, subject to the provisions of sections 29 [15 U.S.C. 
Sec. 1111] and 32 [15 U.S.C. Sec. 1114], and subject to the 
principles of equity, to recover (1) defendant's profits, (2) 
any damages sustained by the plaintiff, and (3) the costs of 
the action. The court shall assess such profits and damages or 
cause the same to be assessed under its direction. In assessing 
profits the plaintiff shall be required to prove defendant's 
sales only; defendant must prove all elements of cost or 
deduction claimed. In assessing damages the court may enter 
judgment, according to the circumstances of the case, for any 
such sum above the amount found as actual damages, not 
exceeding three times such amount. If the court shall find that 
the amount of recovery based on profits is either inadequate or 
excessive the court may in its discretion enter judgment for 
such sum as the court shall find to be just, according to the 
circumstances of the case. Such sum in either of the above 
circumstances shall constitute compensation and not a penalty. 
The court in exceptional cases may award reasonable attorney 
fees to the prevailing party.

           *       *       *       *       *       *       *

    (d) In a case involving a violation of section 43(d)(1), 
the plaintiff may elect, at any time before final judgment is 
rendered by the trial court, to recover, instead of actual 
damages and profits, an award of statutory damages in the 
amount of not less than $1,000 and not more than $100,000 per 
domain name, as the court considers just. The court shall remit 
statutory damages in any case in which an infringer believed 
and had reasonable grounds to believe that use of the domain 
name by the infringer was a fair or otherwise lawful use.

           *       *       *       *       *       *       *


   false designations of origin and false descriptions, and dilution 
                               forbidden

    Section 43. [15 U.S.C. Sec. 1125] (a)(1) Any person who, on 
or in connection with any goods or services, or any container 
for goods, uses in commerce any word, term, name, symbol, or 
device, or any combination thereof, or any false designation of 
origin, false or misleading description of fact, or false or 
misleading representation of fact, which--

           *       *       *       *       *       *       *

    (c)(1) The owner * * *

           *       *       *       *       *       *       *

    (d)(1)(A) Any person who, with bad-faith intent to profit 
from the goodwill of a trademark or service mark of another, 
registers, traffics in, or uses a domain name that is identical 
to, confusingly similar to, or dilutive of such trademark or 
service mark, without regard to the goods or services of the 
parties, shall be liable in a civil action by the owner of the 
mark, if the mark is distinctive at the time of the 
registration of the domain name.
    (B) In determining whether there is a bad-faith intent 
described under subparagraph (A), a court may consider factors 
such as, but not limited to--
          (i) the trademark or other intellectual property 
        rights of the person, if any, in the domain name;
          (ii) the extent to which the domain name consists of 
        the legal name of the person or a name that is 
        otherwise commonly used to identify that person;
          (iii) the person's prior use, if any, of the domain 
        name in connection with the bona fide offering of any 
        goods or services;
          (iv) the person's legitimate noncommercial or fair 
        use of the mark in a site accessible under the domain 
        name;
          (v) the person's intent to divert consumers from the 
        mark owner's online location to a site accessible under 
        the domain name that could harm the goodwill 
        represented by the mark, either for commercial gain or 
        with the intent to tarnish or disparage the mark, by 
        creating a likelihood of confusion as to the source, 
        sponsorship, affiliation, or endorsement of the site;
          (vi) the person's offer to transfer, sell, or 
        otherwise assign the domain name to the mark owner or 
        any third party for substantial consideration without 
        having used, or having an intent to use, the domain 
        name in the bona fide offering of any goods or 
        services;
          (vii) the person's intentional provision of material 
        and misleading false contact information when applying 
        for the registration of the domain name; and
          (viii) the person's registration or acquisition of 
        multiple domain names which are identical to, 
        confusingly similar to, or dilutive of trademarks or 
        service marks of others that are distinctive at the 
        time of registration of such domain names, without 
        regard to the goods or services of such persons.
    (C) In any civil action involving the registration, 
trafficking, or use of a domain name under this paragraph, a 
court may order the forfeiture or cancellation of the domain 
name or the transfer of the domain name to the owner of the 
mark.
    (2)(A) The owner of a mark may file an in rem civil action 
against a domain name if--
          (i) the domain name violates any right of the 
        registrant of a mark registered in the Patent and 
        Trademark Office, or section 43 (a) or (c); and
          (ii) the court finds that the owner has demonstrated 
        due diligence and was not able to find a person who 
        would have been a defendant in a civil action under 
        paragraph (1).
    (B) The remedies of an in rem action under this paragraph 
shall be limited to a court order for the forfeiture or 
cancellation of the domain name or the transfer of the domain 
name to the owner of the mark.

           *       *       *       *       *       *       *


            construction and definitions; intent of chapter

    Section 45. [15 U.S.C. Sec. 1127] In the construction of 
this Act, unless the contrary is plainly apparent from the 
context--

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    A ``counterfeit'' is a spurious mark which is identical 
with, or substantially indistinguishable from, a registered 
mark.
    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)).
    The term ``domain name'' means any alphanumeric designation 
which is registered with or assigned by any domain name 
registrar, domain name registry, or other domain name 
registration authority as part of an electronic address on the 
Internet.

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