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$100,000 in Statutory Damages Plus Attorney Fees

By Enrico Schaefer

Yes, maximum damages are sometimes awarded against cybersquatters under the Anti-Cypersquatting Consumer Protection Act.  Thanks to the Seattle Trademark Lawyer Blog for alerting us that The Western District recently entered its Findings of Fact and Conclusions of Law in the Lahoti v. Vericheck, Inc., cybersquatting case. 

The Plaintiff lost a UDRP proceeding and filed a declaratory judgment action within the 10-day period challenging the National Arbitration Forum?s UDRP order that his domain name, vericheck.com, be transferred to Complainant Vericheck, Inc. The arbitrator made findings as follows:

Complainant has continuously used and operated under the VERICHECK name since Complainant?s establishment in 1989. Moreover, Complainant registered the VERICHECK mark with the State of Georgia in August 2001. Since its establishment, Complainant has spent more than $85,000 on marketing its products and services and now conducts more than $1.2 million per month in financial transactions over the internet under the VERICHECK name. The third-party that holds the active trademark registration for the VERICHECK mark with the United States Patent and Trademark Office is VeriCheck Systems, Inc., an Arizona corporation. The registrant, however, does not use the mark. The record shows that Respondent is not commonly known by the <vericheck.com> domain name. Moreover, Respondent is not using the domain name to offer any goods or services of its own but is using the name to direct internet users to links, including links to Complainant?s competitors. Respondent acknowledges that in response to Complainant?s offer to purchase the name Respondent quoted a price of $48,000. Furthermore, consumers seeking to find Complainant?s website who use Respondent?s domain name are redirected to a website that features advertisements of competitors of Complainant, presumably for a referral fee paid to Respondent. Respondent does not merely ?park? the domain name.

Vericheck counterclaimed against Mr. Lahoti for cybersquatting, trademark infringement, and violation of Washington?s Consumer Protection Act. It appears that Lahoti had some poor legal advice, as   the Federal District Court Judge found on summary judgment that Mr. Lahoti was in fact a bad faith cybersquatter, leaving open the trademark issues and statutory damages under the Anti-Cybersquatting Consumer Protection Act. After a short a two-day bench trial, the judge concluded:

?[T] court finds the VERICHECK mark to be suggestive and, therefore, inherently distinctive. The mark?s strength in the marketplace is amply supported by Vericheck?s long use of the mark; the mark?s promotion through advertising, trade shows, and promotional incentives; and the expansion of Vericheck?s territory and client list along with an increase in sales. Because Vericheck has already satisfied the other elements under the ACPA, the court grants judgment in favor of Vericheck on its ACPA counterclaim.?

The Judge awarded Vericheck $100,000 plus attorney fees as a result of ?Mr. Lahoti?s bad faith and his deliberate and knowing acts, his pattern and practice of registering domain names that incorporate the trademarks of others, his efforts to extort thousands of dollars in exchange for transfer of the Domain Name, his disregard for the submission of inaccurate answers to interrogatories, and the actual confusion which is occurring in the marketplace?.?

So, yes, court's do award maximum penalties under the ACPA.  And seek competent legal advice before suing a large company in court  to preclude transfer of your domain after an adverse ruling under the UDRP.   Defendant is certain to counter-sue under the ACPA and you may find yourself a double loser, minus more than just your domain name. 

Full post as published by AntiCybersquatting Consumer Protection Act Blog on December 17, 2007 (boomark / email).