Verizon Wireless wins $33 million in a Cybersquatting Dispute

January 27, 2009

Verizon has been awarded a record amount in a law suit against a tech company and domain registrar, OnlineNIC, which had registered over 660 domain names that used Verizon’s trademarks.

The case was brought under the Anti-Cybersquatting Consumer Protection Act which is a US Federal Law that was enacted in 1999. The law basically codifies similar principles as the UDRP.  So, in order to bring a claim under the ACPA, a trademark owner must establish that their mark is distinctive or famous, that the domain name and trademark are confusingly similar (or dilutive for famous trademarks) and that the registration or use of the domain owner constitutes bad faith to profit from the mark.

OnlineNIC did not appear in court so Verizon was given a default judgment. The court ruled that OnlineNIC had acted in bad faith and owed Verizon $50,000 for each domain name.

Many commentators think that the award was so high due to the fact that when Verizon first approached OnlineNIC the company told them that they wanted $50,000 per domain name. It remains to be seen whether Verizon will actually be able to collect this amount of money since OnlineNIC is owned by a Chinese company.  American companies often find it extremely difficult to get a judgment enforced abroad especially when the defendant did not appear in court.

A good next step for Verizon would be to push for ICANN to revoke OnlineNIC’s accreditation. This would be precedent setting since ICANN have yet to revoke accreditation of a registrar purely following a civil matter. They have revoked accreditation previously when the president of ESTDomains was convicted last year of several criminal charges including fraud and money laundering.  At the least ICANN will probably launch an investigation into OnlineNIC and its cybersquatting.