Anti-Cybersquatting Legislation in the U.S.

On March 26, 2010 Governor Gary Herbert signed the Utah E-Commerce Integrity Act into law. The Act, which aims to strengthen intellectual property protectionin Utah and shield consumers and businesses from online fraud, could serve as a harbinger for U.S. congressional efforts to similarly amend the federal 1999. Anticybersquatting Consumer Protection Act (ACPA). A key provision in the Utah bill updates and strengthens the weak enforcement provisions of ACPA by allowing brand owners to sue “affiliates” as well as registrants of trademark infringing domain names.

The legislation is strongly supported by a broad coalition of national and local businesses, as it will protect them and their consumers from the bad faith misappropriation and diversion of their trademarks online. Cybersquatting, the registration of domain names similar to others’ trademarks for the purpose of misleading Internet users, is estimated to cost brand owners worldwide over $1 billion a year by diverting legitimate traffic and revenue, undermining hard-earned trust and goodwill, and increasing the enforcement expense of protecting consumers from online fraud.

The Utah E-Commerce Act exists to improve consumer safety on the Internet and preventbusinesses from having to dedicate millions of dollars to combating online fraud. In addition to allowing trademark owners to sue “affiliates,” the Utah ECommerce Act creates a presumption of statutory damages starting at $100,000 per domain name if a pattern of willful infringement is present. This marks a significant change from ACPA, in which statutory damages begin at $1,000. Other sections of the legislation address phishing and pharming by allowing registrars and Internet service providers to remove or disable website content involved in fraudulent activities; defining phishing and pharming as third degree felonies; allowing for either actual damages or rewards of up to $150,000 per violation in related civil suits; and permitting $1 million in penalties for the use of spyware.