The complaint apparently names three domain name registrars – BelgiumDomains, CapitolDomains, and DomainDoorman – along with several alleged Bahamian shell corporations (e.g,, Caribbean Online International, Domain Drop S.A., Domibot, Highlands International Investment, Keyword Marketing Inc., Maison Tropicale, Marketing Total S.A, Click Cons Ltd., Wan-Fu China Ltd. and Web Advertising Corp.) that the registrars supposedly used to act as the companies registering the domains. The suit also names Miami-resident Juan Pablo "JP" Vazquez and alleges that he is connected to the companies.
The case was apparently filed in the U.S. District Court for the Souther District of Florida in October, but placed under seal until yesterday. The judge in the case sealed the case while federal marshals seized hard drives and other computer equipment from Vazquez's home on November 9th. The judge also issued a temporary restraining order against the defendants barring them from using the practice of “domain tasting” to make money off of and then deleting any domain names that may infringe upon Dell's trademarks.
“Domain tasting” is cyber-squatting business model that came about because of rules established by Internet Corporation for Assigned Names and Numbers (ICANN) which give registrars up to five days to sample domains before actually having to purchase them. This allows these registrars to basically buy up large numbers of domain names, test (or “taste”) their value through pay-per-click ads on the parked domains, and then give up domain names that do not appear to generate enough traffic to provide any value. By purchasing domain names of commonly misspelled web site names, often including registered trademarks (so called “typosquatting”), the domain registrants can often make money on the misdirected web surfers who opt to click on one of the many6 pay-per-click ads rather than retyping the correct domain name address.
According to Dell, however, the defendants have been combining “typosquatting” with “domain tasting” by setting up a network of registrar companies that continually purchase and give up infringing domain names so that the companies never have to pay for them all while still profiting from them.
The lawsuit cites an example where on May 25, 2007, DomainDoorman registered dellfinacncialservices.com. Five days later, then the register dropped the domain name, the same domain was registered by BelgiumDomains within minutes. Five days later, that company dropped the domain name, only to have it be registered by CapitolDomains. When that company gave it up give days later, the domain was again registered by DomainDoorman. The same approach was done with other such domain names as dellinspirion.com, delloutletcom.com, and dellsuportcenter.com.
What has raised interest in this case, however, is that in addition to the standard trademark infringement causes of action, including cybersquatting cause of action under 15 U.S.C. §1125(d), Dell also alleges counterfeiting against the defendants (i.e., that the typosquatting is effectively a counterfeit of the authentic “trademark holder’s domain name”). While federal law allows a court to award damages up to a maximum of $100,000 per domain against cybersquatters, if the same domains are found to constitute counterfeits, then federal law would allow a court to award damages up to $1 million per violation.
If the defendants actually put up a fight in this case, Dell may have some hefty evidentiary hurdles to overcome and is likely to have to engage in some major discovery efforts to untangle this offshore web of “typosquatting domain tasters.”
As for the counterfeiting claim, the court is likely to grant Dell the injunctive relief it wants based on the trademark infringement and cybersquatting claims alone. Dell will also probably be awarded damages on such claims. Should the judge dismiss this novel cause of action, it will be interesting to see if Dell decides to appeal such a decision – either to make some new law or to get a larger damage award. Of course, one wonders whether it would be worthwhile to fight so hard for an additional $900,000 in damages. After all, winning a judgment is one thing, enforcing it is another -- especially where so much of the activity appears to be based offshore.
Dell is probably better off spending that money on a campaign to force ICAAN to change its rules to prevent “domain tasting” – or to at least put enough of a price tag on such tasting that the business model would not be as profitable.