A recent court case out of New York underscores the importance
of including domain name registration as part of important
corporate strategies, such as in mergers and acquisitions. In late
2008, on the same day that Bank of America Corp. alerted the media
that it had acquired Merrill Lynch & Co, Inc. a cybersquatter
registered the domain names "bofaml.com" and
"mlbofa.com."
In order to gain control of the domain names, Bank of America and
Merrill Lynch filed a complaint under the Uniform Domain Name
Dispute Resolution Policy (UDRP), which is an arbitration
proceeding used to resolve disputes over domain name ownership.
Last spring, the arbitration panel hearing the matter ruled that
the domain names at issue were confusingly similar to Bank of
America's "B of A" trademark, the cybersquatter had
no right or legitimate interest in the domain names, and the
cybersquatter registered and was using the domain names in bad
faith. As a result, the arbitration panel ordered the transfer of
the domain names to Bank of America.
But the cybersquatter did not consider the matter settled and did
not transfer the domain names as ordered. Instead, the
cybersquatter filed suit against Bank of America and Merrill Lynch
in New York federal district court, seeking a declaratory judgment
that his use of the domain names did not violate Bank of
America's and Merrill Lynch's trademark rights. The judge
ultimately ruled in favor of Bank of America and ordered the
offending domain names transferred to Bank of America. The court
cited the cybersquatters' own admissions in his complaint that
he was a "domainer," who acquires high value domain names
and uses them to generate pay-per-click revenue or to build
websites. There was also evidence in the record that the
cybersquatter offered to sell the domain names to Bank of America
suggesting that they were each worth over $1 million. These facts
didn't bode well for the cybersquatter's case.
It remains to be seen whether filing an action in federal court to
prolong control of domain names will become a common strategy for
cybersquatters or whether this was merely one person's unique
approach. In any event, Bank of America and Merrill Lynch could
have saved thousands of dollars simply by registering the domains
in question before announcing the acquisition. Businesses would be
wise to proactively register domain names as part of their
corporate strategies.
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