Opening Statement of Rep. James Rogan (R-CA). Hearing: House Courts and Intellectual Property Subcommittee. Re: HR 3028 IH, Trademark Cyberpiracy Prevention Act. Date: October 7, 1999. Source: This document was created by Tech Law Journal by transcribing an audio recording.

Cybersquatting is the deceptive practice of registering a domain, or establishing a web site, containing a trademark name or title owned and registered by another entity with the intent to gain commercial advantage. HR 3028, Trademark Cyberpiracy Prevention Act, amends the Trademark Act of 1946 to provide an explicit trademark remedy for cybersquatting.

Last year Internet businesses and electronic commerce companies generated over 95 Billion Dollars. Industry officials expect this figure to double by next year. With more than 4 Million Internet sites registered today, this problem is becoming more and more frequent, as businesses with a trademark name or title seek to establish a commercial presence on the Internet, only to discovery that their trademarks are frozen, and then later sold to the highest bidder by a cybersquatter."

It is common practice for a cybersquatter to register a brand as an Internet domain name in order to extract payment from the rightful owners of the trademark. The rightful owners are then forced to pay for the right to engage in electronic commerce under their own brand name. In essence, the commerce rich Internet is used as a tool by pirates to extract payments. Misusing well know trademarks is fraudulent and deceptive. Many fake sites derive advertising revenue based on the number of hits the site receives. The images of well know trademarks are intentionally tarnished in the process.

HR 3028 will protect American businesses from unnecessary legal costs, and will promote the growth of electronic commerce by protecting against those who register domain names in an attempt to profit from legitimate trademark owners.

Current law does not expressly prohibit the practice of cyber-squatting. While it is important to foster the low cost access to markets that the Internet represents, and the employment e-commerce firms provide, we must protect legitimate trademark holders and their products.

This legislation specifically prohibits registration, trafficking in, or use of a domain name that is identical to, confusingly similar to, or that dilutes a mark that is distinctive at the time that the domain name is registered. HR 3028 sets a standard for enforcement when a bad faith intent to profit from the good will associated with that mark is shown.

Legislation clarifies the right rights of trademark owners with respect to bad faith, abusive domain name registration practices, and provides clear deterrence to prevent this bad faith conduct. Furthermore, the property interests of trademark owners are balanced with the interests of Internet users. A number of balancing factors are set forth which a court may wish to consider in decided whether the requisite bad faith intent is present. If the court finds bad faith by a domain name holder, trademark owners can seek the forfeiture, cancellation, or transfer of an infringing domain name.

This legislation provides the committee and Congress with the real opportunity to shore up consumer confidence in legitimate brand names, discourage fraudulent electronic commerce, and protect the rights of legitimate trademark owners. HR 3028 strengthens electronic commerce and the legitimate use of Internet. It is time for Congress to act and pass this necessary legislation.

And finally, Mr. Chairman, may I express my personal thanks to the staff of both Mr. Boucher's office and this committee, who worked very closely with us on this.