Cybersquatters, Beware

A recent decision from a federal court in Chicago highlights both the practice of "cybersquatting" and the effect that the Internet is having on litigation.

A cybersquatter either takes the name of a website that the owner forgot to re-register or sets up a website with a name that is very similar to the name of some other website. The cybersquatter then either extorts a payment from the company that wants to legitimately use the site that it has taken or it tries to confuse consumers who accidentally go to the similarly named site.

The case involved the second kind of cybersquatting, with a Chicago inventory auction company suing web-hosting company GoDaddy, claiming that GoDaddy had registered domain names (such as UBID.com) similar to the one that it used (uBID.com), and then used consumer confusion to sell advertising that would run on those similar websites. GoDaddy responded by claiming that it was an Arizona company and that courts in Illinois had no jurisdiction over claims brought against it.

The trial court agreed with GoDaddy, but the appellate court reversed the decision and ruled that GoDaddy could be sued in Illinois. The court noted that GoDaddy had "thoroughly, deliberately, and successfully exploited the Illinois market" with a national advertising campaign, and it rejected GoDaddy's claims that Illinois, as one market among many, was "of no particular interest to it."

Finding it a reasonable quid pro quo to require GoDaddy to come to Illinois to defend claims against it when it had reached and profited from so many Illinois residents, the court ordered the case sent back for trial.

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