$33 Million in Cybersquatting Case — Verizon Wins

Verizon wins default judgment against top 15 domain registrar.

Clients of OnlineNic, Inc., a top 15 domain registrar with over 1,000,000 domains registered, ought to be concerned regarding the state of the registrar following a judge ordered the firm to pay $33 million to Verizon (NYSE: VZ).

A judge entered the default judgment of $50,000 for each of the 663 domain names OnlineNic owned that allegedly infringed Verizon’s trademarks. OnlineNic didn’t respond to the lawsuit, which was filed back in June.

Verizon has lodged a number of trademark lawsuits, counting against Houston based iREIT (which it settled) and Navigation Catalyst (which was also settled). Verizon is also a member of Coalition Against Domain Name Abuse (CADNA).

Although aggressive itself in filing domain name trademark suits, Verizon and other CADNA members seem to be hypocritical as they use “error services” to show ads on typo domains. In fact, Navigation Catalyst counter-sued based on this error service. It appears that the countersuit may have helped Navigation Catalyst, as it settlement basically states that it can no longer cybersquat on Verizon’s trademarks. Perhaps Verizon didn’t want to deal with the embarrassment of its typo redirect service.

This case brings up an notable question and a reminder.

First, what non-financial penalty could a registrar face for participating in cybersquatting? I assume the $33 million judgment, if ever collected, would doom OnlineNic. But what role and under what timeline ought to ICANN step in to protect clients of OnlineNic?

Second, this case ought to serve as a stark reminder to trademark infringers that they have more to lose than just a UDRP. They can lose up to $100,000 per infringing domain under the Lanham Act.