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Land Casinos prepare to fight for "Cybersquatting"
Monday, July 22, 2002
Las Vegas Review-Journal
WORLD WIDE WEB: Casinos fight cybersquatters
Gambling officials worry improper trademark use could ruin customer goodwill
By TONY BATT
STEPHENS WASHINGTON BUREAU
WASHINGTON -- Three years after Congress enacted a law to curtail the unauthorized use of a company's brand name on Internet sites, the practice of "cybersquatting" continues to be a growing problem for casinos.
Cybersquatting is the unauthorized online use of a business trademark in an Internet domain name. Gambling cybersquatters may operate games under an established casino's trademark or they may use the trademark to lure customers who are then transferred to other gambling Web sites.
Gambling analysts estimate 35 percent of Internet casinos either cheat by fixing their games or refuse to make payouts to winners.
This concerns officials from brick-and-mortar casinos, who worry that the improper use of their trademarks could destroy the goodwill developed with customers over several years.
"In the last three years, on behalf of various publicly traded casino corporations, we probably have filed more than 30 cybersquatting actions," said Mark Tratos, whose Las Vegas firm Quirk & Tratos represents MGM Mirage, Mandalay Bay and Boyd Gaming, among others.
The Anticybersquatting Consumer Protection Act of 1999 allows companies whose trademarks are being exploited to seek civil damages up to $100,000.
"The Anticybersquatting Consumer Protection Act is one of the important tools for protecting casino trademarks on the Internet," said Alan Fisch, a gambling patent attorney for the Washington, D.C., firm Simon Arnold & White.
In addition to a $100,000 penalty, the federal law authorizes cancellation of the domain name used by the cybersquatter.
If these sanctions prove an insufficient deterrent, exploited casinos can pursue remedies of traditional federal trademark infringement laws, which permit open-ended damage awards.
Although cybersquatting remains a problem for all businesses, casinos are particularly vulnerable.
Several American casinos operate Web sites, but none of them offer gambling yet. The cybersquatters who use an established casino's brand name are likely to be located offshore, outside the jurisdiction of U.S. law.
Although some offshore Internet gambling operators are licensed, the regulatory standards are usually minimal.
About 1,400 offshore web sites are projected to generate $5 billion in revenues next year, a study by Bear, Stearns & Co, a Wall Street investment firm, shows.
Last month, a House panel passed a sweeping Internet gambling ban. But even if that legislation becomes law, it would do little to prevent cybersquatting, Tratos said. The potential remains for a widespread cybersquatting scandal that could taint the entire gambling industry.
"I would like to tell you all would be perfectly fine if (Internet gambling) had government regulation or oversight with only licensed operators, but the problem is that there will always be unauthorized operators who are not licensed," Tratos said.
"The entire gaming industry is being diminished by virtue of the unregulated play," Tratos said. "Every year, more and more (internet gambling) companies don't pay off (winners) or pay false ratios."
In June, the Isle of Capri Casinos, Inc. of Biloxi, Miss., sued a man for allegedly operating a gambling Web site under the company's name without authorization. In this case, the defendant, David Brown, lives near the casino, not offshore. Brown could not be reached for comment.
Not only could the Web site hurt the company's reputation, the lawsuit alleged, but Isle of Capri could be prosecuted by the federal government.
The Department of Justice presently considers Internet casinos a violation of the Interstate Wire Act of 1961, Fisch said. The wire act prohibits use of the telephone to place bets across state lines.
"Thus, the Isle of Capri trademark could become tarnished in the minds of consumers, potential investors and even prosecutors because of the erroneous but understandable assumption that it is operating an Internet casino and thereby committing a federal crime," the lawsuit said.
Tratos said the Isle of Capri case is not unusual.
"At any given time," he said. "We have more than a dozen cyber squatting cases going on where these valuable trademarks are being misused."
Las Vegas Review-Journal
WORLD WIDE WEB: Casinos fight cybersquatters
Gambling officials worry improper trademark use could ruin customer goodwill
By TONY BATT
STEPHENS WASHINGTON BUREAU
WASHINGTON -- Three years after Congress enacted a law to curtail the unauthorized use of a company's brand name on Internet sites, the practice of "cybersquatting" continues to be a growing problem for casinos.
Cybersquatting is the unauthorized online use of a business trademark in an Internet domain name. Gambling cybersquatters may operate games under an established casino's trademark or they may use the trademark to lure customers who are then transferred to other gambling Web sites.
Gambling analysts estimate 35 percent of Internet casinos either cheat by fixing their games or refuse to make payouts to winners.
This concerns officials from brick-and-mortar casinos, who worry that the improper use of their trademarks could destroy the goodwill developed with customers over several years.
"In the last three years, on behalf of various publicly traded casino corporations, we probably have filed more than 30 cybersquatting actions," said Mark Tratos, whose Las Vegas firm Quirk & Tratos represents MGM Mirage, Mandalay Bay and Boyd Gaming, among others.
The Anticybersquatting Consumer Protection Act of 1999 allows companies whose trademarks are being exploited to seek civil damages up to $100,000.
"The Anticybersquatting Consumer Protection Act is one of the important tools for protecting casino trademarks on the Internet," said Alan Fisch, a gambling patent attorney for the Washington, D.C., firm Simon Arnold & White.
In addition to a $100,000 penalty, the federal law authorizes cancellation of the domain name used by the cybersquatter.
If these sanctions prove an insufficient deterrent, exploited casinos can pursue remedies of traditional federal trademark infringement laws, which permit open-ended damage awards.
Although cybersquatting remains a problem for all businesses, casinos are particularly vulnerable.
Several American casinos operate Web sites, but none of them offer gambling yet. The cybersquatters who use an established casino's brand name are likely to be located offshore, outside the jurisdiction of U.S. law.
Although some offshore Internet gambling operators are licensed, the regulatory standards are usually minimal.
About 1,400 offshore web sites are projected to generate $5 billion in revenues next year, a study by Bear, Stearns & Co, a Wall Street investment firm, shows.
Last month, a House panel passed a sweeping Internet gambling ban. But even if that legislation becomes law, it would do little to prevent cybersquatting, Tratos said. The potential remains for a widespread cybersquatting scandal that could taint the entire gambling industry.
"I would like to tell you all would be perfectly fine if (Internet gambling) had government regulation or oversight with only licensed operators, but the problem is that there will always be unauthorized operators who are not licensed," Tratos said.
"The entire gaming industry is being diminished by virtue of the unregulated play," Tratos said. "Every year, more and more (internet gambling) companies don't pay off (winners) or pay false ratios."
In June, the Isle of Capri Casinos, Inc. of Biloxi, Miss., sued a man for allegedly operating a gambling Web site under the company's name without authorization. In this case, the defendant, David Brown, lives near the casino, not offshore. Brown could not be reached for comment.
Not only could the Web site hurt the company's reputation, the lawsuit alleged, but Isle of Capri could be prosecuted by the federal government.
The Department of Justice presently considers Internet casinos a violation of the Interstate Wire Act of 1961, Fisch said. The wire act prohibits use of the telephone to place bets across state lines.
"Thus, the Isle of Capri trademark could become tarnished in the minds of consumers, potential investors and even prosecutors because of the erroneous but understandable assumption that it is operating an Internet casino and thereby committing a federal crime," the lawsuit said.
Tratos said the Isle of Capri case is not unusual.
"At any given time," he said. "We have more than a dozen cyber squatting cases going on where these valuable trademarks are being misused."
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