Verizon unlikely to receive any cash despite winning $33.2 million in cybersquatting suit

Verizon Communications Inc. said it has been awarded $33.2 million in a "cybersquatting" case against a San Francisco company that registered Internet domain names purposely similar to the telecommunications giant's trademarks (See: Verizon's dogged chase of faceless cyber squatters nets $33.2 million) 

Verizon, however, may not see any money, as the registrar, OnlineNIC, never appeared in federal court for the Northern District of California to defend itself. Some of the domain names mentioned are verizononline.com, myverizonwireless.com, 123verizonphones.com, accountverizonwireless.com, and iphoneverizonplans.com. The fake Verizon sites hosted ad links and pop-under advertisements that resulted in revenue for OnlineNIC.

Each of the 633 domains registered by OnlineNic received a default judgment of $50,000 as well as an order to deliver to Verizon not only the funds for the lawsuit but each of the identical or similar domain names. Verizon was originally seeking $66.3 million in damages for the confusing domain names.

"This case should send a clear message and serve to deter cybersquatters who continue to run businesses for the primary purpose of misleading consumers," said Sarah Deutsch, Verizon associate general counsel. "Verizon intends to continue to take all steps necessary to protect our brand and consumers from Internet frauds and abuses."

Verizon claims that OnlineNIC conceals its owners' true identities and involvement by using numerous shell entities, fictitious businesses, and personal names for ICANN registration.

The firm also allegedly deletes infringing domains within five days and then re-registers to avoid paying registration costs and to avoid detection by trademark owners.

OnlineNIC claims to be based in San Francisco, although its website offers an Oakland, California mailing address. Court filings show that Verizon was unable to find a correct mailing address for any OnlineNIC employees at which to serve the court summons.

Other companies may also demand their pounds of flesh, considering that OnlineNic as currently owns more than 900,000 domain names that are eerily similar to those of companies such as Adidas, MySpace, Google, Wal-Mart Stores and Yahoo.

Complaints about cybersquatting - or setting up a Web site using a trademarked name and then profiting by selling the name to the trademark owner - surged to a record in 2007, according to World Intellectual Property Organization, a watchdog group.

Anyone can register domain names for a nominal fee, but cybersquatters claim popular domain names with the intention of selling them at a profit when the real owners of the wake up to the potential of the Internet. More recently, Internet entrepreneurs have set up Web sites using famous names - or even versions with typos in them - and setting up per-click ads leading to the entity's official site.

The practice was barred in the US in 1999. After declining for several years, incidents began to rise in 2004 and have been climbing in recent years.