RealTime IT News

FTC Wants To End Cupcake Party

The U.S. Federal Trade Commission is looking to do what international domain dispute arbitrators and the U.S. legal system has failed to do: stop one of the Internet's most notorious cybersquatters, John Zuccarini.

Zuccarini is accused of registering more than 5,500 domain names that are spelled almost like the names of popular companies like Yahoo!, Abercrombie & Fitch and Budget Car Rental, and using them to generate millions in advertising revenues.

The FTC is looking to shut down the cybersquatter's business and return all the money he's made in his "ill-gotten gains."

Timothy Muris, FTC chairman, said Zuccarini's actions must be curtailed, and filed a temporary restraining order with the Eastern district of the Pennsylvania U.S. District Court Sept. 25 to put a stop to any further activity.

"In addition to violating the trademark rights of legitimate Website owners, the defendant may have placed employees in peril by exposing them to sexually explicit sites and gambling sites on the job, in violation of company policies," Muris said. "With more than 63 previous law suits against him for the identical practices, we believe the court will shut down the defendant's schemes permanently."

The restraining order was filed in Pennsylvania because Zuccarini lists an address in the state as his legal residence, although he has avoided court summons and the like in the past by actually residing in other states. He runs his operations out of holding companies with names like The Country Walk, RaveClub Berlin and JZDesign. But his most famous holdings run under more than 22 variations of the world "cupcake," like Cupcake Party, Cupcake Patrol and Cupcake Messenger.

While many Internet users haven't heard of the name Zuccarini before, they've probably run into his handiwork. Running a script on the site of domain that is maybe one letter removed from the correct spelling, like www.aolinstentmessaging.com, the cybersquatter has been able to reap between $800,000 and $1 million in yearly revenues from advertising popups that barrage the user's Web browser.

How it works is this: the user types in the wrong name of the domain they are looking for. A bogus Web site, which looks almost like the site they are trying to visit, pops up. But at the same time, 30 or 35 advertisements also make an appearance, forcing visitors to wade through a veritable blizzard of popup advertisments.

What's more, it is nearly impossible to go back to the previous page to retype the correct domain name or close out the windows. In many cases, invisible browser panes are activated which keep track of the time so future ad launches are generated, forcing consumers to restart their computer to avoid the annoying loop of ads.

Called "mousetrapping," Zuccarini gets about five cents (or whatever the going rate is for an advertisement's page view) for every page view generated using this ploy and has been doing it for years, to the consternation of the court system and international organizations like the Internet Corporation for Assigned Names and Numbers.

"Schemes that capture consumers and hold them at sites against their will while exposing Internet users, including children, to solicitations for gambling, psychics, lotteries, and pornography must be stopped," Muris said.

But saying one thing and doing the other have been very difficult to date. Zuccarini has been able to use loopholes in U.S. anti-cybersquatting legislation and ICANN's Uniform Domain Resolution Process (UDRP) to get away with his schemes.

Last year, Zuccarini and his holding companies lost more than 100 domain names to legitimate companies who filed for domain name mediation and arbitration. Yahoo! alone had 50 domain name "sound-alikes" (like www.yahompas.com, www.yahoomessinger.com) transferred away from Zuccarini, but that doesn't stop him from coming back with others that are similar. He's also been sued no less than 63 times in the past two years.

Under current law, there's no way to stop Zuccarini from going out and registering names at a registrar even if he loses every single lawsuit brought against him. Current legislation, like the anti-cybersquatting bills that passed both the House and Senate in 1999, doesn't forbid repeat violators from registering domain names in the future.

An official at one of the four accredited domain name mediators, the World Intellectual Property Organization, who didn't want to be named, said there's no measure in place that allows them to notify registrars of cybersquatters.

Each case is brought up on a case-by-case basis, so that the integrity of the resolution process is kept. Companies can lump together trademark violations under one complaint, but separate trademark owners can't band together to file against the suspected violator.

Nothing, he said, stops a person like Zuccarini from coming back the next day and registering other domain names.

FTC officials say that any consumer who has information about Zuccarini or feels they've been victimized by the cybersquatter are encouraged to call 1 (800) FTC-HELP and reference the case name, "Cupcake Party."