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.”

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