Verizon enjoyed an early Christmas present when it was awarded a $33.15 million default judgment against a company it sued for “cybersquatting.”

The judgment, announced on Dec. 24, is believed by Verizon and other observers to be the largest to date for abusing trademarks on the Internet. The telecommunications giant accused the defendant, OnlineNIC Inc., of unlawfully registering 663 domain names that misused Verizon trademarks to divert people looking for Verizon Web sites. Verizon v. OnlineNIC, No 5:2008cv02832 (N.D. Calif.).

“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’s vice president and associate general counsel.

OnlineNIC, which did not appear in court, could not be reached for comment.

Sanford E. Warren, a partner in the intellectual property practice of Akin Gump Strauss Hauer & Feld in Dallas, said that the judgment is among the largest he knows of. Typically in these cases, Warren said, winning the case is one thing and collecting another. In dozen or more cybersquatting cases that he has handled, simply finding the defendant, who can be located anywhere in the world where there is access to the Internet, was a challenge.

“Finding the right company, the right person and the right server is often hard to do. When you can do it, great,” Warren said. “Usually, companies aren’t even looking for money. They just want their trademark protected. It is rare to get any money.”

The federal Anticybersquatting Consumer Protection Act, passed in the early days of the Internet, prohibits people from registering Internet domain names of trademarked products and companies, and then demanding payment for use of the domain name, Warren said.

“What the law was originally trying to stop doesn’t happen very much any more, but there are still all sorts of scams on the Internet,” he said. “What legitimate companies are doing is going after entities that are infringing their trademark to steer people to their Web site. It looks like that is exactly what [OnlineNIC] was doing with Verizon’s trademark.”

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