Cybersquatting, aka domain squatting

Cybersquatting comes in many forms and involves buying up website addresses, or domain names, that sound very similar to existing well-known brand names.

The exponential boom of e-commerce over the last 20 years (Amazon was founded in 1994 and eBay came a year later) has brought about two significant developments; firstly, the importance of domain names and secondly, the practice of cybersquatting.

It is widely accepted that owning a domain name identical to one’s company’s name or trademark is essential for branding and significantly enhances a business’ ability to connect and interact with customers and clients. For some companies it is crucial that they own and control their online namesake no matter the costs; losing that domain name may actually mean going out of business.

Tech-savvy individuals then realized that they could capitalize on the first-come, first-served domain name registration policy and as a result, cybersquatting was born.

What is cybersquatting?

Cybersquatting refers to the practice of registering domain names consisting of trademarks, company names or names of individuals, especially celebrities, with the sole purpose of making a profit by selling them to the actual owners or their competitors at extortionate prices.

This practice is also known as one form of ‘domain flipping’, where batches of domain names would quickly be registered in the hopes of making a quick buck by reselling them.

In its Final Report of the First WIPO Internet Domain Name Process, the World Intellectual Property Organization (WIPO) referred to cybersquatting as the ‘abusive registration of domain names that violate trademark rights’.

A classic example of cybersquatting in practice can be seen in the case of Computer Associates International Inc & Anor v Horvath & Anor ([2001] EWCA Civ 1086), where the respondents made the following offer to the complainants to sell a domain name in their possession:

“I am writing regarding the computer-associates.com domain names …I now intend to start using the domain name computer-associates.co.uk initially. Computer Associates are welcome to contact me with a view to use the pages to advertise their products. I am also considering making a similar offer to offer [sic] software suppliers…”

Creative cybersquatting

As more and more ways to exploit the system have gradually been uncovered, it has become apparent that the current trend has moved away from classic cybersquatting to more creative methods.

Instead of acquiring domain names solely for purposes of reselling them, registered domain names are also used to divert visitors to other websites, preventing them from landing on websites they originally intended to visit.

Domain names may also be registered and subsequently shelved without intention of being used to operate active websites while at the same time generating revenue by advertising. This method is also known as ‘domain parking’.

There is also the practice of ‘typosquatting’, where domain names are registered using several spelling variations. Typosquatters typically rely on common typing errors made by internet users while keying in a domain name to obtain or divert web traffic.

Cybersquatters also utilize methods such as registering domain names that comprise the targeted trademark/name together other words or terms, some generic, descriptive or even meaningless in order to make them appear unique, and may include strategic uses of punctuations and/or abbreviations at the beginning or end of the domain name.

Yet another technique employed by cybersquatters include registering domain names containing trademarks using either a ‘.sucks’ top-level domain or the suffix ‘sucks’ or other pejorative terms added to the end of the domain name. While some of these domain names are used to create legitimate ‘gripe sites’ established to criticize individuals or institutions, most of these domain names are registered in bad faith.

The future

Cybersquatting, though undesirable, is inevitable due to the very nature of the internet. While the Uniform Dispute Resolution Policy (UDRP) established and administered by WIPO and the Internet Corporation for Assigned Names and Numbers (ICANN) has, to a certain extent, been successful in tackling and reducing the number of cybersquatting cases, it may be argued that this is insufficient when it comes to dealing with cases that fall outside the practice of classic cybersquatting.

Specifically, trademark owners may find it relatively difficult to assert their rights involving domain names that consist of generic and/or pejorative terms. At the current rate, all the signs are that the jurisprudence of cases involving domain name disputes will continue to grow steadily as new top-level domain extensions are introduced, making it a challenge for drafters of future versions of the UDRP.