Focus, Law, and Technology

Be proactive about preventing cybersquatters

Companies can run into all sorts of trouble when those with bad intent attack domain names.

May 23, 2014
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There are several actions companies can take to prevent cybersquatting, but the key is to protect domain names as early as possible. Courtesy Thinkstock

Cybersquatting — the act of registering a domain name with a bad-faith intent — has the potential to ruin a company’s reputation, or at the very least hinder its marketing plans and create unexpected expenses.

John Di Giacomo, an attorney with Revision Legal, said there are two common ways cybersquatting occurs.

The first is similar to what a real estate speculator would do.

Since the beginning of the Internet there has been a group of individuals known as domainers who buy up domain names that contain someone else’s trademark with the purpose of selling them to those companies for a hefty price.

“These people have found they can make a lot of money,” Di Giacomo said.

The second way someone can profit off someone else’s name is by registering a misspelling of a company’s trademark, so that someone looking for the website could easily end up at the wrong site — particularly a competing company’s website.

“If Steelcase were to have a competitor register a typographical misspelling of Steelcase and then divert traffic from their site to another site that sells furniture, that would be a pretty serious competitive concern because they are going to lose revenue,” he explained.

A cybersquatter can profit in several ways from registering a domain name with a typographical misspelling.

“They can display pay-per-click advertisements for competitors of the company that they are cybersquatting on. They can set up an affiliate page, which would send leads to competitors. Or they can forward web traffic to a competitor directly,” Di Giacomo said.

If a company discovers it is the target of a cybersquatter, however, there are a few courses of action that can be taken to retrieve the domain name.

“Some companies affected by cybersquatting may have legal recourse through trademark infringement lawsuits or arbitration,” said Jennifer Puplava, an attorney with Mika Meyers.

“Under the federal Anti-Cybersquatting Consumer Protection Act, owners of a trademark entitled to protection can bring a lawsuit against anyone who, with a bad-faith intent to profit from the goodwill of another’s trademark, registers or uses a domain name that is confusingly similar to a distinctive mark.”

Puplave said there are several factors that are considered in determining whether the required bad-faith intent exists.

Under the ACCPA, a plaintiff can obtain up to $100,000 per domain name plus costs and attorneys fees, said Di Giacomo.

“As an alternative to litigation, arbitration through domain name dispute resolution proceedings instituted by the Internet Corporation of Assigned Names and Numbers may also be available to trademark owners to resolve claims of abusive or bad-faith domain name registration,” Puplava said.

One benefit of going the arbitration route is that it is less costly than bringing a lawsuit under the ACPA, and it can also be resolved in a much quicker fashion.

On the downside, according to Puplava, companies seeking retribution through arbitration cannot recover financial remedies.

While most cybersquatting cases are pretty easy to prove — and therefore easy to resolve — the game changes significantly when international entities are involved.

“Bringing a lawsuit against an international cybersquatter can be difficult because the lawsuit may have to be brought in a remote location,” Puplava said.

“It can also sometimes be difficult to locate and serve the cybersquatter as required under the applicable court rules. Uniform Domain-Name Dispute Resolution arbitration proceedings apply to international domain name disputes and avoid the jurisdictional difficulties involved in a lawsuit.”

Another situation where it might be harder for a company to win back a domain name is when ex-business partners are involved.

“When you have a problem winning a case, it’s typically because it’s an ex-partner and there has been a split in the business, and the partner registered the domain name and he wants to take it with him,” Di Giacomo said. “Those are the more complex cases. We see a lot of those in startups when a partner leaves, and it’s harder to litigate them because, obviously, it’s a more complex factual scenario.”

Di Giacomo said the best offense in these cases is to register the domain name in the name of the business and to obtain trademark rights for its name or its brands at the outset — also under the name of the company.

“That is really the way to handle it,” he said.

Puplava agreed companies can save headaches down the road with a little bit of foresight.

“All companies should take action to protect their names before third parties cause problems. It is far less expensive for a company to preemptively register domain names incorporating their trademarks than it is to later seek legal recourse for cybersquatting.”

She stressed that companies also should register their domain names in all the top-level domains — .com, .net, info, etc. Firms doing business overseas also must consider international domains, such as .asia, which are ripe for international cybersquatters.

Another proactive approach is to register variations of a company’s trademark, such as (companyname)stinks.com.

“Companies should also consider registering their trademarks with the United States Patent and Trademark Office, as federal trademark registrations help brand owners enforce their rights against third parties who are using confusingly similar marks in domain names or otherwise,” Puplava said.

She noted that hundreds of new top-level domains will be made public over the next several years, giving companies an even greater opportunity to expand their domain name portfolios.

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