The practice of cybersquatting (or "domain name piracy") arose with the exponential commercial growth of the internet, as companies began to recognise the value of domain names. The main area of conflict is between registrants of domain names and those who hold trade mark or other intellectual property rights. The practice involves registering a domain name in bad faith, usually to then sell it on for profit or make profit in other ways. Alternatively, a domain name may be registered with the intention of using a website located at that address to make harmful or defamatory statements about a person or organisation associated with the domain name.
A topical example is in relation to the new Apple product "iPhone". Cybersquatters have registered various domain names incorporating the product name in order to lure people to the website. Rather than containing information on the "iPhone", these websites feature an array of "pay-per-click" advertising links. The cybersquatters make money from users clicking on any of these. This example shows how cybersquatting can be a big problem for businesses. Perpetrators can register many sites quickly and easily, and then fill them with lucrative advertisements. This leads to confusion for consumers and damage to brands, while also diverting potential customers away from genuine company websites.
What Can a Legitimate Trade mark Owner Do About Cybersquatting?
The Internet Corporation for Assigned Names and Numbers (ICANN) has ultimate responsibility for the registration of domain names. The right to use all generic top level domains (gTLDs), that is, .com, .net, .org and other non-country-specific domain names is subject to ICANN's Uniform Domain Name Dispute Resolution Policy (UDRP). Country code top level domains (ccTLDs), such as .co.uk, are delegated to national registries. While ccTLDs are not required to be subject to the UDRP, many national registries in fact use it as their dispute policy. Those who do not use the UDRP will usually have their own policy that is generally similar.
The UDRP requires that in order to challenge a domain name registration, a complaint should be filed with one of the three arbitration providers accredited by ICANN. In order for a complaint to be successful, it must be proven that (i) the domain name is identical or confusingly similar to the complainant's trade mark or service mark; (ii) the domain name holder has no rights or legitimate interests in respect of that domain name; and (iii) the domain name holder has been registered and used in bad faith.
These criteria mean that in clear cases of cybersquatting the complaint will be successful, and in such cases there is a special procedure to resolve the situation through an online process taking less than 57 days. However, there are grey areas, such as where the domain name holder can show that they are legitimately trading with the domain name, when in reality they are only doing so to validate their actions until they can sell the domain name to a larger organisation. Nonetheless, statistical analysis has shown that the Complainant succeeds in challenging the domain name registration in around 80% of cases, and that the UDRP tends to favour trade mark holders and larger organisations.
A trade mark owner may challenge a domain name registration through the court system and can appeal a decision made under the UDRP to the Courts. However, national courts have at times found difficulty in asserting their jurisdiction over issues in "cyberspace". In addition, the UDRP is in general a cheaper and faster way of thwarting cybersquatting.
The best option is to ensure that all domain names you wish to hold are registered promptly. This can be part of an intellectual property strategy which ties domain name and trade mark registrations together. This strategy can prevent cybersquatting to some extent, or at least make it easier to take action against it later if required.
Trade mark owners can also benefit from the existence of "sunrise periods", often lasting more than a month, which are granted when a new domain is introduced. During a "sunrise period" only legitimate trade mark owners may register domain names, and these registrations must be identical to their mark. The "sunrise period" for the new domain .asia will begin on 9 October 2007.