The Evolution of the Cybersquatter

The emergence of the Uniform Dispute Resolution Policy (“UDRP”) and other dispute resolution procedures have made it increasingly difficult for others to make money from traditional forms of cybersquatting. It is much more difficult for a traditional cybersquatter to successfully extort money from a trademark owner in return for a particular domain name. Also, due to greater awareness, most large companies are now proactive in confronting the problem — registering domain names for their company name and any potential products well before they hit the marketplace.
However, the business of cybersquatting continues to be a lucrative source of income for those who wish to defraud consumers. A newer form is “typosquatting,” in which one purchases a domain name that is a variation on a popular domain name with the expectation that the site will get traffic from the original site because of a user’s misspelling of the name. This widespread practice has led to the recent phenomenon of domain name parking services. Parking services generate revenue from links provided at certain web sites. The parking service contracts with both the owners of the domain name and the companies for which links are provided. Obviously, many of these parking services make money from domain names that are owned by typosquatters. These sites generate enough traffic to be profitable due to the carelessness of users when typing URLs.
In this regard, cybersquatters are taking advantage of a five-day grace period to sample millions of domain names, keeping the relative few that might generate advertising revenues and dropping the rest before paying. Spammers and scam artists are also starting to use the grace period as a source of free, disposable Web addresses.
With up to six million names tied up at any given time through a practice known as domain-name “tasting”, individuals and businesses are having even greater difficulty finding good names, particularly in the already-crowded dot-com space. The Internet Corporation for Assigned Names and Numbers (“ICANN”) has for years required operators of major Web suffixes (also called top level domains (“TLD”) like “.com” to refund cancellations within five days. A newer variant, sometimes called “kiting”, involves the same company re-registering the same name every fourth or fifth day to hang onto it in perpetuity, without ever paying for it.
Additionally, those who wish to engage in traditional forms of cybersquatting can still do so, provided they are aware of the obstacles contained in the laws of various countries. For example, as long as one has a legitimate purpose for using a particular domain name, they cannot be considered to be acting in bad faith. Therefore, merely by constructing a fan site (e.g., “I really love SONY”) or a site consisting mainly of free speech (e.g., microsoftsucks.com) one can evade the existing laws in many jurisdictions.
It seems, regardless of the legislation enacted or the obstacles confronted, cybersquatters continue to stay one step ahead of trademark owners.
For more on this topic and other areas of intellectual property law, see TransLegal’s online course “The Legal English of IP Law” at http://www.translegal.com/online-courses/iplaw.