Cybersquatting: What It Is and What Can Be Done About It

Here's what to do if someone is cybersquatting on the domain name that matches your trademarked business name.

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If you own a trademark and find that someone is holding it hostage as a domain name until you pay a large sum for it, you may be the victim of cybersquatting. Learn what to do if this happens to you.

What Is Cybersquatting?

Cybersquatting is registering, selling or using a domain name with the intent of profiting from the goodwill of someone else's trademark. It generally refers to the practice of buying up domain names that use the names of existing businesses with the intent to sell the names for a profit to those businesses.

The History of Cybersquatting

The practice that's come to be known as cybersquatting originated at a time when most businesses were not savvy about the commercial opportunities on the Internet. Some entrepreneurial souls registered the names of well-known companies as domain names, with the intent of selling the names back to the companies when they finally woke up. Panasonic, Fry's Electronics, Hertz and Avon were among the "victims" of cybersquatters. Opportunities for cybersquatters are rapidly diminishing, because most businesses now know that nailing down domain names is a high priority.

Recognizing Cybersquatting

How do you know if the domain name you want is being used by a cybersquatter? Follow these steps to find out.

Check where the domain name takes you. As a general rule, first check to see if the domain name takes you to a website. If it does not take you to a functioning website, but instead takes you to a site stating "this domain name for sale," or "under construction," or "can't find server," the likelihood increases that you are dealing with a cybersquatter. The absence of a real site may indicate that the domain name owner's only purpose in buying the name is to sell it back to you at a higher price.

Of course, absence of a website does not always mean the presence of a cybersquatter. There may also be an innocent explanation and the domain name owner may have perfectly legitimate plans to have a website in the future.

If the domain takes you to a functioning website that is comprised primarily of advertisements for products or services related to your trademark, you may also have a case of cybersquatting. For example, if your company is well-known for providing audio-visual services and the website you encounter is packed with ads for other company's audio-visual services, the likelihood is very strong that the site is operated by a cybersquatter who is trading off your company's popularity to sell Google ads to your competitors.

If the domain name takes you to a website that appears to be functional, has a reasonable relation to the domain name, but does not compete with your products or services, you probably aren't looking at a case of cybersquatting. For example, if your trademark is "Moby Dick" for fine art dealing with whaling, and the website you encounter (www.mobydick.com) is for road cleaning machines, you do not have a case of cybersquatting. You may, under certain circumstances, have a case of trademark infringement. (For more information, see Nolo's article What to Do If the Domain Name You Want Is Taken.)

Contact the domain name registrant. Before jumping to any conclusions, contact the domain name registrant. To find the name and address of a domain name owner, you can use the "WHOIS Lookup" at whois.net. Find out whether there is a reasonable explanation for the use of the domain name, or if the registrant is willing to sell you the name at a price you are willing to pay.

Pay, if it makes sense. Sometimes, paying the cybersquatter is the best choice. It may cheaper and quicker than filing a lawsuit or initiating an arbitration hearing.

What You Can Do to Fight a Cybersquatter

A victim of cybersquatting in the United States has two options:

  • sue under the provisions of the Anticybersquatting Consumer Protection Act (ACPA), or
  • use an international arbitration system created by the Internet Corporation of Assigned Names and Numbers (ICANN).

Trademark experts consider the ICANN arbitration system to be faster and less expensive than suing under the ACPA, and the procedure does not require an attorney.

Using the ICANN Procedure

In 1999, ICANN adopted and began implementing the Uniform Domain Name Dispute Resolution Policy (UDNDRP), a policy for resolution of domain name disputes. This international policy results in an arbitration of the dispute, not litigation. An action can be brought by any person who complains (referred to by ICANN as the "complainant") that:

  • a domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights
  • the domain name owner has no rights or legitimate interests in the domain name, and
  • the domain name has been registered and is being used in bad faith.

All of these elements must be established in order for the complainant to prevail. If the complainant prevails, the domain name will be canceled or transferred to the complainant. However, financial remedies are not available under the UDNDRP. Information about initiating a complaint is provided at the ICANN website.

Suing Under the ACPA

The Anticybersquatting Consumer Protection Act (ACPA) authorizes a trademark owner to sue an alleged cybersquatter in federal court and obtain a court order transferring the domain name back to the trademark owner. In some cases, the cybersquatter must pay money damages.

In order to stop a cybersquatter, the trademark owner must prove all of the following:

  • the domain name registrant had a bad-faith intent to profit from the trademark
  • the trademark was distinctive at the time the domain name was first registered
  • the domain name is identical or confusingly similar to the trademark, and
  • the trademark qualifies for protection under federal trademark laws -- that is, the trademark is distinctive and its owner was the first to use the trademark in commerce.

Defenses to ACPA lawsuits. If the accused cybersquatter demonstrates that he had a reason to register the domain name other than to sell it back to the trademark owner for a profit, then a court will probably allow him to keep the domain name.

For extensive information on cybersquatting, domain names, and changes to trademark statutes, get Trademark: Legal Care for Your Business & Product Name, by Stephen Elias and Richard Stim (Nolo).

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