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Internet Cybersquatting: Definition and Remedies

One type of crime small business owners seldom consider when setting up their business website is cybersquatting. Cybersquatting, also called domain squatting, involves using the domain name of an established business to lead users away from the legitimate company and to the squatter's site. The squatter can also take the domain name hostage and force the owner to pay to get it back.

Cybersquatting is a serious problem for large businesses, but as e-commerce becomes more popular, it can affect smaller companies too. Cybercriminals always look for ways to make money, and cybersquatting is profitable.

Types of Cybersquatting

The Anti-Cybersquatting Consumer Protection Act (ACPA) is an amendment to the Lanham Act. Cybersquatting is a subset of trademark infringement according to U.S. law. In legal terms, cyberthieves attempt to confuse buyers about the identity of the product or business with bad faith intent.

The ACPA defines cybersquatting as the registration, sale, or use of a domain name that is identical or confusingly similar to another registered trademark or service mark, with the bad faith intent of profiting from the confusion. Most cybersquatting cases fall into four basic categories:

  • Typosquatting or URL hijacking: This means registering a URL similar to a real address but with a typographical error. The squatter counts on users typing the wrong address into the browser header. Typosquatters may go so far as to create fake websites for users to land on.
  • Identity theft: Unrelated to the credit card theft of the same name, this type of theft involves waiting for domain names to expire and then buying them. Domain name purchasers often don't realize they must renew the names periodically. Cybersquatters track desired names, sometimes with special tracking software, and are ready to buy and register them as soon as they expire.
  • Name jacking: This is stealing the personal names of celebrities. The ACPA has strict trademark protections for famous names, so this has declined in recent years.
  • Reverse cybersquatting: This occurs when a legitimate business owns a domain name another company wants. The company that wants the name may exert legal and other kinds of pressure to convince the owner to transfer the name to them. These attempts may be unfair business practices.

Preventing Cybersquatters

The Internet Corporation for Assigned Names and Numbers (ICANN) is the recognized domain name and URL dispute arbiter. ICANN monitors domain names and extensions and assigns unique identifiers (DNS) to each name. Most users recognize the common domain extensions, such as .com, .org, and .gov. With the rapid growth of e-commerce, .com domain names grew scarce.

ICANN resolved this by creating generic top-level domain names (gTLDs). Users can now have a domain extension like .news or .spa. In one way, this helped ease the domain name scarcity. In another, it created a boom for cybersquatters. For instance, .porn is available as an extension, leading to a rush of celebrities battling to keep their names from becoming X-rated internet sites.

Small businesses are more likely to be defendants rather than complainants in a cybersquatter case. It is more probable that a larger company will find your domain name and believe you took it from them or want yours and pull a reverse domain attack on your business. Your best protection is following the ICANN guidelines for acquiring and keeping a domain name, which are:

  • Research: Research your internet domain name on a registrar site or via ICANN's Lookup tool. This is the best way to confirm nobody else has claimed your name.
  • Register: Register your domain in either your own name or the name of your business. Registering a domain name does not mean you own it. If you register through a developer site, they may register your domain in their name so they can renew it for you every year. That's convenient for both of you, but it means that in a legal sense, you have no rights to the name.
  • Update: Keep your contact information up to date. Your registrar must contact you and remind you when your domain name is about to expire. If your phone number has changed or your email address is not current, they may assume you have abandoned your domain and transfer it.
  • Trademark: See if you can trademark your domain name. A trademark must be unique and used to identify your business or service. You may have better luck if your domain name is already part of your brand name or company slogan.

Having a domain name and updating your site are the best ways to avoid squatters and scammers. Acting in good faith when registering your name and trademarking your brand will keep you ahead of domain trolls who buy up expired domains and try to sell them back to the owners. 

Despite your best efforts, your domain name can still end up being cybersquatted. What should you do if you find someone has stolen your domain or is claiming you stole theirs?

ICANN and ACPA Cybersquatter Eviction Process

ICANN-accredited registrars must follow the Uniform Domain Name Dispute Resolution Policy (UDRP) when there is a domain name dispute. ICANN prefers arbitration over expensive and time-consuming litigation. Under the UDRP, anyone can bring a claim for domain name infringement if they can show:

  • The owner has no rights or legitimate interest in the domain name
  • The name in question is identical to or similar enough to a trade or service mark owned by the claimant to cause confusion among consumers, like a trademark infringement action
  • The domain name was registered in bad faith

If the claimant can show all these factors during arbitration, they win. ICANN policy will award the winner the domain name. It does not grant monetary damages.

The advantages to ICANN's process are the speed and low cost. All the claimant wants is the name itself. These issues are often brought up early in the domain name system when two developers or companies claim the same name almost simultaneously.

The ACPA lets trademark owners sue alleged cybersquatters in federal court. If the domain name owner wins, the judge issues a court order requiring the transfer of the domain name and sometimes monetary damages. In an ACPA case, the plaintiff must show:

  • The trademark was registered and unique when the domain name was registered
  • The cybersquatter had a bad-faith intent to profit from the known trademark
  • The registered domain name is identical to or similar enough to the actual trademark to cause confusion among consumers
  • The existing trademark is protected by federal trademark law

The defendant can prevail in an ACPA case by showing they had a good-faith reason to register the domain other than exploiting the goodwill associated with the trademark or other unlawful purposes.

The World Intellectual Property Organization (WIPO), a branch of the United Nations, handles international claims. WIPO follows the same arbitration policy as ICANN.

Legal Protection From Cybersquatters

If you're a victim of cybersquatting or the target of a reverse cybersquatting scam, you need legal advice immediately. Talk to a business and commercial law attorney in your area for assistance on how to proceed with legal action and protect your company.

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