Executive Summary
-
It is advisable to seek legal advice when dealing with a cybersquatter. A good lawyer will invariably save you time and frustration and will also probably lead you to a better outcome than if you attempt to deal with the problem yourself.
-
Collect as much evidence as you can on the domain name and the website at the domain name.
-
Have a good business strategy in place to minimize the risk of cybersquatting.
-
You can choose whether to take the cybersquatter to court or to arbitration. Each has its own advantages.
Introduction
Cybersquatting is to be distinguished from the business of domaining. Domainers legitimately own a large number of domain names. They use them to earn money from advertising which they place on the pages that people visit and by selling the domains later on. This use of domain names is completely legitimate.
Cybersquatters will also use domains in similar ways to domainers. The main difference between the two is that cybersquatters do not have legitimate claims to the name. Very often they will email a company and tell it that they have a domain name that the company would want and will only transfer that name for a large sum of money.
It is important to avoid responding with angry emails. If the domain is not too important to you, consider waiting awhile. Once the cybersquatter realizes that the domain is not valuable to you, and if the website at the domain doesn’t get many hits, the cybersquatter will probably not renew it. If you decide to wait it out, then register the domain for a snapback service which will automatically purchase the domain name for you when it becomes available.
The “Hotmail” Approach
Many companies, in order to avoid legal costs, will try the “hotmail approach” when they discover that someone owns a domain name they want. They register a fake email account and approach the domain name owner asking to buy the domain name for a small fee. Many times the domain name can be purchased for less than the cost of launching a legal complaint. Be careful when trying this to not reveal who you are at any time nor to tell them what you need the domain name for.
This technique is also best saved for a website that you will not actually use; you do not want the cybersquatter to realize you are paying out for websites as it only encourages them to engage in more of this behaviour. They are likely soon after to register a bunch of domain names similar to your trademark.
If you successfully acquire a domain name in this way it is best to make sure you use a third party as the registrar or use a privacy service. You should probably also use an escrow service for transfer of the money. There have been several cases where money was paid but the domain was never transferred.
However, many domain owners are increasingly becoming aware of this technique, and realize that domain buyers are not who they say they are, or if they are, that they are buying on behalf of another entity. If you are dealing with a knowledgeable domain owner, expect them to be very cautious. They will want to know as much about the potential buyer as possible in order to either maximize the sale or to prevent a UDRP (see “Arbitration” section below) action against them later. Companies are known to use the domainer’s willingness to sell as evidence of bad faith in a UDRP simply because the owner names a price that he would sell at.
Steps for Dealing with Cybersquatters
Dealing with cybersquatters tends to be frustrating, time consuming, and expensive. Often a company that has been trading for years suddenly realizes someone else has a domain name with their company or product name in it.
The first step is to collect evidence, such as a printout of the domain’s website. Keep evidence of any references on the website to you or to your competitors. Also be very careful when approaching a cybersquatter, and keep copies of all communications.
The next step is to check the “whois.” This is a facility that can be used to find out who owns a domain name. Many websites use it to offer this service. Be sure to use a reputable site such as www.domaintools.com. There has been a recent controversy about disreputable whois services that collect information on users or are involved in what is known as domain tasting. In domain tasting, once a domain has been searched, a registration provider will buy the domain name to see if it is lucrative and will return it at the end of the free taster period if it is not.
Do not be surprised if the domain is registered to a fictitious name or if the registrant is using a name shield (discussed below). At this stage it is important to check the date when the domain was registered to the current owner. If they registered the domain name before you began your business, the case is much more difficult to prove, and your options for recourse are more limited.
Legal Recourses
There are many complex legal issues that arise in retrieving domain names through legal channels. It is essential to do some research on the registrant to find out who you are up against. Often, however, you will discover that cybersquatters use false details or a name shield to protect their identity.
A name shield means that the registrant’s name is displayed as “Whois Guard” or similar. This will make it more difficult to determine the identity of the real registrant, but it will not prevent you from getting transfer of the domain names in either court or arbitration.
If the name is not shielded, find out whether there have been previous UDRP proceedings against the owner. Evidence of their having lost previous arbitration proceedings will be useful in your own case since it is evidence of bad faith. Some country-level domains (such as .uk) even have special rules for registrants who have had several decisions made against them, and in such cases the cybersquatter will have a much higher burden of proof to prevent the transfer of the domain.
Lawyers will then write to the owner to state your claims and demand transfer of the domain. If the registrant of the domain is a legitimate domainer they are more likely to agree to settle with you for fear of being labeled a cybersquatter in a judgment. Once lawyers get involved, some cybersquatters even agree to sign an undertaking not to do this again.
When dealing with cybersquatters the rule of thumb is to be prepared for almost anything. One common practice is known as cyberflight where the registrant, soon after being contacted, quickly transfers the domain to another party or another name. If this happens before you have filed your arbitration or lawsuit, then you will generally have to serve another letter on the new registrant unless there is good evidence that it is the same registrant. You can usually tell this by assessing whether the website has changed and whether there have been other changes, such as the website’s server.
Once you file suit in arbitration or court, the domain is locked. However, cyberflight can occur during the time lapse between your filing suit and the domain name being locked. If it occurs during this period, you will probably be able to amend the complaint rather than having to start from scratch, because courts or tribunals tend to regard the complaint as having the same registrant.
Benefits of Litigation
One of the benefits of litigation is that there a large number of remedies available, including damages. It is also possible to get an undertaking from the squatter not to register any names in the future which infringe against your trademark rights. Additionally, in these types of cases cybersquatters often have to pay damages and legal fees in addition to transferring the domains.
Arbitration
The UDRP stands for the Uniform Domain-Name Dispute-Resolution Policy and is used for disputes over all top-level domain names (.com, .net, etc.) Country-level domain names like .us or .uk are governed by very similar policies.
Two of the benefits of arbitration over litigation are that it is generally cheaper and faster. The filing fees are lower, and you will not need to go to the expense of having a trial. To win in this type of arbitration you will need to prove three elements—that you have prior rights in the name; that the owner does not have rights in the name; and that the domain name was registered and is being used in bad faith.
The main limitation of the UDRP is that you only will be awarded transfer of the domain name. The tribunal does not have the power to award any money, so you will not get any damages or legal costs.
However, transfer of the domain may be all you can realistically achieve. This is especially true in cases where the registrant is based in a jurisdiction that is out of your reach for enforcement of court orders or is using a cloaked identity. Service of process under domain name arbitration requires only proof that you tried to contact the registrant using their whois details.
Case Study
Microsoft
Cybersquatting was becoming a serious problem for Microsoft, so in 2006 it launched legal actions against a number of cybersquatters in the United States and the United Kingdom. It publicly denounced the typosquatters who had registered slight variants of its brand and had been earning money from adverts which they placed on the pages that people mistakenly visited.
In the United States, Microsoft filed six lawsuits against typo-squatters and settled with an untold number. One of these lawsuits was to reveal the identities of 54 domain name owners. In the end, it was able to recover thousands of domain names and an untold amount of damages. In one case in California, Microsoft was awarded $1 million in damages in a case against a cybersquatter who had registered 85 infringing domain names. Microsoft was also successful in the United Kingdom where it launched five legal actions which allowed it to recover over 6,000 domain names.
It hopes to take further action in other countries against other cybersquatters. Aaron Kornblum, senior attorney for Microsoft, said “We hope that our stance and activity on this issue will help motivate and empower other companies whose brands are abused to take action.”
Conclusion
Dealing with cybersquatting can be difficult. It is best to develop a long-term strategy for dealing with cybersquatting as well as other internet infringements.
Making It Happen
Cybersquatting is a complex area of law, so it is generally best to seek legal advice rather than attempting to deal with the problem on your own.
-
Prevention is one of the most important steps in the fight against cybersquatting. Securing top-level and country-level domain names for the territories in which you trade or intend to trade reduces the risk of cybersquatter problems.
-
Another preventative step is to have a good administrative domain management system in place to ensure that domains are renewed on time.
-
A distinctive name helps a lot. Generic brand names like “Apple” inevitably mean that cybersquatters and other legitimate domain name owners will be able to claim rights in brand names you may regard as more rightfully yours.
-
Make sure your brand is adequately protected on the internet by registering trademarks and seeking legal advice on internet law and copyright.
www.qfinance.com