Executive Summary
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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.
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Collect as much evidence as you can on the domain name and the website at the domain name.
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Have a good business strategy in place to minimize the risk of cybersquatting.
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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 behavior. 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.
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