Cybersquatting 101

When starting a new venture, the first thing most business owners look for is a domain name to best match their brand, product, or service. In the late 1990s, when the worldwide web was just beginning to take shape, most name-specific URLs were still available, and the process was relatively simple. But these days, finding the perfect domain name can be challenging at best … sometimes even impossible. Despite the introduction of more and more domain extensions like .info, .biz, and .me, most new companies struggle to find a suitable URL to meet their needs because so many have already been registered.

Often, these “reserved” domains are owned by people and/or businesses who have yet to actually build a website. They are, in effect, just parked web addresses without any content. In such instances, they can often be purchased either directly from the current owner, or with the help of a domain broker. Unfortunately, in more extreme cases, domains are purchased and held indefinitely by internet squatters seeking a profit. This practice is called “cybersquatting,” and it’s a legal problem that’s grown significantly in recent years.

With cybersquatting, domain names are purchased with the intent of reselling them at a premium price – either to the current trademark holder or to the highest bidder at auction. The domain names don’t even need to be an exact match to a company or brand name – in some cases, alternative spellings are sufficient to cause trademark complications. The alternate versions are typically used to pull traffic away from the “true” website to improve ad revenue, or to intentionally damage a personal/brand reputation. In these instances, there is clearly a legal issue. Free enterprise is one thing, trademark dilution through deception is quite another.

If you own a trademark and find that someone is holding the exact match URL hostage unless or until you pay an exorbitant fee for it, you are likely the victim of cybersquatting. However, a 1999 Federal Law known as the Anti-Cybersquatting Consumer Protection Act may help your case. Under this law, cybersquatting means registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else.

The bottom line is this: if you are the victim of cybersquatting, there are legal remedies available. Either way will cost you money, but defending your legitimate trademark rights will probably cost less than paying ransom to a cybersquatter. In addition to strengthening your intellectual property claims, by pursuing legal action you can secure your domain name, and possibly damages.

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