Domain Squatting
(Last Updated On: November 29, 2018)

While the term “domain squatting” may prompt thoughts of activists and good fighting evil, this is not the reality in the vast majority of cases. This is an industry which is literally worth millions of dollars per year. In simple terms, it is the purchase of a domain name with the intention of benefiting in some way from an existing domain or business of a similar name. When challenging domain squatters this can lead to very complicated legal cases and significant expenses.

You should monitor your websites on a regular basis, searching the likes of Google, keeping a close eye on traffic numbers and statistics and even feedback on the Internet. At the first sign of trouble you need to take action!

 

Defining domain squatting

The acquisition of a domain name in “bad faith” is the legal description of domain squatting. This we define as:

Attempting to block a trademark owner from acquiring a domain name

If you are acquiring a similar domain name, maybe with a different TLD (top-level domain), simply as a means of blocking the acquisition by a third party, this can be seen as “bad faith”. There might be a variety of different reasons why you would utilise this strategy. Still, proceed with caution because it can be difficult to justify in a court of law, especially where trademarks are involved.

 

Attempting to attract customers from a competing business using a similar domain name

The best way to describe this definition is “deception”. The idea is purely and simply to confuse customers who may think they are visiting the “real” website. Morally and legally there are many questions unanswered by those undertaking this strategy.

 

Registering a domain name with the sole intention of selling to a competitor at a profit

There is a difference between domain name trading and domain name squatting. When looking at the issue of selling to a competitor for a profit, this is deemed “bad faith” . Why? Well, this owner intentionally plans to benefit from the reputation of a third party. In effect you would be paying a price based on the success of the real domain name!

 

A means of disrupting the marketplace for an individual’s business

Acquiring a domain name simply out of malice and looking to disrupt the marketplace for an established business is food and drink to the legal profession. In many ways domain squatting is more directly related to the reason why the domain name was acquired as opposed to the actual acquisition. In theory, if a domain has not been registered then anyone can acquire it. Whether there are legal repercussions is a whole different matter.

 

How lucrative is domain squatting?

Perhaps the best way to demonstrate the potential riches that domain squatting can attract is to take a look at a now infamous case in the UK. This involved UK supermarket giant Tesco v Elogicom and an affiliate program offering dietary advice. TradeDoubler operated the affiliates program and allowed third parties to sign up to the Tesco Diet program and use their unique links to promote this. These links directed traffic towards the official Tesco Diet website where customers could sign up for dietary advice. Each sale was tracked, with the referring affiliate partner paid a pre-agreed commission.

In this instance, Elogicom acquired a range of Tesco related domains one of which was www.tescodiets.com. Using the TradeDoubler affiliate links the company simply redirected all traffic from www.tescodiets.com (and other TLD variations) to the official Tesco Diet website, collecting commission from referred sales. In April 2005 the company earned commission of £75.42 but after installing the redirect the commission in May 2005 was £26,688. Tesco obtained a favourable ruling regarding trademark infringement and eventually the domain names got transferred to Tesco. You can read the full ruling here – Tesco v Elogicom.

 

Anyone and anything is fair game to domain squatters

Unfortunately, where there is potential to create an income stream or sell on a domain name for a profit you will see the emergence of domain name squatters. Piggybacking on a strong brand identity, a famous person or a company, is the key to what many people refer to as cybersquatting. In some cases this can lead to a “ransom demand” where the domain name is transferred in exchange for payment.

The key to everything is disruption, disrupting reputation, disrupting brand names and disrupting income streams. The domain squatters appreciate these different types of disruptions. They have monetary value to the individuals and companies involved and look to exploit this. The ever-growing list of TLDs means that it is nigh on impossible to protect reputations and brand names by acquiring all associated extensions to your domain name. As a consequence, many third parties will only react when they see an impact on their own website and reputation.

 

Taking action against domain squatters

In theory, the easiest way to protect your website from domain squatters is to buy all of the TLDs for your main domain name. As we touched on above, in reality this is nigh on impossible because of the variations available today. However, there are some options:

Threaten legal action

In some occasions, you can quite simply send off a legal letter threatening action unless ownership of the domain name in question gets transferred. You would need to have a legal standpoint such as a trademark, company name or copyright infringement. On occasion, some domain  squatters will back off. However, the majority may be outside of your local jurisdiction and ignore such threats.

 

Reclaiming your domain name

Where there is an obvious domain name copyright/trademark issue many people have utilised the Uniform Domain Name Dispute Resolution Policy (UDRP) adopted by ICANN (Internet Corporation for Assigned Names and Numbers). This policy has also been adopted by all accredited domain name registrars and has created a form of self-policing.

 

Court action

We have also seen many companies and celebrities going to court to reclaim connected domain names. The main issue with court proceedings is the fact they can take some time to conclude and incur significant expenses. In many cases, there is little or no chance of reclaiming expenses. Not even in the event of a successful prosecution.  This is likely to be your last option and must be considered against potential long-term loss of reputation and income.

 

Buy the domains and end the confusion

As we touched on above, while domain squatting involving large companies and famous celebrities tend to grab the headlines, any company or any individual can be impacted. We have seen many cases where third parties have not been in a position to instigate legal proceedings and UDRP has either dragged on or proved unsuccessful.

As we are not always talking about thousands of dollars in purchase fees, many parties will simply negotiate with the domain squatter and purchase the disputed domain name. This can very often save time, money and any further damage to personal or business reputation. It is not ideal to be paying for domain names which take advantage of your particular strengths but the wheels of justice tend to move extremely slowly.

 

Planning ahead and protection

There are simple ways in which you can protect yourself from harm that domain squatters pose to your business/reputation.

 

Register your domain name as soon as possible

We know that some cybersquatters will scour company records checking that new companies have registered the relevant domain names. Likewise, if you are looking to bring out a new product and create a website in the same area. As soon as any name has been agreed, buy the domain name taking in the main TLD variations.

 

Consider buying similar domain names

There are some companies and individuals that attract an array of misspellings. This often leads to confusion regarding website domain names. In reality it is impossible to cover every possible variation of a name or business. However, if there are some common misspellings then it may be worthwhile looking to acquire the main TLD variations.

 

Register your trademark

The United States Patents and Trademark Office is just one example of a body with which you can register your trademarks. If a third party acquires a domain name using your trademark then you would be able to take legal action. Register business trademarks as a matter of course, but they are even more important today with the real threat of domain name squatters upon us.

 

Brand identity

Trademark and copyright infringements are very strong arguments when it comes to legal proceedings. The more practical approach would be to adopt a strong branding strategy with the use of characters, images, banners, etc. This will ensure that those landing on third-party disruptive websites get alerted due to the lack of branding. If a domain squatter adopts your unique style of branding, this would add a further legal string to your bow.

 

Never assume it won’t happen to you

If you own a website, chances are, you will receive an unsolicited email offering to sell you a domain name similar to your own. The initial offer will be polite, testing the water, but very often they can become more aggressive and more threatening. These are more opportunist domain squatters as opposed to those who carry out this activity for a living.

If you have any questions or queries you should approach your domain provider and ask for advice. They will come across domain squatters on a regular basis and may offer guidance about protecting your existing domain names.