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Cybersquatting a growing problem around the world

iStock image used with permission.

Disputes over Internet domain names are up, according to recent reports by the National Arbitration Forum (FORUM) and the World Intellectual Property Organization.

FORUM, an international provider of dispute resolution services, announced 2,177 cases were filed in its domain name dispute resolution program in 2010, up 24 percent from the 1,759 cases filed in 2009 and up 23 percent from the 1,770 cases filed in 2008.

The majority of new cases, 96.6 percent of them, involved generic top-level names including .com and .org under the Uniform Domain Name Dispute Resolution Policy. About 70 cases involved a .us top-level domain under the United States Dispute Resolution Policy.

“The business of registering and monetizing domain names continues to grow,” said Kristine Dorrain, National Arbitration Forum’s Internet legal counsel. “As a result, it is inevitable that some percentage of those names will involve cybersquatting and more cases then ever are being filed.”

Cybersquatting is the bad faith registration of domain names which are identical to, similar to or include other parties’ names, tradenames or trademarks, according to Susan Schultz Laluk, a Hiscock & Barclay LLP partner whose practice focuses include intellectual property matters.

Laluk has written a chapter on the Anticybersquatting Consumer Protection Act in “Internet Law and Practice,” published 2002-2010 by Thomson Reuters/West, which notes the practice is also referred to as cyberpiracy or domain name hijacking.

Laluk, president of the Monroe County Bar Association, said cybersquatting became popular because domain names can be registered for a nominal fee on a first-come basis, so people and companies reserve domain names with common English words, company names, famous products or celebrity names, domains they believe someone else may be willing to purchase from them at a profit.

While there are no statistics on how prevalent the practice is locally, Ronald S. Kareken, another intellectual property practitioner who is of counsel to Hiscock & Barclay, said he has had two or three instances in recent years.

“It’s important for a trademark owner or well-established domain name to cut that confusion off,” he said. “A mere threat nine out of 10 times gets results.”

He said most of the disputes are going to WIPO because it’s a relatively quicker way of doing things and somewhat less expensive. Trademark holders, according to the WIPO, filed 2,696 cybersquatting cases covering 4,370 domain names with the WIPO Arbitration and Medication Center in 2010, an increase of 28 percent over the 2009 level of 2,107 and 16 percent more than the 2,329 cases filed in 2008.

Not all cases make it to dispute resolution. Laluk said sometimes it is quicker and cheaper to buy the domain name from a cybersquatter, depending on the asking price, than go through the dispute process, but Kareken cautions that may also make a company an easy mark for cybersquatters.

Laluk said trademarks and domain names, such as Kodak or Xerox, are very important and valuable pieces of intellectual property that cybersquatters may try to use to divert business to them.

“I wouldn’t rule out competitors using tactics like that to divert sales,” Kareken said, noting cybersquatting is a very substantial problem, costing in the high billions worldwide.

“It’s a very good form of white collar crime that can be done from a desk that doesn’t require you to have any particular asset base,” he said. “Just a single computer can do it.”

Kareken, who has been in practice for about 45 years, said he first dealt with cybersquatting issues in the late 1980s or early 1990s when the information highway took off.

Congress passed the Anticybersquatting Consumer Protection Act in 1999 to curb cybersquatting by establishing a cause of action for the deceptive use of domain names for profit, but a lot of them are registered in foreign countries. Kareken said if someone is having a problem with a domain name registered in a foreign country, that it is important to get good legal advice from someone in that country. He said some legislation in other countries may be helpful.

“I think some very good advice for a company is that they remain active in policing their own domain names and trademarks they consider valuable,” Kareken said, noting employees should be on the watch and report anything they see.

Laluk deals with the issue more on the front end when people are making decisions on selecting a domain name. She said there are times when legitimate businesses in different industries, but with similar names, may register similar domain names, but that customers usually realize they’ve got the wrong company when they’re viewing the website.

She has been on both sides of a dispute where clients have been contacted about ceasing use of a similar domain name or have discovered someone else using a domain name similar to theirs.

“Sometimes, there is actual confusion,” Laluk said. She knows of parties that reach agreements to forward inquiries to the other if they receive something intended for the similar domain name.
Kareken said most of the cases that get publicity are intentional cybersquatting.

“The ones that don’t get publicity are the nine out of 10 that we write to and say you shouldn’t have picked that name and you better talk to a lawyer before you use it again,” Kareken said.

The top five areas of WIPO complainant activity were retail, banking and finance, biotechnology and pharmaceuticals, Internet and IT, and fashion.

“That makes sense,” Kareken said. “Those are the ones where trademarks are very important in promoting business.”

He said there is also value in registering a domain name around the world in the various trademark offices since it only costs about $3 or $4 to register and $10 annually to maintain.

Kareken also suggests checking sites such as whoiz.us to see if the domain name being considered is taken or request a search from companies that do trademark searches.

The problem of cybersquatting — whether coincidental or intentional — is increasing with the growing use of the Internet around the world

In 2010, FORUM surpassed a total of 15,000 domain name cases filed (15,763) since it accepted its first case in 1999. Since the UDRP’s launch in December 1999, the WIPO Center has received more than 20,000 UDRP-based cases, covering some 35,000 domain names in both generic and country code top-level domains.

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