Cybersquatting: Understanding Regulations to Maintain Your Valuable Web Presence

In today’s business environment, a strong internet presence is not only helpful but essential to growing a business. It is often the first point of contact between a business and its potential consumers. This evolution has had many benefits and made it easier to connect businesses to customers throughout the world. On the other hand, it has also created a new set of problems, of which cybersquatting may be the largest. Cybersquatting is the act of registering a domain name in hopes that it can later be sold at a profit.

Issues in Deterring Cybersquatting

For example, someone registers the domain name “superman5.com” in hopes that the movie will come into existence and they can sell it. The studio promoting the film will pay the owners of that domain name a steep fee for it. This system was ripe for abuse, especially in the early days of the internet. Many corporations had not yet grasped the importance of having a strong web-based presence. As a result, many did not register appropriate domain names before cybersquatters got to them first. That was a two-fold problem. Domain names were typically extensions of intellectual property. At the time, the holders of that IP had no legal recourse. Because the internet is global, it also posed a jurisdictional problem. As the internet expanded and increased in importance, the issue of cybersquatting became more and more pressing.

Regulations Enacted to Prevent Cybersquatting

Around the turn of the millennium, two different regulations intended to prevent cybersquatting were enacted. The regulations remain in effect today. The Internet Corporation for Assigned Names and Numbers (ICANN) enacted the Uniform Domain-Name Dispute Resolution Policy (URDP) in 1999. Also in 1999, the U.S. Congress enacted the Anti-Cybersquatting Consumer Protection Act. ICANN formulated the URDP soon after the latter’s founding to handle cybersquatting disputes. One of ICANN’s biggest challenges is navigating the maze of local, state, national, and international trademark laws. As the highest domain authority, every registrant is bound to their terms of service. The URDP was ICANN’s attempt to solve the cybersquatting conundrum.

URDP’s Criteria for Determining Cybersquatting

The operation of the URDP, by design, is straightforward. A complainant will file a URDP complaint with any of a number of ICANN approved arbitrators. The responding party has a chance to respond. Then, the panel will rule on whether the holder of the domain name is cybersquatting. If so, the panel will order the domain name transferred to the complainant. In making this determination, the arbitrators will consider several things:
  1. Whether the complaining party has trademarked the domain name or if it is confusingly similar to the trademark.
  2. If the current domain name holder has any legitimate rights or interests to the name.
  3. Whether the domain name holder has been acting in bad faith.
The entire process is much quicker than litigation, and the costs and fees are often only a few thousand dollars. Stakeholders can expect a final decision in two-to-three months or less. The main drawback is that the remedies the panel awards are limited to the transfer of the domain name. An arbitration panel convened under URDP cannot award monetary damages of any kind. In comparison, the Anti-Cybersquatting Consumer Protection Act does allow for money damages, just as in any other trademark case. In its attempt to prevent cybersquatting, the U.S. Congress decided, instead of creating a new legal framework, to effectively extend the existing laws regarding trademark to include domain names. In order to have aprima faciecase under the ACPA, the claimant must show several things.

ACPA’s Criteria for Determining Cybersquatting

  1. The domain holder has a bad faith intent to profit from the domain name
  2. That the domain holder has registered, used, or trafficked in a domain name
  3. Uses a trademark, or is confusingly similar to the claimant’s trademark
Because of the difficulty establishing jurisdiction in cybersquatting suits, the ACPA also provides remjurisdiction. Remjurisdiction is established when jurisdiction over the domain holder is impossible to establish or the holder cannot be located. The main advantage of the ACPA is that is does allow for the recovery of monetary damages. On the other hand, the ACPA is slower and more expensive. In general, the cybersquatting criteria are very similar to those of the URDP.

When making the decision of how to proceed in a cybersquatting case, you should consider several factors: time, expense, and potential damages. Having a strong web presence can be the most vital element of maintaining one’s business. Knowing how to weed out cyber squatters is essential to maximize investments in web presence.

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