What is Domain Squatting or Cybersquatting?

These days, your business’s success is largely dictated by your online presence. And your Internet presence is largely dictated by your SEO and how you rank in Search Engine Results Pages (SERP).

Having a domain that represents your business well and is easy for users to remember not only increases your business’s search engine visibility but will make your business look professional and legitimate.

But have you ever browsed a domain brokerage and found your perfect domain like yourbusiness.com only to find that the domain is either taken or for sale at an exorbitant price? Maybe the price isn’t even listed, and they ask you to contact the owner? Unfortunately, you might have come across an instance of domain squatting.

Domain squatting, or as many call it cybersquatting, is the act of purchasing a domain with the intent to hold the domain and sell to the highest bidder, take advantage of Internet traffic to make money on ads, or purposefully block others from having access to the name for a variety of reasons.

Domain Squatting vs Domaining

Domain squatting is different than the similar act of domaining which is purchasing domain names that might be valuable for the purpose of reselling or holding for personal use. The difference between domaining and domain squatting is that domain squatting often has malicious or extortionary intent. Domain squatting actually used to be perfectly legal, but the Uniform-Dispute Resolution Policy (UDRP) by ICAAN, an international body dedicated to Internet fair competition and human usability, has made the act of domain squatting illegal in many cases and a grey area at best.

Why Would Someone Domain Squat? Its profitable.

Though domain squatting or cybersquatting can have series legal implications many consider it an investment. Valuable top-level domains (like .com) are purchased first come first serve, held, renewed, and sold at exorbitant prices. For example, generic websites like thebestdatahost.com could be considered valuable investments and sold to a company looking for a marketable URL that will generate traffic. Domain squatters can buy this domain and hold it until they sell it at a profitable price.

Here’s where domain squatting becomes problematic

There have been high-level court cases such as those with celebrities and fortune 500 companies where domains were either purchased and offered for extortionary prices or misused to gain web traffic. These cases are typically referred to as “bad faith”.

Celebrity Cases

One of the most famous cases of a celebrity winning a bad faith case was in 2000 when the singer Madonna successfully sued Dan Parisi to gain the rights to Madona.com. The singer won due to The World Intellectual Property Organization (WIPO) ruling that the name was purchased for the purpose of capitalizing on Madonna’s fame and gaining web traffic. Because Madonna is a famous trademark, she was well protected against domain squatting.

But even celebrities don’t always win domain/cybersquatting cases. Such was the famous case involving Bruce Springsteen in 2001. The WIPO ruled that a domain squatter had legitimate interests in the website BruceSpringSteen.com after the cybersquatter argued points like the site being a fan site and that Springsteen’s name had no trademark protections.

Steps to protect yourself

The takeaway from the Madonna and Springsteen cases is that despite ICANN trying to create protections against domain squatting, it still happens decades after the above cases, so Internet users and business owners need to protect themselves.

Here are a few suggestions that can help you protect your business against domain squatters or cybersquatters.

1. Purchase domains in advance: If you are strongly considering starting a business, a new website, product line, etc.. you should ABSOLUTELY purchase a domain name for your business and similar domain names for good measure. Domain squatters like to monitor for new businesses being registered so they can claim the domain and potentially auction it.
2. Purchase a domain for as long as possible: Domains can be purchased for a maximum of 10 years at a time. Consider purchasing a domain for the max period of time so you don’t have to worry about expiration for a while.

As a tip: Sometimes you may be told that registering a domain for a longer period of time can increase legitimacy in the eyes of search engines leading to better SEO. There is no evidence of this. Your efforts should be focused on creating great content for SEO while having a domain for a longer period of time gives you peace of mind that the domain will remain yours.

• Don’t be picky about the domain name: Just because you don’t get the perfect domain name doesn’t mean your business is dead. Be creative with your domain name so you don’t have to pay crazy prices.
• Remember to renew or auto-renew your domain: Domains must be renewed annually, and domain squatters will sometimes take over a domain if the first owner forgets to renew. Be vigilant about renewing domains or set up to auto-renew if the option is available.
• Consider all top-level domains (TLD): the TLD is the part of a domain after the dot. Like (.com). While .com is the strongest TLD right now consider others like .net or the emerging .io.
• Know your rights: ICAAN’s UDRP outlines what they consider to be domain squatting and how to file a case if litigation hasn’t resolved the issue. A link to their website will be included at the bottom of this post.

When does domain squatting become malicious? When there is an attempt to harm or confuse

Domain squatting can go beyond simply holding a website in hopes to extort owners or auction it off. Much of the time domains are purchased because they look similar to legitimate, high traffic sites. This is often referred to as typosquatting. For example, let’s use buzzfeed.com. A squatter might purchase the rights to officalbuzzfeed.com or another similarly named domain to hijack web traffic and confuse everyday users of the legitimate site. From here, those domains could be ad pages for generating revenue or spread malware or phishing campaigns.

The ACPA and How to Protect Your Business

The Anti-Cyber Consumer Protection Act (ACPA) is a US law passed in 1999 designed to protect personal names and brands from cybersquatters or domain squatters from profiting from a famous or trademarked name. The goal was to create a path of litigation if a business or brand feels their name is either being extorted or misused for the cybersquatter’s financial gain.

The ACPA is different than the UDRP because the ACPA is a path for litigation to award damages from the squatters. Unlike the UDRP, these cases aren’t just for winning a domain name transfer, but also for awarding monetary damages.

When bringing a case under the ACPA, the court mainly looks for these factors:

1. Intellectual property trademarks or other documented rights to a name
2. Prior use of a domain for offering a good or service
3. If a name is part of trademark fair use
4. The intent to divert web traffic from the legitimate name or brand
5. Any offers to sell and transfer the domain for profit without having any other use for the domain
6. the accuracy of the owner’s contact information when registering the domain in question.
7. A history of purchasing confusing or misleading domain names by the domain name in question’s owner.
8. How famous or distinctive the name in the domain is and if it seems like it was meant to confuse.

ACPA: https://www.govinfo.gov/content/pkg/CRPT-106srpt140/html/CRPT-106srpt140.htm

After assessing the above, a court can award monetary damages and even domain name transfers. But domain name lawsuits don’t always end with the transfer of a domain name to the rightful owner. After trying the litigation process the party trying to acquire a domain can turn to ICAAN and the UDRP to argue for the transfer of a domain.

What is the UDRP and ICAAN?

In the early days of domains, domain squatting was a totally legal but emerging issue. But this changed April 30th, 1999 when The Internet Corporation for Assigned Names and Numbers (ICAAN) published the Uniform Domain-Name Dispute-Resolution Policy.

ICAAN is a nonprofit that is dedicated to keeping the Internet secure and competitive. They developed the Domain Name System (DNS) as a way for humans to be able to find Internet web pages.

What is DNS?

DNS refers to how we humans read URLs or domains as words like www.zebrahost.com instead of as a series of numbers assigned to a computer (IP). This DNS system serves two purposes:

(a) it makes domains more human friendly because people remember words better than numbers.

(b) domains are no longer exclusively assigned to a unique computer IP and can be transferred between hardware.

Naturally, as competition for unique word-based domains formed, certain domain names became more valuable. This created a valuable market opportunity to either buy domain names in advance as investments or to purchase similar names to popular websites in hopes to divert web traffic. This prompted the creation of the UDRP to address this issue.

ICAAN as a body enforces its UDRP because it forms deals with domain registrars. Registrars are the companies that own all the TLDs. ICAAN assigns accreditations to each of the registrars and ensures a fair environment for the domain market. All registrars must follow UDRP.

The UDRP outlines what happens when domains are abused by squatting or bad faith. In bad faith cases, the UDRP first looks for arbitration. If the case cannot be settled in court ICAAN can step in and potentially transfer, cancel or suspend a domain.

You can read more about the UDRP and how to protect yourself from domain squatting here.

UDRP: https://www.icann.org/resources/pages/help/dndr/udrp-en

Final Thoughts

Domain squatting or cybersquatting is still an issue two decades after the passing of the ACPA and ICAAN’s UDRP. The unfortunate truth about domain squatting is that its hard to eliminate because there is a very fine line between investing in domains and being a domain squatter/cybersquatter.

Many choose to invest in domain names for brand protection, future use, or as an investment to sell later. The important takeaway is that these are all legitimate uses as long as they aren’t extortionary. The easiest way to protect yourself is to be proactive about your domain registration and renewal. Making sure you have a domain name ready for when you launch your business online can save you the headache of having to purchase from domain squatters. And purchasing extra similar names can make it harder for domain squatters or cybersquatters to capitalize off your brand and hopefully save you from an infuriating law.