INTERNET LAW - The State of Global Cybersquatting in 2007

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 IBLS Editorial Staff
Wednesday, April 18, 2007


The World Intellectual Property Organization (WIPO) reports Internet cybersquatting is exploding globally, up 25% in 2006 over the previous year, as even software colossus Microsoft's Bill Gates lost a symbolic case involving his Corbis images company, presided over by WIPO, as well. This article reports recent notable cases, trends in cybersquatting, and strategic developments being advanced against the issue

Cyberquatting is the predicament of the Internet era. In 2006, 1,823 formal complaints were lodged over internet address disputes, the most since 2000, before the WIPO"s arbitration and mediation centre. Cybersquatting" is defined as "the abusive registration of trademarks as domain names." The WIPO complained the domain name system itself was in danger of becoming a mere forum for "speculative gain" as cybersquatters have snapped up many choice addresses associated with top businesses, brands and other trophies in this intellectual property skirmish.

New methods have been developed to gain control of potentially lucrative addresses that have resulted in many trademark owners being stymied when trying to bring their product directly to consumers via the 'Net. For instance, WIPO reports that cybersquatters now use automatic software packages that troll for and instantly purchase esteemed domain names that may have temporarily expired. Then, they "park" at them and install pay-per-click portal sites. The creation by domain registration sites of introductory offers that allow a five-day test period encourages speculators, especially in newly opening top-tier generic domains, and emboldens anonymous registrations that ultimately aid the usurpation of valuable intellectual property rights.   


These are the most common types of cybersquatting,

 "Cybersquatting": Bad-faith intent registration; a cybersquatter can either sell to the highest bidder, or collect money by "domain parking";

 "Typosquatting: This is cybersquatting of the tendency to mistype certain words in Internet addresses, such as spelling Google as "Googel";

 "Domainer": A purveyor of domain names, who makes income from buying and selling them;

 "Dropcatcher": A person or company who rushes to purchase, or "catch" popular domain names quickly when their registrations lapses;

 "Domain Tasting": Getting domains for a "five-day free refund period" to test, then dropping for refund the ones that didn't pan out;

 "Domain Parking": A way of making money by having a small site with just advertising linked to a related domain name, where the owner paid a small amount whenever a person clicks on an ad; which can add up to millions in some cases.

As WIPO deputy DG Francis Gurry recently stated, "While electronic commerce has flourished with the expansion of the internet, recent developments in the domain-name registration system have fostered practices which threaten the interests of trademark owners and cause consumer confusion. Practices such as ‘domain name tasting' risk turning the domain name system into a mostly speculative market." The commandeering of internet names made potent by years of ethical service and the hard work and risked capital of entrepreneurs not only creates a drag on the global economy, but also lessens trust in the Internet as a mode of commerce. Gurry asked for "concrete policy responses" to the issue.

Microsoft recently launched an international effort to recover domain names related to its far-flung empire, recovering internationally 1,100 domain names related to house brands, in the last six months alone, aided by a team of Microsoft researchers led by Yi-Min Wang, who played a large part in shutting down fake sites. Microsoft attorney Aaron Kornblum responded, "These sites confuse visitors who are trying to reach genuine company Web sites, which can negatively affect corporate brands and reputations as well as impair the end-users' experience online," adding "With every ad hyperlink clicked, a registrant or ad network harvests cash at the trademark owner's expense, while derailing legitimate efforts by computer users who are trying to go to a specific Web site." He finished, noting, "We hope that our stance and activity on this issue will help motivate and empower other companies whose brands are abused to take action."

Many would-be Internet entrepreneurs have discovered the hard way how seriously the Washington based software company approaches copyright violations. One Seattle newspaper has stated that Microsoft claimed that on each day last year, an average of 2,000 domain names illegally appropriating its trademarks were registered, three quarters by cybersquatters. But a Canadian boy was shocked by what he discovered about the mighty American computer ware behemoth. In 2004 Microsoft took to court a 17-year-old high school student from Victoria, Canada. After being mailed a letter from Microsoft's lawyers, Mike Rowe, who registered www.mikerowesoft.com explained, "Since my name is Mike Rowe, I thought it would be funny to add 'soft' to the end of it. I didn't think they would get all their high-priced lawyers to come after me."

Microsoft recently filed or amended four suits in the U.S.: (1) Microsoft Corp. v. Maltuzi LLC, Case No. C07-1419 (N.D. California); alleging this California company infringed on trademarks through massive "domain tasting," registering blocks of company related domain names; keeping some and dropping others depending on profitability.

(2) Microsoft Corp. v. Sule Garba, Darin Grabowski and Yi Ning, Case No. 06-1192RSM (W.D. Wash.). Microsoft alleges here owners of 217 infringing domain names hid their true identities behind registration privacy options. In the suit, Microsoft used the technique of naming all 217 persons "John Doe," which then allows further discovery to establish their true identities, and established all the persons involved. Here, it is claimed just three persons are behind at least 135 infringing domain names.

 (3) Microsoft Corp. v. John Does 1-54, Case No. 07-2-08568-8 SEA (King County Superior Court, Washington). Microsoft filed a civil lawsuit in state court in Seattle, using as above the John Doe method to find the ownership of 54 infringing domain names.

 (4) Microsoft Corp. v. John Does 1-105, Case No. C06-1766JLR (W.D. Washington). In December 2006, Microsoft filed a civil lawsuit in federal district court in Seattle to discover who was registering and "parking" infringing internet addresses. Microsoft has other cases in the midst of settlement, in the U.S. and worldwide, including a settlement with U.K.-based Dyslexic Domain Company Limited, who had registered more than 6,000 illegal domains.

Overall, cybersquatting remains a serious issue that can only be reigned in through government action, better laws, the organization of groups to lobby against it and private owner's vigilance. Billions of dollars in commerce are at stake, and therefore good legislation and strong responses against these thieves of intellectual property must be encouraged across the globe.


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