Cybersquatting is a fairly common practice that enables another entity to cash in on the goodwill someone else has established with a name or destination on the Internet.

“Cybersquatters direct traffic away from a valid website, often to a website with a list of advertisements that relate to the industry, brand or subject being searched. These ads could actually lead traffic to competitors,” says Sandra M. Koenig, a partner and intellectual property attorney with Fay Sharpe LLP.

While the hope is that visitors realize they’re not on the correct website and move along, some might see a link to the same product or service on the imposter site and proceed to the imposter website instead of seeking out the correct website, she says.

“Worse yet, your visitors might land on a disparaging website where negative things are said about your business,” Koenig says.

Smart Business spoke with Koenig about cybersquatting, how you can reduce your exposure to it, and how an increase in top-level domain name options might make the fight against this type of fraud more challenging.

What is cybersquatting?

When a trademark is used in a domain name with the intent to profit from the goodwill of another existing mark, it is considered cybersquatting. The Anti-Cybersquatting Piracy Act states civil action can be taken against any person who in bad faith uses, registers or traffics in a domain name that is confusingly similar to another’s trademark.

For example, someone might establish a domain name by transposing or omitting a few letters of a brand or company name or introducing or eliminating punctuation between words. They also could use a different top-level domain name — such as .net rather than .com — to confuse potential visitors into landing on their site instead of the site a visitor intended to access.

What is a top-level domain name and what is the Internet Corporation for Assigned Names and Numbers (ICANN) doing with them?

A top-level domain name is everything to the right of the dot, for instance .com or .gov.

ICANN has opened the door for businesses to establish their own top-level domain name beyond the 22 that already exist. The owner of the designation would become the administrator of a contrived top-level domain name, such as .google. A purchaser could also register the name of its brands or establish ownership of a generic name, such as .coupon. However, the window of opportunity to apply for a name has closed and about 2,000 applications, at around $185,000 each, have been made for a top-level domain. All of these applications are being evaluated by ICANN and likely won’t be used until around 2013.

How does ICANN allowing companies to file for and purchase top-level domain names affect cybersquatting?

On one hand, cybersquatters likely won’t seek to purchase these top-level domain names because they cost too much and there is a lengthy examination process required to prove you have the ability to administer it. Also, ICANN has put safeguards in place to eliminate duplication. Domain administrators will likely have protections in place to deal with trademark infringements on top-level domain names. The domain administrators will be controlling who gets to use the name and could potentially keep it for internal purposes or for use with suppliers.

However, for the generic names, such as .green or .wine, there’s a lot of opportunity for cybersquatting. The increase in these names expands the opportunities for cybersquatters to infringe on a company’s reputation.

What sort of resolution can a company pursue from cybersquatters?

If you are the brand holder and someone is cybersquatting on your property, you can take them to court under anti-cybersquatting legislation or pursue relief through less costly arbitration proceedings. In the latter case, you would file a complaint with an arbitration forum designated to handle this type of case and submit evidence of the bad-faith use of your name or mark and why you — and not the cybersquatter — should have the rights to the domain name. If the cybersquatter does not prove its right to the domain, the infringing domain name is either canceled or transferred to you. However, the other party might have a legal right to use the name even though it’s a similar trademark, such as a company with a similar name that works in a different, non-interfering industry.

How can a company protect itself from cybersquatters?

In many ways it is getting more difficult to guard against cybersquatters. Not that long ago the advice one would give would be to think of all the potential misspellings of your brand or company name or variations using punctuation, but it is a lot of work and expense to attempt to get every adaptation registered in your name, especially with the proliferation of top-level domains. However, it is still important to make sure you try to protect yourself in at least the .com and .net fields, and it is also beneficial to own other domains as described below.

Be proactive and protect yourself as best you can. While the increase in domain options will offer legitimate businesses greater possibilities for branding on the Web, it also creates more opportunities for cybersquatters to take advantage of the goodwill you’ve established through your brand and company name.

Here are five strategies to protect against cybersquatters:

  • Register your trademarks in the U.S. Patent and Trademark Office.

  • Register your important trademarks as domain names with several different top-level domains.

  • Register variations of your domain names including common misspellings, typographical errors and punctuation edits.

  • Secure disparaging domains, e.g. brandsucks.com, or domains that may put you in an unfavorable light for your industry, e.g. brand.xxx.

  • Be aware of the new top-level domains that will be available beginning in 2013 and seek registration for those that might be relevant to your business or industry.

Sandra M. Koenig is a partner and intellectual property attorney with Fay Sharpe LLP. Reach her at (216) 363-9000 or skoenig@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP.

Published in Cleveland

In the Information Age, every business has a website that is available to any person in the world who points a Web browser to its address. As a result, businesses must understand how to create an online presence that enables customers to find them and distinguish them from their competitors.

“Basic knowledge concerning trademark rights, website addresses and how they work together is key for any business in establishing and defending its online identity,” says John Haarlow, Jr., an attorney at Novack and Macey LLP.

Smart Business spoke with Haarlow about how to establish a strong Web presence.

What is a trademark?

The term trademark generally refers to a name or symbol used to identify a business or the goods and services it provides. For example, the name Nike and its swoosh symbol are both identified with Nike Inc. The concept of trademarks recognizes that consumers associate symbols and words with particular businesses, goods and services. One reason trademark law exists is to prevent consumer confusion caused by the use of similar words or symbols in association with competing or related goods.

What is a registered trademark?

A registered trademark is a mark that has completed the federal registration process before the U.S. Patent and Trademark Office. During registration, the proposed registered trademark must pass various substantive standards, such as not creating a likelihood of confusion with other registered trademarks for related goods or services. Registration does not require the assistance of an attorney, but one can be helpful during the process.

Why should a trademark be registered?

Every trademark used grants some rights automatically, including the exclusive right to use the mark within the user’s geographic market area. However, federal registration provides a more powerful group of rights, such as exclusive use of the mark in commerce nationwide in connection with the registered goods and services, so other businesses cannot use a similar mark in connection with similar goods or services. A registered trademark also provides notice to others that it is in use, making it is less likely that they will adopt or register similar marks. Should a controversy arise, a registered trademark enjoys a presumption of validity in litigation.

What is the connection between a trademark and a website?

When looking for a particular company or product website, many consumers expect that typing the company or product name, followed by .com in a browser’s address bar will take them to the right place. Thus, owning a domain name that corresponds with a trademark designating the name of a business or product is likely to make it easier for consumers to find them on the Web.

If possible, every business should own domain names corresponding with both its name and its products’ names. Consider registering multiple domain names to increase the chances consumers find your business or product on the Web and reduce the chances that others might obtain similar domain names.

How do companies obtain domain names?

It is easy to find one of the many companies that provide domain name registration. What can be difficult is finding an available domain name, as registration is on a first-come, first-served basis. Thus, while Delta Air Lines and Delta Faucet Co. can coexist in the marketplace because they sell different goods and services, only one of them can own delta.com. Moreover, owning trademark or other rights to a name is not a prerequisite for registration.

Anyone can register any domain name, regardless of whether he or she has recognized rights to the words registered. While there are legal remedies for cybersquatting — the improper registration of a domain name that is the same as or similar to a trademark with the bad faith intent to profit — they require resources that are not available to all businesses. As a result, the availability of domain names should be a consideration when choosing the name for a new product or business.

How does trademark registration help a business defend its rights on the Internet?

A federally registered trademark provides the exclusive right to use the mark nationwide. Thus, a domain name cannot use a registered trademark in a way that is likely to cause confusion between the domain name and the mark. In such circumstances, the holder of the federal registration will most likely be able to force the owner of the website to relinquish all rights to the offending domain name. This is true even when the two businesses use the marks at bricks-and-mortar locations in two different geographical areas.

For example, assume that the fictitious Beta Widget Co., marketing its products at beta.com, sells widgets in stores in Illinois and Wisconsin and obtains a registered trademark for the use of Beta in connection with widgets. Subsequently, Gamma Widget Co. begins selling a new line of widgets in North and South Dakota that it calls Beta Widgets and launches the website betawidgets.com. Consumers looking for Beta’s widgets might type betawidgets.com into their browsers, only to find themselves at Gamma’s website and be confused as to the source of the goods.

Should this chain of events come to pass, Beta would likely be successful in forcing Gamma to cease using the name Beta Widgets to refer to its new widget line and would likely be able to force Gamma to stop using the betawidgets.com website. However, if Beta did not have registered rights, these remedies would be in far greater doubt because only registered rights provide a national right to exclude, precluding Gamma from mounting a defense on the basis of the two companies’ distinct markets.

John Haarlow, Jr. is a commercial litigation and intellectual property attorney with Novack and Macey LLP. Reach him at (312) 419-6900 or jhaarlow@novackmacey.com.

Insights Legal Affairs is brought to you by Novack and Macey LLP

Published in Chicago

Anew IT development giving companies the ability to adopt generic top level domains (gTLD) could be a real game-changer in how companies are represented and found on the Internet. On Jan. 12, companies could begin applying for their very own domain — .apple, .coke, .sony — .you-name-it.

The ability to acquire a gTLD has never been a reality until now.

“The possibilities are endless,” says Heather Barnes, a partner in the Intellectual Property Group at Brouse McDowell, Akron. “There are some restrictions, but not many, and the Internet Corporation for Assigned Names and Numbers (ICANN) believes this expansion will create a new age for the Internet with limitless opportunities for creativity and imagination.”

Consider how a gTLD could work in an open registration enterprise where a company acquires the domain “.car.” Dealerships and manufacturers of cars would want a site with this domain. Or, a company like Microsoft or Ford could acquire a gTLD for their brand (.microsoft, for example) and leverage the domain in its marketing efforts.

“Ultimately, a gTLD represents another potential asset for a company’s intellectual property portfolio, but the value attached to this opportunity will depend on a number of factors,” Barnes says, noting that the cost of applying for a gTLD and maintenance fees are a barrier for some companies. And the concept is not for every business.

For now, most businesses will take a wait-and-see approach. “Most companies need to be aware of this change and develop a strategy for protecting their intellectual property and especially their trademarks,” Barnes says.

Smart Business spoke with Barnes about what this development in domain ownership could mean for companies, and how all businesses should respond during this first application process.

What are the potential benefits of applying for a special generic top level domain?

There is some thought that a gTLD would give consumers greater comfort that they are dealing with an authentic product when they search online. For example, someone searching for Nike shoes online would know that a website with the domain .nike belongs to the brand. Another possible benefit is search engine optimization: a greater ability to be found and ranked higher on search engines such as Google or Yahoo. However, the extent of this potential benefit is unknown. For the most part, a company can look at their gTLD as one more asset in their IP portfolio that will allow them new opportunities to market their brand.

What are some barriers to applying for a generic top level domain?

First, the application fee for a gTLD is $185,000 with an annual maintenance fee of $25,000. Also, there is no general consensus among large companies that are in the financial position to adopt a gTLD. In other words, not every corporation is jumping on this opportunity. Most companies will wait and see what happens and who participates in this first application process. And until the application process closes on April 12, no company will have complete knowledge of who applied for a domain. However, at that point, there will be an extensive examination process during which all companies can gain access to the applications to see if their competitors have applied and to determine whether any applicants are compromising trademarks or misappropriating intellectual property. ICANN is allowing 1,000 applicants to file for a gTLD on a first-come, first-served basis until April 12.

What IT infrastructure must a company have in place to take advantage of this new development?

There are many layers of infrastructure that are required, and they all interact. First, and most importantly, is the financial infrastructure and associated business plan. The costly application fee and maintenance costs must be figured into a company’s budget, and the company needs to ensure this is a good investment, which will require a plan to ensure its success. Second, the marketing team must be prepared to educate consumers about its domain, and website traffic must be directed to the domain for it to be a success. Third, the technical infrastructure in terms of managing day-to-day operations must be in place. Finally, a legal team should be involved in this process to ensure that all aspects of the infrastructure are in place and to advise on interactions with other companies and the consuming public. The legal team will also assist in developing offensive and defensive strategies for protecting a company’s intellectual property.

How can all companies prepare as the first application process for a gTLD is rolled out?

For companies that want to apply for a gTLD, the time to start the process is now. The information and financing required to complete the application is substantial. For companies taking a wait-and-see stance, be on the look-out in late April when those applications will be available for review. Be prepared to file commentary or objections if any trademarks are misappropriated by third parties. Consult with a legal team in advance on a strategy to protect intellectual property.

In the meantime, all companies should evaluate their search engine placement as this new IT development will likely affect placement. In other words, if a competitor already has a higher search engine ranking, how would a gTLD potentially advance this competitor’s ranking? What can you to do protect your ‘status’ online when a potential customer searches for the products or services you sell?

Now is the time to seriously evaluate the way you go to market online and to discuss with trusted advisers and your legal team how gTLD could affect your positioning.

Heather Barnes is a partner in the Intellectual Property Group at Brouse McDowell, Akron, Ohio. Contact her at (330) 535-5711  or hbarnes@brouse.com.

Published in Akron/Canton