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