The Rise of Cybersquatting Poses a Genuine Threat for Brands


15. March 2022

By Laura Lemos. Anti-counterfeiting Lawyer.

Since its inception, the internet has evolved remarkably, from its original role as mere means of communication into a thriving, fully-fledged digital space for commercial activities. With a greater number of people spending more time online, the internet has become an invaluable commercial resource, with businesses reinforcing their online presence to build brand awareness while offering authentic content and a place to make trusted sales.

A strong online presence is key to securing business and promoting brands, and the modern consumer has come to expect it. On account of this, cybersquatting has become an all-too-common practice for fraudulent online activity and a genuine problem for legitimate brands.

Cybersquatting is known as the act of registering, trafficking in, or using an internet domain name with the intent to profit from the goodwill of third parties’ trademark, or its variations. It involves the preemptive and bad faith registration of trademarks as domain names by third parties who do not own the rights to such names.

There are many economic incentives for those who engage in cybersquatting, along with keyways in which they can seek to exploit brand owners and profit from their practice. Most commonly, they seek to sell the domain back to the legitimate trademark holder at an inflated price. Furthermore, if the domain cannot be sold, they are able to drive traffic away from the sites of the authentic brand for commercial gain.

For the latter, sophisticated counterfeiters typically register domain names and develop websites that use, or closely resemble, the name and logos of an established business to confuse and entice consumers in an attempt to sell counterfeit products.

In addition to posing ongoing challenges to businesses, cybersquatting damages their goodwill and forces their owners to resolve such issues with a greater sense of urgency. It poses to trademark owners a real threat that must be addressed.

Trademark owners can use established out-of-court procedures in order to protect their brands online and deal with abusive domain names. The main resource in counteracting cybersquatting is “ICANN”, the organization responsible for maintaining the global domain name system, which allows victims of cybersquatting to seek transfer or the cancellation of a domain name registered in bad faith by using dispute procedures organized under the Uniform Domain Name Resolution Policy (UDRP).

Statistics recently published by the World Intellectual Property Organization (WIPO) shows a 22% increase in domain name dispute resolution cases, notably with a surge in cybersquatting case filings.

Previously, domain strategies were primarily motivated by the need to promote new products and services. In 2020, protecting brand value by mitigating brand abuse became the most important factor driving domain registrations.

The rise in cybersquatting cases shows that from well-known brands to smaller businesses, no one is spared when it comes to online infringement. For many businesses operating online is a fundamental step for growth, it is crucial to ensure that a series of measures are in place so that the domain space is regularly monitored, and brands are proactively protected from squatters.

Although domain name disputes related to cybersquatting and related practices can be resolved in a timely and affordable manner through UDRP procedures, preventive measures, including defensive registrations, can save trademarks owners the costs for initiating such procedures.

Being proactive rather than reactive will help mitigate threats and anticipate future risks. This way businesses can limit the impact of cybersquatting by registering important and obvious domains related to their trademarks and business, redirecting these domains to their website. Having a comprehensive domain portfolio is important for driving user traffic, boosting search engine visibility, and protecting a valuable brand.

It is also becoming increasingly important to watch domain name registrations, especially since hundreds of new generic top-level domains (gTLDs) started going active. Considering this, a preventive strategy is to apply to an online surveillance program that identifies potentially litigious domain names that have been registered. This surveillance not only detects identical domain name registrations, but also similar and approximate spellings of the brand name (typosquatting) and monitors the website itself, detecting any changes in its use.

Originally, the domain name was used as a simple address online locator. it has evolved to hold value far beyond that, becoming one of the strongest intellectual property assets a business can leverage to promote and protect its online identity.

As domain names have played a major role, it has become increasingly essential for companies to build a strategy based on domain name protection and focus on managing domain portfolios. Besides containing the instances of cybersquatting, it helps brands to succeed in numbers and increase customer confidence and guarantee a genuine brand experience without the consumer being led astray.

 

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