Cybersquatting and Typosquatting

The trademark laws and how they apply to domain names is gaining a more defined paradigm as of late. However, you can still find plenty of inconsistencies throughout the recent history of cases. Without even looking at specific examples of trademark infringement, you’re always safe applying the general rule of thumb – if it seems even the littlest bit questionable, you’re safer not crossing that line.

Cybersquatting

At one time, cybersquatting referred to the act of knowingly registering a domain name that is trademarked, then attempting to sell it to the trademark owner at an inflated price. Unfortunately, as of late, many media sources have begun using the term to describe anyone who buys and sells domain names in order to earn a profit.

This might seem a bit unfair to someone who wants to start investing in domain names, but unfortunately, the lines have blurred. If you registered heydendoc.com and for some reason another person wanted the name for their site, you become Public Enemy #1 for trying to sell it for any more than you originally paid. So if you decide to get at all involved in domain name investments, be prepared to be mislabeled as a cybersquatter.

The legal use of the word cybersquatting still keeps with the definition used from the beginning: A person who purchases a trademarked domain name and holds it ransom or misuses a trademarked domain name.

Here are a few possible scenarios and how the cybersquatting law may apply:

• You register the name MicrosoftProducts.com and try to sell it to Microsoft. Even if you don’t inflate the price, you could be charged with trademark infringement and fined in court.
• You register the name MicrosoftProducts.com and don’t do anything with it. You still registered a trademark and could conceivably be charged if Microsoft decides they want the domain.
• You register the name MicrosoftProducts.com and start a website that discusses Microsoft products (showing a huge banner on the home page stating that you are in no way affiliated with Microsoft). This would still be considered trademark infringement if Microsoft pushed the case. As a matter of fact, Microsoft was one of the first to start fighting for their domain names when they sent out hundreds of cease and desist letters to domain owners in 1997. Some of the websites simply contained instructions on how to better use Microsoft’s products.
• You register the name MicrosoftProducts.com and start a discussion forum which points out the ways Microsoft has become a terrible bully in the software industry. However, you do not profit from the website in any way, shape, or form. Even though you don’t profit from the site, it is still considered trademark infringement to simply own and utilize the domain. Recent precedents set in a Wal-Mart suit against a domain owner criticizing the company opened more doors for such sites. This all comes down to judgment though, rather than a easy to understand law, and you always run the risk of drawing lawsuits when you play the domain game.
• You register the name MicroSoftProducts.com where you sell very small pillows for a reasonable price. This could be considered trademark infringement, depending on the judge you get. Sometimes, if a company name or domain name existed before the trademark was registered the smaller domain owner will win. In most cases the larger corporation tends to win. This was demonstrated in a 2000 court case in which Volkswagen sued VirtualWorks, a small company, for trademark infringement for using the vw.com domain name.  Though both companies use the vw initials day to day, Volkswagen won the case.
• You register the name MicrosftProducts.com and do any one of the above mentioned things with the domain name. This is known as typo-squatting and in some cases it is punishable. We will discuss this in greater detail below.

You can see from the above examples that the law, though there may be some loopholes, there isn’t much room in trademark law for infringing on the rights of trademark holders. Often times, as in the case of Volkswagen above, a larger corporation wins their case, even if the other company was within their rights. As we’ve said before, and it bears repeating, always ere on the side of caution. When in doubt, do a trademark search first or don’t register the name.

Typo-squatting is similar to cybersquatting, except you are register a misspelling of a popular trademark in hopes that in hopes that internet surfers will mistype the real domain name in their browser, allowing you to profit off the traffic with advertising.

As of yet, there are very few rulings in typo-squatting cases, so precedent is still open. As with cybersquatting cases, there’s a chance you could still get named in a trademark suit. Remember, if a company doesn’t protect their trademark, they risk losing it, which is why many are getting aggressive when it comes to protecting them within domain names. 

Many serious domainers frown on the practice of typo-squatting, but some continue the practice to this day.

Dell recently took several typo-squatters to court, including affiliates promoting their products and Registrars who had engaged in domain tasting. The case could drag out for years, but most domainers bet on Dell as the winner. If Dell does win the case, it will set precedent and hundreds of other cases are likely to go to court.

It’s always best to play it safe and avoid piggybacking on the names of other websites. It may seem like a cheap way to make money, but it’s an easy way to land a very expensive lawsuit.