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The Wikipedia definition of cybersquatting, also known as domain squatting, according to the United States federal law know as the AntiCybersquatting Consumer Protection Act, is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else.

A cybersquatter will acquire valuable domain names that contain well known names or trademarks and then offers them for sale at an inflated price.  A domain squatter is looking to make money by selling the domains in their portfolio in the after market.  Often times they will put them for auction or park them and collect money for driving consumers to targeted ads placed on the sites.

When a domain name disputes arises there are a few possible remedies.  One of which is retaining counsel to file a legal action.  Some examples of legal actions regarding domain names are; ACPA, UDRP, URS.  The other is to hire an investigator experienced in conducting discreet domain name acquisitions to identify and anonymously contact the domain owner to negotiate a purchase of the domain name and then transfer it to the owner while abiding by ICANN rules.  In the course of your dealing with a domain name owner that is potentially squatting; whether your retain an investigator or not it is vital that you document all communications.  The evidence you obtain in this process can be vital in proving the bad faith and/or intent to profit necessary in many legal actions.  Often times the purchase price requested by the cybersquatter can be less than the legal fees and filing fees required to pursue to the cybersquatter.

One of the largest judgments obtained in a Cybersquatting case ($33.15 million) was secured by expert domain name attorney, David Steele, of Christie, Parker & Hale, LLP. According to Steele,“Our aim with this case was to send a clear message to deter¬†cybersquatters who continue to run businesses for the primary purpose of misleading Verizon consumers or consumers of other legitimate companies, as well.”

Tim Santoni of National Trademark Investigations was featured in article written by Paul Paradise in PI Magazine talking about the current trends surrounding cybersquatters.  In the article Santoni discussed the fact that cybersquatters are typically well versed in the law and have resources to fight back.  In many cases anonymous contact with domain owners proves to be a crucial piece in proving cybersquatting.  Cybersquatters have actually admitted to our investigators that they are sitting on certain domain properties waiting for the brand owner to contact them.  In other cases they are simply looking to move the domains that they know they will likely lose because they contain trademarks.

The article points out some of the largest after market sales of domain names containing trademarks and well known brands and celebrities.

Some of those transactions include:

  • Sex.com ($13 million) – 2010
  • Diamond.com ($7.5 million) – 2006
  • Social.com ($2.6 million) – 2011

We consistently find that clients are willing to pay anywhere from $5,000.00 – $100,000.00 for domain names that containing their trademarks, brands or new products.

TIP: Before you invest in a new product or brand check to see if the domain name is available.  If the domain is registered, but does not resolve to an active site it would make sense to contact the owner about purchasing the domain.  We see clients launch products, market the new product, write press releases and then realize the domain name is taken.  This drives the cost of acquisition way up and decreases the effectiveness of an anonymous acquisition.

Additional Reading:

Domain Name Acquisitions “The Domain Name I want is Registered, Now What?”¬†

Posted in Cybersquatting