Domain Name Speculation - Domain Name Speculation Versus Cybersquatting

Domain Name Speculation Versus Cybersquatting

One of the most common accusations against domain name speculation is that it is simply cybersquatting. Cybersquatting is defined as registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. The key element in this definition is that the intellectual property rights of another's trademark are infringed by the cybersquatter. For a UDRP action to succeed one of the things that the complainant has to establish is that the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights. Legitimate domain name speculation tends to steer clear of trademarks and concentrate on generic words and phrases as domains based on trademarks can be subject of UDRP actions by the trademark owners. As the number of registered domain names has increased, the number of UDRP cases has also increased. Trademark and service mark owners now use brand protection services that monitor TLDs for newly registered domains that potentially infringe on their trademarks. This is due in part to typosquatting, a form of cybersquatting where variations of the spelling of a brand's domain will be registered in an attempt to profit from users mistyping the URL of the site they wish to visit.

Generic terms, such as the term "salt" when used in connection with sodium chloride, are not capable of serving the essential trademark function of distinguishing a product or service. This means that generic terms are generally not afforded any legal protection. The Canned Foods, Inc Versus Ult Search, Inc decision specifically deals with a case involving a generic term, "Grocery Outlet" and the domain name "groceryoutlet.com". The decision contains the key sentence "Generic terms receive no protection in US trademark law when they are used to label the goods and services that they describe."

One of the earliest examples of a written definition of cybersquatting was the Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996). The definition was "These individuals attempt to profit from the Internet by reserving and later reselling or licensing domain names back to the companies that spent millions of dollars developing the goodwill of the trademark."

As domain name speculation has evolved alongside the domain name system, the most memorable and shortest domains tend to be amongst those registered first in any TLD. For old TLDs like COM (introduced in 1985), these domains will be long gone and people registering their first domains are often frustrated at the lack of short and memorable domains in this and other mature TLDs.

One of the main problems concerning trademarks and domain names in unrestricted TLDs and gTLDs is that of trademarks in general: the rights of the trademark owner have to be asserted in order to protect the trademark. The trademark owner has to take legal action, typically a UDRP, to defend the trademark after the potentially infringing domain has been registered. The UDRP action has to follow a procedure of notifying the respondent, receiving a reply from the respondent, appointing an adjudication panel and awaiting a decision. The process can take two months or more.

The global and unrestricted nature of TLDs and gTLDs effectively means that anyone in any country can register a domain name in them regardless of whether they have any intellectual property rights in that name. With country code TLDs the jurisdiction is more clearly defined. The affected intellectual property rights owner would have to take a legal action, typically a UDRP case to transfer or cancel the domain unless the registrant is in the same jurisdiction as the affected intellectual property rights owner. In this case, local law may be sufficient as the action may be considered as Common law tort of Passing off.