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Cyber-squatting on the rise

IP and IT specialist Oliver Smith advises businesses how to protect their valuable domain names and safeguard online business.

For any businesses, protecting your name and reputation has always been vitally important to success. But businesses now need to arm themselves against a new generation of online threats and protect their e-commerce from being hijacked, particularly with regard to illegal use of domain names.

Latest figures from the World Intellectual Property Organisation (WIPO) show that "cybersquatting" is on the rise, increasing by 6% in the last year. Cyber-squatting is where a website address, or domain name, is registered by someone who has no legitimate interest in or connection to the name. They often intend to ransom the domain to someone who might have a real connection to it, or use it to divert traffic to their own website, possibly to sell counterfeit goods connected to that domain name. Luxury brand Gucci recently won a case to recover 100 domain names registered by a cyber-squatter and London Mayor Boris Johnson won a case over the use of his name in a website address.

There are two ways to recover a domain name hijacked by a cyber-squatter. The first, and often the easiest, is to make a complaint to the registrar of the domain under the WIPO Uniform Domain-Name Dispute-Resolution Policy (UDRP). This is conducted online. An independent expert will consider written arguments from both sides and then decide whether the domain was registered in bad faith and infringes your rights in the name. The expert can direct the registrar to transfer the domain name to you. The process is relatively cheap and quick but does not award damages or an injunction, so the cyber-squatter can simply go on to register more variations of the domain name.

If the cyber-squatter is trading from the website and using the goodwill in your name to make a profit then the second option of a claim for an injunction and damages may be a better choice. This will enable you to stop all future infringements of your name and to recover damages or an account of profits for the use of your name.

Prevention is better than cure, and it is therefore sensible to register the most common variations of your domain name and to get a registered trade mark. Even if you do not have a registered trade mark you will still have common law rights to claim an unregistered trade mark under the law of "passing off" if you have used your name sufficiently to build up good will and reputation in it. This should entitle you to prevent unauthorised use of your name in a domain name, although the process is easier where the trade mark is registered.

In some cases, where there is an innocent conflict of domain names, or the legal position is not clear cut, one party may offer to buy out the other's name. In those cases it can be helpful to use a solicitor to maintain anonymity whilst negotiating, so that the seller does not know your financial means or likely use for the name.

As the internet becomes essential to businesses in acquiring new custom, it is increasingly common for cyber-squatters to use domain names to divert traffic to their websites. These may compete directly by selling the same goods or services, or even counterfeit copies of branded goods. Often it is some time before this is discovered and large sums can be lost to these activities. A domain name monitoring service can help detect such activity and then prompt action can be taken to shut down the cyber-squatter.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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