Article by Jeanine Coetzer (Spoor & Fisher)
The Internet has had a profound influence on modern commerce with domain names providing the real estate for businesses to build an online presence. The opportunity to profit from the Web has also been the Achilles heel for anyone with a semblance of presence on the internet. Cybersquatting, the undesirable practice of deliberately registering a domain name with the intent of selling or profiting from a trade mark, remains an ongoing concern for brand owners.
Cybersquatters effectively abuse the first-come, first-serve nature of the domain name registration system whereby they register domain names incorporating trade marks or names of businesses with which they have no association. Their conduct relies on diverting customers and users to their domains by riding on the coat-tails of more reputable trade marks.
The vast increase in the number of cybersquatting cases is partly due to the influx of new generic top-level domain names (gTLDs). According to the World Intellectual Property Organization (WIPO), cybersquatting disputes relating to new gTLDs have risen by 16%. WIPO Director General Francis Gurry has been quoted saying that “the continuing growth in cybersquatting cases worldwide shows the need for continued vigilance by trademark owners and consumers alike”.
In an attempt to address cybersquatting in South Africa, the .ZA Domain Name Dispute Resolution Regulations (ZADRR) were introduced to deal with co.za domain names. The struggle, however, is that cybersquatters are famously inactive and the speed at which domain names change hands makes it all the more challenging to track and combat abusive registrations.
A cybersquatter may register a name and not use it, nor try to sell or rent it, but simply wait to be approached by the trade mark holder. These actions of domain name pirates often result in damage to a company’s brand reputation and to losses if the appropriated name is used as an instrument of fraud.
Amongst the top victims of cybersquatting are brand owners who operate in the banking and financial sector. The deception is to divert customers and clients into believing the website they are visiting is genuine by mimicking the content and page behaviour. To the extent that the disputed domain name and the offending website are diverting internet traffic intended for the trade mark holder, it is prejudicial to the complainant and its functions.
Some of the most ubiquitous cybersquatting methods include, amongst others: domain parking (the redirecting of a domain name to a website containing advertisements for the purpose of generating internet traffic); ransoming of domain names (utilising domain names and using ransomware to block access to infected file systems until the quarry pays an amount of payoff money); affiliate marketing (using domain names to redirect to webpages used for the retail of products and/or services in exchange for commission on these sales) and hit stealing (whereby an internet user who visits a website associated with a cybersquatted domain name gets referred to a website of a competitor).
An even more worrisome occurrence is where cybersquatters register a domain name for an online “advanced fee” scam using e-mail communications pretending to be from a bank and it may include identity fraud and credit card fraud. The e-mail encourages the recipient to make an up-front payment in order to receive a pre-approved loan. In an already over extended society where people are predisposed to to fall prey to such tactics, it is prudent that brand owners guardedly enforce their trade mark rights.
While the Alternative Dispute Resolution (ADR) process saves time and money by successfully transferring offending domain names to the complainants and / or getting offending sites down rather fast and without drawn-out litigation proceedings, it has by no means served as a deterrent to cybersquatters who invent domain names that play on an essentially infinite number of variants of well-known trade marks, including common misspellings to drive internet traffic to their own domains and/or sites.
Despite well-intentioned efforts by both the international communities and local authorities, cybersquatting continues to flourish as new age pirates find ways to benefit from the loopholes in legislation and lethargic enforcement. Brand owners and trade mark proprietors are therefore well advised to implement a proactive line of attack to protect their brands online or face litigious heat.