The term “cyber-squatting”, which means registering or using a domain name in bad faith with the intent to profit from the goodwill in another’s trade mark, has gained significant exposure in the last decade with the exponential growth of the Internet and the concomitant increase in user traffic. Fortunately, there is a quick, efficient and reasonably cost effective mechanism with which to combat cyber-squatting in certain name spaces, being the Uniform Domain-Name Dispute-Resolution Policy (UDRP).

The UDRP came into being in December 1999 and is designed specifically to discourage and counter the abusive registration of trade marks as domain names by persons other than the owner of the trade mark.

Under the UDRP, a Complainant must demonstrate that the disputed domain name is identical or confusingly similar to its trade mark; that the Respondent does not have a right or legitimate interest in the domain name; and that the Respondent has registered and used the domain name in bad faith.

The typical cyber-squatter will register a variation of a well-known brand as a domain name, along with a generic or descriptive term, in order to divert online traffic to its website, generate money through pay-per-click mechanisms or sell the domain name to the rightful brand owner for a considerable profit.

By way of example, the well-known social network company Facebook, Inc recently fell victim to a mass cyber-squatting incident in respect of its FACEBOOK trade mark. Facebook, Inc. filed a complaint with the World Intellectual Property Organisation (WIPO) Arbitration and Mediation Centre, in 2011, against Domain Asset Holdings for twenty-one .com domain names, incorporating the well-known FACEBOOK trade mark and a generic or descriptive term. Such domain names included aboutfacebook.com, facebookbabes.com, facebookcheats.com, facebookclub.com and killfacebook.com. Each domain name was offered for sale to the public on the website to which it was directed. WIPO ultimately ordered the transfer of the domain names to Facebook, Inc. on the basis that they had been registered in bad faith.

According to WIPO’s online statistics, in 2010, 2 696 cyber-squatting cases were filed by trade mark holders, covering 4 370 domain names, under the UDRP procedures. Although WIPO has not yet released the figures for 2011, with the daily increase in the number of domain name registrations, it is likely that there has been an even further increase in the number of cyber-squatting cases.

Despite the increase in registrations of domain names, WIPO has successfully managed to give credence to the intention of the policy, namely to protect brand owners against abusive domain name registrations and, ultimately, enhance business and user confidence in the Internet.

The potential for cases of cyber-squatting has, however, recently increased. In June 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) authorised the launch of the new gTLD programme. The programme allows organisations globally to apply for the right to operate a new gTLD registry of their choosing and introduce it for use on the world-wide-web. A generic top-level domain (gTLD) is one of the categories of top-level domains (TLDs) and is what comes after the dot in an internet address, for example ‘.com’.

Currently, there are only twenty-two gTLDs, including the well-known .com, .biz, .edu, .gov, .info, .mobi, .net, .org and .xxx domains. The new gTLD program has been introduced as a response to the rapid growth of the Internet. There are approximately 50 000 new domain names coming online every single day and there is insufficient space in the existing gTLD spaces to accommodate such exponential growth. The new gTLD programme will therefore open up more space and will allow many more new services and applications for new gTLDs, which is intended to make navigation of the internet more intuitive.

A new gTLD can include any extension, including a brand, product-niche, service-niche, geographical indicator etc, for example, .brand, .cars, .bank, .art, .country. ICANN is expecting between 200 – 1000 new gTLD applications.

Registration for application of the new gTLDs closed in March 2012 and applications will have closed on 12 April 2012. The application fee for a new gTLD is US$ 185 000.

The new gTLD programme, however, has come under fire from various critics. In fact, ICANN has received several petitions against the launch of the new gTLD programme from the National Consumers League, the Association of National Advertisers, the Coalition for Responsible Internet Domain Oversight, the Federal Trade Commission, U.S. Congress as well as well several brand owners such as Adobe Systems Incorporated, American Express, The Coca-Cola Company, Dell Inc., Johnson & Johnson and more.

The main concerns with the new gTLD programme are that it will (i) unduly burden a diverse range of public and private brand holders, as they would be forced to spend even greater amounts of time and resources simply to protect their brands and (ii) increase the level of internet fraud and create new opportunities for internet crimes, including cyber-squatting.

ICANN appears to have given very little notice to the concerns raised or the petitions and is going ahead with the implementation of the new gTLD programme as scheduled.

The new gTLD programme does, however, contain certain checks and mechanisms to protect internet users and third party rights. Applicants will undergo extensive evaluation to ensure that the technical, financial and administrative requirements are met to satisfy ICANN that the applicant is competent to operate a gTLD registry.

ICANN will conduct background screenings of applicants, focusing on general business diligence and criminal history. ICANN will also be screening for cyber-squatters.

New gTLDs will also be published on the ICANN website on 1 May 2012, and an opportunity will be allowed for third parties to object to new gTLDs within seven months, on the basis of their legal rights (also known as a Legal Rights Objection). The WIPO Arbitration and Mediation Centre has been appointed by ICANN as the exclusive provider of dispute resolution services for trade mark-based pre-delegation Legal Rights Objections under ICANN’s New gTLD program.

An independent panel, comprised of up to three external experts, will determine whether the applicant’s potential use of the new gTLD would be likely to infringe an objector’s existing trade mark rights. The panel will need to make a determination as to whether the use of the gTLD:

1. takes unfair advantage of the distinctive character or the reputation of the objector’s registered or unregistered trade mark;
2. unjustifiably impairs the distinctive character or the reputation of the objector’s trade mark; and
3. otherwise creates an impermissible likelihood of confusion between the new gTLD and the objector’s trade mark.

There are also a number of non-exclusive consideration factors which will be taken into consideration by the panel for an objection based on trade mark rights, which are set out on WIPO’s website.

All Legal Rights Objections must be submitted electronically to the WIPO Center, using WIPO Center’s model form, along with a copy of the objection. The objection filing fee of US$ 10 000 must be submitted at the time of filing.

ICANN has also established a range of Rights Protection Mechanisms (RPMs) to assist Registries after the new gTLDs are approved. These include a Trademark Clearinghouse (a centralised database of verified data on registered trade marks), a Uniform Rapid Suspension system (URS) (intended for clear-cut cases of trade mark abuse) and a Post-Delegation Dispute Resolution Procedure (PDDRP). In addition, the existing UDRP will be applicable to all new gTLDs.

One thing is certain, with the implementation of the new gTLD programme and the rapid growth of the internet, there will be an increase in the number of cyber-squatters. Although ICANN and the new gTLD programme make provision for the protection of third party rights, brand owners will have to be vigilant in enlisting legal expertise to ensure that the necessary protection mechanisms are put in motion and their valuable brands protected on the internet.

Contact:
Shaun Cothill – Associate, Trade Mark Litigation, Adams & Adams.

Verified by – Kelly Thompson, Partner, Trade Mark Litigation, Adams & Adams