Domain grabbing & cybersquatting: the difference and legal consequences

The perfect domain is worth its weight in gold since those looking for a suitable name for their web project often find that all the catchy ones are taken. But not every registered address is actually used; many domains are purchased for the purpose of being resold. The higher the demand, the higher the price. Sought-after domains often go for several thousands of dollars. The domain market is therefore full of users occupying promising addresses. This business practice is referred to in internet jargon as domain grabbing and differs slightly from illegal cybersquatting.

Domain grabbing refers to the practice of registering internet domains with the intention of selling the ownership rights rather than keeping them for their own personal use. The domain grabber hopes to make a good profit by selling popular top-level domains. Names of specific products or services are usually avoided when domain grabbing in order to prevent conflicts with rights holders. Because of this, domain grabbing does not usually violate trademark law.

While domain grabbers target unprotected terms, cybersquatters concentrate specifically on trademarks and proper names. The aim of registering legally-protected terms as part of the domain name is to sell them to the actual rights owner for a higher transfer fee. Cybersquatting is also referred to as brand jacking or name jacking, depending on the type of trademark protection. If the controversial domain contains the name or part of the name of musicians, sports personalities, TV stars, or other celebrities this results in an overlap of both practices.

To put pressure on rights holders, many of these domains are used for malicious purposes. For example, they include content which shows the business or the person concerned in a bad light. Another variant of cybersquatting is typosquatting, where typos are purposefully made in brand name domains in order to intercept visitors.

In the UK, there isn’t a clearly defined internet domain name law since most of the legal framework is based on the law of contract. When you purchase a domain and agree to the legal terms and conditions, these usually bind you to a dispute resolution policy e.g. the ICANN Uniform Dispute Resolution Policy (UDRP). If someone claims you are using a domain for harmful purposes, and they win the case, the domain name can be transferred to them.

If you register a domain name which is similar to someone else’s this can be seen as an 'instrument of fraud'. If the UK court does consider the domain name to be a breach of intellectual property rights, the domain owner may have to transfer the domain name as well as be liable for and damages and costs.

Some countries, such as the US with its Anticybersquatting Consumer Protection Act (ACPA), have more specific domain name laws, which give specific legal rights to trademark owners.

Social media sites like Facebook and Twitter continue to grow in popularity and this has led to a new form of cybersquatting where trademark-protected brands or names are registered by others. They have now made the practice a violation of their terms and services. Tony La Russa, manager of the St. Louis Cardinals, found out the hard way just how damaging cybersquatting can be. Someone registered a Twitter account using his name and posted many derogatory status updates with the aim of damaging his reputation. He was the first celebrity to file a lawsuit against the site, before later dropping it.

Facebook is also strict when it comes to trademark infringement. Trademark owners must report any unlawful profiles as soon as they see them. A further step to prevent cybersquatting is 'mobile phone authentication', which involves a user verifying their account by phone in order to get a username.