Out-Law News 4 min. read

Domain name disputes on the rise, figures show

The number of disputes over the ownership of website addresses has increased by 6% in the past year to July compared to the same period 12 months earlier, a legal information provider has said.

The World Intellectual Property Organisation (WIPO) ruled on 2944 cases involving disputes over domain names during the past year in comparison with 2775 for the year to July 2011, according to Sweet and Maxwell. The latest figure is the highest number of disputes ever recorded, the firm said.

The disputes centre on the ownership of website addresses by so-called 'cybersquatters'. Those individuals or businesses often register domain names containing words protected by trade mark rights, such as those owned by major global brands. Another form of cybersquatting - typosquatting - occurs when individuals or businesses register websites with addresses that use slightly different characters to other, better known, sites.

The squatters often look to sell ownership of the domain names to trade mark owners or alternatively conduct retail operations, frequently of counterfeit goods, through the site. The latter enables them to benefit from the reputation associated with big-brand names.

Trade mark law expert Gillian Anderson of Pinsent Masons, the law firm behind Out-Law.com, said that it was "easy" to understand why brand owners would be keen to defend their trade mark rights against cybersquatters.

"Almost every large company has an online presence and recognises the value of protecting the value of its brand and the presence of its brand online," Anderson said. "Some commentators have indicated that the typical IP assets of a business account for 80% of the value of a business. Cybersquatters are attacking the heart of a business when they register domains which incorporate that business’ brand, so it is easy to understand why brands are meeting cyber squatters head on." 

"A trade mark guarantees the origin of a product to the end consumer and will influence consumers' decision to buy or not," said Anderson. "For brand owners it is key to ensure the integrity of their brands given the investment they will have made in the brands to ensure that their goods are distinguished from competitors and to build consumer loyalty. Cybersquatters undermine the ability of the brand to guarantee the origin of the products or the quality or safety of a product and so ultimately brand owners are compelled to take action against cyber squatters to protect their investment, their products and business."

Anderson said that the increase in the number of domain name disputes may be due to fact that domain name dispute proceedings offer a "more cost effective and expedient solution" for brand owners to recover web addresses owned by cybersquatters "than having to litigate in foreign jurisdictions" where a cybersquatter could be based.  "Litigating in foreign jurisdictions can be difficult and costly," she added.

The expansion of the number of generic top-level domains (gTLDs) at which domain names can be registered is also sure to impact on rights holders, although the extent of this impact is not yet clear, Anderson said.

Last summer directors at the Internet Corporation for Assigned Names and Numbers (ICANN), which is the body that oversees the identification of websites, voted to increase the number of gTLDs from the current number of 22. Top level domains are the suffixes to addresses and include familiar address endings such as .com, .org and .net. The first round of applications for the new gTLDs opened in January and in June ICANN published the full list of potential new gTLDs that have been applied for.

There are 1930 applications, many from individual organisations or trade bodies, including Apple, Google and Microsoft. The list of domains applied for includes .bbc, .bank, .google and .london, with many firms competing for ownership of single domains.

Anderson identified particular new gTLDs that have been applied for that may concern brand owners.

"Generic gTLDs such as .shop or .store pose concerns for online retailers because if approved, these generic gTLDs open up the marketplace for cybersquatters to apply for opportunistic domain name registrations," she said. "While the right holder may be able to take advantage of the TradeMark Clearing House and sunrise registration periods they will not remove the problem in its entirety and the expansion of gTLDs will ultimately cost the average business money in terms of defensive registrations and or taking action against cyber squatters."

"For example, KPMG has applied for the gTLD .KPMG, however as gTLD applications have been filed for .accountant and .accountants, it is likely that KPMG would also look to secure domain names such as KPMG.accountant and KPMG.accountants. Companies should also be aware of potential new 'internationalised domain names' (IDNs) that could be registered in languages other than English, such as Chinese," Anderson said.

"The IDNs are of particular interest because they open up the internet in a way we have never seen before. Some of the IDNs applied for include transliterations of .com and .net. So if approved, brand owners must ensure that they have a strategy for securing key registrations in order to avoid infringement of its brands taking place. The full impact of the new gTLDs will be clearer once the evaluation process is complete," she added.

Sweet and Maxwell said that Gucci fashion house has already won ownership of more than 100 domain names this year as a result of bringing six cases to the WIPO. Examples of the web addresses that had been owned by cybersquatters were 'cheapguccionsale.com' and 'guccishoponline.org'.

Luxury crystal brand Swarovski has won 32 similar cases since 2010, whilst the InterContintental Hotels Group previously won ownership of more than 1,500 domain names in a case ruled on in 2009, the company added. Madonna, Wayne Rooney and Boris Johnson are among celebrities that have also contested ownership of domain names owned by cybersquatters, it said.

Complaints about alleged domain name squatters stemming from China have more than doubled since 2009 and now account for 12% of the total number of complaints made, Sweet and Maxwell said. The US still has the highest number of alleged infringers complained about, it said.

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