Domainers and cybersquatters both intentionally buy domains with the intention of flipping them for a profit. But these two types of domain investors are not the same.
If you want to get into domaining, it’s a good idea to understand the differences. Below we’ll look at what cybersquatting is and why you should avoid the temptation to go that route.
What is Domain Cybersquatting?
Legitimate domainers follow market and social trends, hoping to snap up new domains before anyone else thinks to do so. They do their best to avoid treading on other companies’ trademarks. Instead the goal is to beat everyone else to a hot new terminology or concept as a sound investment strategy.
On the other hand, rather than look for new domain names, cybersquatters typically register domains that contain another company’s trademark. They hope they can either sell the domain to the owner of the trademark or leverage the trademark owner’s reputation.
Are You an Unintentional Cybersquatter?
Most people don’t intentionally choose a domain name that matches a trademark. Instead, most cybersquatting is entirely accidental.
For example, perhaps you design WordPress themes and want the perfect domain name that represents your designs.
If you use ‘WordPress’ in your domain name, like shinywordpressthemes.com, even if all your wanted to do was promote your business, you’re guilty of cybersquatting.
How can that be? You’re not trying to extort money from WordPress!
What you may not realize is that WordPress Foundation, the charitable organization behind the WordPress open source project, possesses the trademark for ‘WordPress.’ It has sued people who use the term WordPress in their domain name. (If you’re curious, WordPress foundation publishes guidelines for using its trademarks.)
Like WordPress, many other popular terms are trademarked, including Scotch Tape, Photoshop, Realtor and Rollerblade. You can’t use any of these or other trademarked names and phrases in a domain name.
Penalties for Cybersquatting
Like in the case above, trademark holders will sometimes sue people for cybersquatting, demanding $100,000 or more from the cybersquatter.
Most of the time, however, trademark owners will either contact the domain name owner requesting them to turn the domain over, or they may file a cybersquatting complaint under the Uniform Domain-Name Dispute-Resolution Policy (UDRP).
Understanding the Uniform Domain-Name Dispute-Resolution Policy
UDRP is a simple complaint process that doesn’t come with the expensive costs of litigation. If the company that files the case wins, then it gets the domain name. The domain name owner does not pay a fine but loses the domain he or she registered.
In order for a company to win a cybersquatting complaint under UDRP, it must show three things:
- Your domain name is confusingly similar or matches their trademark. In the case of WordPress, The WordPress Foundation can just point to its registered trademark. But a company doesn’t have to have a registered trademark to file a UDRP; they can show that they have unregistered rights through extensive use and and secondary meaning of the term.
- You don’t have legitimate interests in the domain name. The company has to show that you don’t have a legitimate reason for registering the domain. Perhaps you registered it because it matches your business name. Or maybe the domain name includes your last name. This will make it harder for someone to claim you lack a legitimate interest in the domain.
- The domain was registered and used in bad faith. Note the word “and” in this part of the UDRP. The trademark owner has to show that you registered the domain in bad faith back when you originally registered the domain. If a company starts using a trademark term after you register the domain name, then you probably won’t lose your domain in a UDRP.
Of course, there’s lots of nuance when it comes to cybersquatting. If one of your domains is ever subject to a UDRP, it’s probably a good idea to talk to an attorney that specializes in cybersquatting disputes.
Domaining Done Right
At Namecheap we want to help you achieve all of your domaining goals. You can register all of your .com, .net and .biz domains with Namecheap, or check out one of the hundreds of new top level domains.
And to make sure you don’t accidentally register someone else’s trademark, be sure to do search for potential conflicts on Trademark247.com.
Andrew Allemann is editor of Domain Name Wire, the longest-running blog covering the business of domain names. Domain Name Wire has covered the business of domain name investing for over ten years.