Domain Names Cybersquatting on the Rise, Says WIPO

Domain Cybersquatting is at its highest level in four years. Is the dispute resolution system still working? Or are other factors causing problems?

You might not have heard much about cybersquatting in the news lately, and took this as a sign that the problem is going away. Think again. The World Intellectual Property Organization reported a 20 percent jump in the number of cybersquatting cases it handled in 2005 over the year before. Frances Gurry, director general of WIPO, stated that the number of cases is the highest recorded since 2001, and that the crime itself seemed to be on the rise.

For those who don’t know, cybersquatting occurs when someone who has no right to a particular trademark or copyright registers it as a domain name – for example, Steve Jobs registering a domain name with some variation of the word “Microsoft” in it would probably be considered cybersquatting. The cybersquatter hasn’t asked for permission from the rights holder, and often will try to sell the domain name to the rights holder for an exorbitant sum of money. In short, cybersquatting is an attempt to kidnap a piece of intellectual property and hold it for ransom.

WIPO’s Arbitration and Mediation Center was created in 1994 to offer dispute resolution procedures for all types of intellectual property disputes. In December 1999, the Uniform Domain Name Dispute Resolution Policy came into effect. It allows for a streamlined way to resolve disputes centering on domain names. Since the policy came into effect, the Center has handled more than 8,300 complaints. The total number of disputes racked up for 2005 came to 1,456.

The actual number of disputes over domain names may be higher. WIPO does handle more than half of the world’s cybersquatting disputes each year, but that still means the actual number of complaints last year could have approached 3,000. Given that a person can register a domain name for only a few dollars, the problem seems likely to grow as the Internet continues to increase in size.

Many of last year’s cases were brought by celebrities. These included Morgan Freeman, Damien Hirst, Frank Gehry, and Larry King. Sports organizations were also victims, such as the Lance Armstrong Foundation, Italian soccer club Juventus, and the English Premier League. Fashion designers also saw their names targeted, including Ralph Lauren, Hugo Boss, Armani, and Calvin Klein.

Cybersquatters didn’t forget technology companies. Sony Ericsson and Renault had their day in arbitration. Indeed, in general, technology firms are frequent users of WIPO’s UDRP. Other regular users include entertainment figures, pharmaceutical companies, and small- to mid-sized businesses. These individuals and organizations live and die by their intellectual property.

Examining the cybersquatting cases that WIPO dealt with last year and sorting them by nationality, we find out that individuals or companies from the United States make up the single largest group of complaint filers, accounting for nearly half of the complaints. They also make up the single largest group targeted by complaints, again accounting for nearly half of the total number filed.

The next most frequent filers came from France, Britain and Germany. Interestingly, France and Germany were rarely on the other end of a cybersquatting complaint; instead, firms and individuals from China were frequent targets of complaints. Gurry believes this is due to linguistic reasons; certain languages are more accessible than others for cybersquatters.

WIPO’s figures are truly international. Since 1999, the Arbitration Center has handled cases coming from 127 countries, concerning 16,000 domain names. That may seem like a lot, but keep in mind that currently, there are about 60 million registered domain names worldwide. Despite the popularity of “end of the Internet” pages (just search for the phrase on Google for more than 799 million links), there seems to be no end in sight for the web’s expansion.

This very likely means no end to cybersquatters. As Gurry observes, cybersquatting “is a commercial model based on the number of hits on a site.” For a very small investment, a person can get instant traffic by trading off another individual’s or firm’s popularity, even if they don’t immediately try to sell the site back to the rights holder. Indeed, many of the cases handled by WIPO have involved the 100 largest international brands by value.

Most complaints, not surprisingly, revolved around users of the “.com” domain. Of all the global top level domains (gTLDs), this one has proven to be most popular. It’s one of the oldest gTLDs, and some Web surfers won’t take a business seriously unless it has a .com domain. It makes sense, then, that .com domains would be a frequent target for cybersquatters.

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