Direct Navigation

Combating Cybercrime

The tremendous market potential associated with Direct Navigation combined with the inherent value of some of the world’s most famous brands make domaining, aggregating and cybersquatting extremely lucrative businesses. Cybersquatting is by far the most problematic business that has been built to capitalize on Direct Navigation and leads to numerous other cyber-crimes that are harmful to both consumers and brand owners alike. In response to continued complaints from brand owners suffering losses in both revenue and reputation, we are seeing the enactment of legislation aimed at controlling cybersquatting and cyber-crime.

Brand owners can use the U.S. Anticybersquatting Consumer Protection Act (ACPA), which was passed in 1999, as an alternative to traditional trademark enforcement. The ACPA defines cybersquatting as “the bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks,” and provides brand owners with a simpler way to act against infringers. However, it has done little to deter cybersquatting, and places a large burden on the rightful brand owners to prove that infringement has occurred.²⁵

The ACPA defines the numerous purposes of cybersquatting that it was designed to prohibit. They include demanding payment from the rightful owner of the mark that is forced to pay for the right to conduct e-commerce under their brand name; selling or auctioning the name to the highest bidder either publicly or discretely; serving illicit content on sites; engaging in confusion-creating tactics and preying on customer confusion; engaging in mass registration of well-known marks or “warehousing;” and defrauding consumers by methods including counterfeiting.²⁶ Most importantly, the ACPA requires demonstration of bad-faith registration.

There are nine elements under the ACPA used in demonstrating absence of bad faith or proving bad faith intent. In an ACPA case, the court will consider all of these in its final decision. The first four factors help the court determine whether infringement has actually occurred. They include the intellectual property rights of the domain name owner, legal name vs. nickname, legitimacy of goods or services sold and noncommercial or fair use. The remaining five elements assist the court in determining if the domain names were registered with intent to harm the rightful brand owner. These include intention to divert customers, sale of the domain name for gain, provision of false contact information, multiple confusingly similar domain names, and the use of distinctive or famous marks.²⁷

While the ACPA has made it easier for brand owners to pursue action against infringers because it clearly defines cybersquatting and has established some clear legal precedents and case law, it has done little to deter cybersquatting. Cybersquatters are persistent primarily because they can go undetected for a period of time and because the financial benefit of capitalizing on Direct Navigation outweighs the risks. Unfortunately, much of the burden of recovering infringed names is placed on the brand owners. They are responsible for performing all due diligence in monitoring the use of their brands in order to recover names and are left facing financial and other intangible costs. As soon as they have successfully recovered one set of names, another ten, hundred, or thousand infringing names are registered.

It is therefore beneficial for trademark owners to push for more favorable legislation and consider new, potentially more effective avenues for enforcement. In a past Perspectives (Volume 3, Issue 1), FairWinds explored the enforcement options available to brand owners with Bob Shaughnessy of Williams & Connolly LLP, a Washington, D.C. litigator who has represented trademark owners against cybersquatters. One suggestion put forth in that Perspectives was for brand owners to consider banding together to pool their resources and go after some of the most problematic cybersquatters more aggressively. However, as with all aspects of a brand’s online strategy, it is important to make informed decisions and take appropriate actions specifically tailored to each particular case.

Navigating Ahead

We have seen that the inherent value of the Direct Navigation market continues to drive profit for numerous businesses, most notably those dealing in domain names. The struggle for these valuable domain names is ongoing. Since valuable domains tend to be the most intuitive ones, the majority of quality domain names are already registered. Many people dealing in domains have turned to infringement and/or various means of acquisition including auctions, drop-catching or outright purchase to increase their holdings. Certain domains containing brand names, brand names combined with generics, generic terms and variations thereof are invaluable to brand owners, traffic aggregators, domainers and cybersquatters. If the climate of the Direct Navigation market continues along this path, domain names will continue to see a steady increase in value and provide businesses with both an effective and succinct way to reach their audiences and a generous return on investment.

FairWinds Partners remains focused on analyzing the underlying causes of cybersquatting and the patterns associated with this practice in order to better serve the public interest and assist brand owners looking to effectively leverage Direct Navigation. By keeping the public and brands abreast of important information regarding Direct Navigation, we can ensure that Internet users are consistently provided with safe and expected online experiences and that brand owners are equipped with the tools needed to develop optimal and cost-effective domain strategies. We will explore the issues of typosquatting and combosquatting in greater detail in forthcoming studies and provide additional insights into how companies can proactively tap into the value of Direct Navigation. We hope that you will be able to use both this discussion and those studies to understand the benefits and challenges of the tasks that lie ahead.

Many of the terms used in this paper are available online in the
FairWinds Knowledge Center and CADNA Resources Section

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