Cybersquatting involves registering domain names related to celebrities or brands with the intention of reselling them at an inflated price. A cybersquatter can sit on a domain name for years, causing problems for the celebrity or company. The act of buying an unused domain name isn’t illegal, but using it in bad faith can cause legal problems. ICANN offers an arbitration option to resolve disputes outside the court system. The era of the cybersquatter may be ending as businesses and celebrities prioritize domain name registration.
Cybersquatting is the act of registering domain names, especially those related to recognizable celebrities or brands, with the intention of reselling them at an inflated price. A cybersquatter exploits the domain registrars’ first-come, first-served policy by submitting a long list of very popular words and names all at once. While the domain registrar is entering these names, the cybersquatter uses profits from individual domain resales to fund the required registration fees.
A cybersquatter can literally sit on a popular domain name for years, causing pain for the celebrity or the company they represent. Until a cybersquatter is recognized as the rightful owner of BillClinton.com, for example, the real former president cannot legally use his name as a domain. He would have to file a lawsuit to force the cybersquatter to give up the name, or actually pay whatever price the current owner awards him. Until a federal anti-cybersquatting consumer protection law became law in 1999, most celebrities and businesses found it easier to pay the often exorbitant fees levied by cybersquatters.
The actual act of buying an abandoned or unused domain name isn’t technically illegal under normal circumstances. What ultimately causes legal problems for a cybersquatter is using that domain name in “bad faith,” a purpose that is clearly contrary to the reputation or intent of a celebrity name or brand. If a cybersquatter chooses to set up a Paris Hilton fan site on ParisHilton.com, they may be protected from prosecution under the language of the federal anti-cybersquatting law. If that same cybersquatter used Paris Hilton’s celebrity status to drive traffic to a porn site, then Ms. Hilton (or any other celebrity in that situation) can sue in federal court for an injunction and fines. However, successful prosecution is not guaranteed, and attorney fees can be prohibitive.
An alternative solution to the cybersquatter problem may lie with a regulatory body called the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN now offers an arbitration option that can resolve domain name disputes outside the court system. Celebrities and corporate representatives have yet to prove a cybersquatter’s bad faith intentions, but successful arbitration can be held without legal representation. The cybersquatter can be forced to surrender domain rights at fair market value or be fined for misuse of a trademark. This would not apply if the cybersquatter registered a domain name before it was associated with a celebrity or brand. If a cybersquatter registered JimJenkins.com in 1998 and a new musical sensation named Jim Jenkins rose to fame in 2001, there would be far fewer grounds for a lawsuit.
However, the era of the cybersquatter may be coming to an end. Businesses and celebrities now have a better understanding of the importance of domain name registration. Acquiring the rights to one’s names and product lines has become a much bigger priority, considering how much potential income could be lost if their preferred Internet identities are already owned by a cybersquatter.
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