In a report issued on March 12, 2007, The World Intellectual Property Organization (WIPO) warned trademark owners that they face increased risks from cybersquatters.

WIPO Conclusions

New Practices That Increase Risk to Trademark Owners

The report observes that "While electronic commerce has flourished with the expansion of the Internet, recent developments in the domain name registration system have fostered practices which threaten the interests of trademark owners and cause consumer confusion." Further, the report states that "domain names used to be primarily specific identifiers of businesses and other Internet users, but many [domain] names nowadays are mere commodities for speculative gain." Two related practices the report cites, which represent the greatest threat to trademark owners are (1) the proliferation of automated domain registration systems and (2) domain "tasting."

Automated Domain Registration Systems

The use of computer software to automatically register domain names has increased dramatically. In some cases, the software user either manually enters trademarks or the software pulls trademarks from lists or the USPTO database. The software then uses advanced algorithms to automatically register any available domains that are the same or similar to the trademarks, combinations of the trademark and generic terms, and possible mistypings of the trademark. In other cases, the software may combine dictionary terms, register any expiring domain name, or even register at random. After the domains are registered, Pay-per-Click (PPC) advertising links are placed on these sites to generate revenue for the domain owner. These links are either randomly generated or generated by using the trademark and/or generic terms for the goods and services as keywords that are already established with search engine advertising networks like Google AdWords.

Domain Tasting

Domain tasting refers to registrants (or registrars) taking advantage of a rule which allows a registrar to avoid registration fees if it deletes a domain within 5 days of registration. The computer software that automatically registers domains similar to trademarks leverages this rule by monitoring the traffic to the domains it has registered for the first 4 days and deleting any domain that does not receive enough traffic to generate at least the cost of registration in Pay-Per-Click advertising revenue. The report concludes that as a result of computer applications, tens of millions of domain names are temporarily registered on this basis each month.

Increased Threat Internationally

The report revealed an increased number of respondents in UDRP complaints from outside the United States, which indicates an increased international threat of cybersquatting. The most frequently named respondent countries after the USA were the UK, China, Republic of Korea, Canada, Spain, France, Australia, Italy, and Russia. Additionally, there was an increase in the number of ccTLD domain name disputes filed with WIPO (some ccTLD registries have designated WIPO to provide domain name dispute resolution services).

Significance Of WIPO Conclusions To Trademark Owners

How These Practices Threaten Trademark Owners

A majority of internet users searching for information about trademark owners or their goods and services type the trademark, or a combination of a trademark and generic, terms directly into their browsers to find what they are looking for. Therefore, the above practices represent a significant threat to brand owners for several reasons:

  1. Creation of consumer confusion - When an internet user types (or mistypes) a trademark or a trademark and generic terms and they arrive at websites owned by third parties where similar goods and services are offered, consumers can believe the goods and services are offered by the trademark owner or that the website is somehow associated with or sponsored by the trademark owner.

  2. Dilution – Registration of large numbers of domains incorporating or similar to a trademark necessarily lessens the capacity of the mark to identify and distinguish the trademark owners goods or services online in the same way that registration of a large number of the same or similar trademarks would.

  3. Loss of Sales / Unnecessary increase of costs – PPC links are often generated by Google AdWords or similar services. The PPC links displayed on a particular domain name are usually controlled by association with keywords that advertisers bid on with these services. The keywords are often the trademarks themselves as well as generic terms for goods and services associated with that trademark. For example, the domain DETLAAIRLINES.COM (note the inverted "T" and "L" characters) might have PPC links generated from keywords such as "Delta", "Airlines" and "Flights". Since the only people that bid on trademarks as keywords are the trademark owner and its competitors, one of two bad things happens:
    1. Internet users searching for the trademark owner’s goods and services are directed to competitor websites.

    2. Internet users are directed to the trademark owner’s website, but the trademark owner must pay increased costs for the traffic that it would have otherwise received for free
  1. Facilitation of Fraud and Identity Theft – When an internet user types (or mistypes) a trademark, or a trademark and generic term(s), and arrives at website owned by third parties which look like the trademark owner’s website, they can be fooled into releasing sensitive personal information.

What Should Trademark Owners Do to Protect Themselves

Trademark owners should take the following steps to protect their valuable trademarks online:

Perform a domain audit – Utilize trademark counsel experienced in domain related matters to complete an international search of all existing domain registrations corresponding to, incorporating, or similar to your trademarks

Register Available Domains – Register available domains corresponding to your trademarks in all gTLDs (.com, .net, .info, .org, .biz) and all countries where your trademarks are currently being used or may be in the future. This is the most cost effective way to protect your trademarks online as enforcement action to reacquire domains after they have been registered by third parties can cost up to 100 times as much as defensive registration by the trademark owner. Trademark owners should select a domain registrar that serves corporate clients only, can register domains on a worldwide basis, and provide local presence service where necessary.

Subscribe to a Domain Watch Service – Engage a domain watch service to monitor all future registrations of domains corresponding to, incorporating, or similar to your trademarks.

Create an Enforcement Strategy – Work with trademark counsel to establish a strategy for dealing with existing and future third party registration of domains corresponding to, incorporating, or similar to your trademarks that fits your budgetary and operation constraints.

Have your trademarks removed from use as keywords by the major online advertising providers – Trademark counsel experienced in domain and internet matters can utilize the advertising network’s procedures and increase the likelihood that your trademarks can no longer be used as keywords to generate advertising.

Ladas & Parry LLP has extensive experience protecting trademarks online and can provide the above services through its Digital Brands Practice as well as its ICANN accredited domain registrar, Ladas Domains LLC. If you have any questions regarding protection of your trademarks online or the above services, please contact Marc Trachtenberg.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.