Are you thinking of setting up a website for your business? Don’t sit on the idea. Once you’ve thought of the domain name for your website, take the necessary steps to have it registered and reserved as soon as possible. If you don’t, you might find yourself a victim of cybersquatting.
What Is Cybersquatting?
Cybersquatting is the act of registering a domain name that’s the same or similar to an existing trademark or company name. The purpose is to sell the domain name in the future when a company wants to pursue the domain name as its own.
Let’s say you started a company called AZTech Incorporated. During the pre-operating phase, you decided to put up a website for the company after the first year’s operating numbers are in.
One year later, the financial reports show the company has excellent growth prospects. Because you’re confident of the company’s future, you green-light the website project and move to register the domain name www.aztech.com.
Unfortunately, you can’t because someone else has taken it. When you click on the URL, there’s no website. All you see on the screen is an advisory “This domain name is for sale”.
You’re in disbelief because the company name “AZTech Incorporated” was properly registered with the Securities and Exchange Commission (SEC). You have all the necessary business permits to run a business under that trade name.
Your only recourse is to buy the domain name from its present owner. However, the owner of the domain name “www.aztech.com” wants to sell it to you for US$5,000.
How Cybersquatting Started
If you’re thinking about starting a business but don’t know what to get into, one of the first things you do is to find a product or service that has strong demand.
This is the same mindset of “entrepreneurial” people who saw opportunities for profit on the Internet. They know having a website is crucial to business success and that 27 % of registered businesses still don’t have a website.
Businesses that haven’t registered a domain name for their companies become easy targets of these cybersquatters. These opportunistic but unscrupulous people knew that eventually, these companies would want to put up a website for their business.
With a bit of time, the cybersquatter can find out which operating companies still don’t have a website. He’ll come up with a list of possible domain names for these unsuspecting companies – including variations of their trade name.
The cybersquatter is hedging his bet that in a few years, one of these companies will want this domain name for his business. The investment in a cybersquatting business isn’t much. The cost of registering a domain name ranges from US$10 to US$20 per year.
How Cybersquatting Can Damage Your Business
When a cybersquatter registers your tradename as a domain name, the purpose might not just be to make a quick buck. The plot might thicken, run deeper, and have serious consequences for your business.
1. Hold Your Brand Hostage – Don’t be surprised to find out that the same person who registered your tradename as a domain name didn’t stop with a .com extension.
Likewise, a cybersquatter will register variations of your tradename with different extensions such as .net, .org, .co, or .us.
Now, you have no way out. Your brand/tradename has been held hostage and you’re compelled to pay an exorbitant fee as ransom.
2. Conduct Acts of Cybercrime – A cybersquatter might have a bigger agenda than just selling tradenames. He can facilitate other acts of cybercrime under websites with your tradename.
In our previous example, the cybersquatter can run phishing operations and distribute malware under the domain name www.aztech.com, www.aztech.net, www.aztech.us, www.aztechinc.com, and so on and so forth.
It won’t be long before the tradename AZTech is associated with cybercrime.
3. Run Smuggling Businesses – Another popular enterprise for cybersquatters is smuggling.
Cybersquatters use different domains to sell pirated merchandise from brands they imitated as well as counterfeit products.
Is it any wonder that cybersquatters are also referred to as “cyber pirates”?
The damage a cybersquatter can do to your business might be irreparable. Imagine if you invested years growing your business to unprecedented heights only to lose customers because they thought you were a cybercriminal or smuggler?
How To Find Out If You’re A Victim Of Cybersquatting
To be clear, just because the search doesn’t land you on a fully-functioning website, it doesn’t mean that your business has fallen victim to a cybersquatting scheme.
It’s possible that the owner of the domain name runs a legitimate business with real, concrete plans to use the website to sell his goods and services. Like you, he hasn’t decided on setting up a website for his business just yet.
In this situation, you might not be a victim of cybersquatting but of trademark infringement. Perhaps this person didn’t register his business at the SEC or any trade regulatory agency.
A scenario of trademark infringement can be resolved by your lawyer explaining and presenting evidence that the business name, while shared, has been legally registered by the SEC or another government agency to you.
Trademark infringement might also be the case if upon clicking the domain name, you land on a website that shares the same tradename but the business operates an enterprise that’s completely different or unrelated to yours.
However, if the search lands you on a fully-functioning website that sells your products, then, you’re a victim of cybersquatting. The proprietor of the site is feeding off your brand as an unauthorized reseller of your products.
What To Do If You Suspect That You’re A Victim Of Cybersquatting
The first thing you need to do if you suspect that someone else is profiting off your tradename, is to calm down. Yes, it can be a frustrating experience especially if you’ve already built up a following with your business. However, there might be a reasonable explanation for the situation.
Next, find out who owns the domain name by going to whois.net. Get the contact details and reach out to the person. Keep in mind that your tradename doesn’t have to be the same to constitute a case of cybersquatting.
For example, if your business name is AZ Tech and you’re a developer of business software and the domain name in question is AZ Tech Business Solutions. The similarity is enough to create confusion with your customers and be accepted as grounds for cybersquatting.
Even if you have a strong case, sometimes the best recourse is to just pay the cybersquatter. It doesn’t sound right but there’s no assurance you’ll win your case in court. Plus, paying off the cybersquatter will save you money in legal fees.
How To Protect Your Business From Cybersquatting
The moral of the story is an ounce of prevention is better than a pound of cure. There’s no way of knowing if a cybersquatter already has your trade name on his hit list. Thus, assume you’ve been marked for cybersquatting and that you should act now.
Here’s how you protect your business from getting victimized by cybersquatters.
1. Have Your Trade Name Trademarked
Your case for trademark infringement and cybersquatting will be stronger if you have your trade name formally registered as a trademark. Even if your trade name was registered with the SEC, it won’t prove that you own the rights to the trade name.
The only way to lay claim to your trade name is to have it registered as your trademark. If you have other brand and trade names that are proprietary to your business, have them trademarked as well to put your company in an advantageous legal position.
2. Don’t Put Your Website On The Backburner
One of the biggest mistakes a business can make is to set aside plans for a website. Some entrepreneurs tend to take a conservative approach to business and won’t invest in a website until the business gets traction.
By not setting up a website right away, you will hinder your business’ opportunities for gaining traction. Hardly anyone uses the Yellow Pages anymore. As far back as 2012, 91% of consumers were already using the Internet to search for information.
If you don’t have a website, your customers won’t be able to find your business. Worse, a cybersquatter might beat you to the race and set up a website using your tradename to run illegal activities.
3. Work With a Professional Web Design Agency
Professional web design agencies have the experience, knowledge, and resources to build a top-level, mobile-responsive, optimized website that’s beautiful and functioning properly.
In addition, they can guide you along the process of registering your domain name. Some agencies can check the availability of your preferred domain names and assist in having them registered.
Assuming these domain names have been taken, the agency can advise you on the courses of action you can take including the available legal remedies.
4. Buy Multiple Top-Level Domains
Of course, everyone wants to have a domain name with the .com extension. Include the cybersquatters on the list of “everyone”.
There are a good number of Top-Level Domains (TLDs) to choose from and they only cost US$10-US$20 per year to register. You don’t have to buy them all. Choose the more recognizable ones such as .net, .biz, and region-specific extensions like .us or .com.uk if you’re planning to expand to Europe.
Don’t give the cybersquatter any opportunity to slander your trade name. The small investment you make in buying the possible TLDs will save you thousands of dollars in potential legal fees.
5. Keep Track of Your Domain Expiration Date
A cybersquatter will also target domain names that have expired. This is where partnering with a trusted web host service provider is crucial because a reliable one will send you a reminder that your domain name is about to expire.
Even if you’re not sure if you want to continue the business, there’s no harm in renewing the domain name. It will buy you another year to plan your next steps and keep your brand from getting tarnished by malicious cybersquatters.
What are your legal options against cybersquatters?
If you believe you have been victimized by cybersquatters, there are 2 legal options for you to consider.
1. Anti-Cybersquatting Protection Act (ACPA) – Available only to citizens of the United States, filing a case with the ACPA can get the cybersquatter to surrender, transfer or cancel the claim to the domain in favor of the complainant.
2. Uniform Domain Name Dispute Resolution Policy (UDNDRP) – Developed by the Internet Corporation for Assigned Names and Numbers (ICANN) and managed by the World Intellectual Property Organization (WIPO) and is used as the forum to resolve international disputes including claims of ownership of domain names.
These legal options while available at your disposal can be costly and time-consuming. It’s recommended to hire a lawyer who’s familiar with cybersecurity laws.
Your case will largely depend on having irrefutable proof that the situation has affected the profitability of your business, damaged your reputation, the registered domain name owner had malicious intent, or carried out a trade that confused your customers.
As a business owner, your time and resources are best focused on running the enterprise. Having to deal with cybersquatters will drain your finances and energy.
For these reasons, have your trade name registered as a trademark right away, and let’s get started on your website.
If this is your first time planning a website for your business, give us a call or drop us an email. We’ll take care of your website while you take care of your business.
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