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Cybersquatters must be punished

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Comment The .eu domain name has been hailed a success because 1.5m variants were snapped-up within a week of the public launch – which is rather like saying that people love cough medicine because it sells well in winter.

As a consequence of Britain's 300,000 .eu registrations at the time of writing, how many .co.uk or .com names will be ditched in favour of an EU re-brand? Perhaps one or two. How many .eu names will front new, Europe-themed websites? Some. But I bet the vast majority will redirect traffic to another name or do nothing at all. Like empty towels on a beach in cyberspace, most .eu names have been reserved only to send tourists elsewhere.

This is largely because the nuisance of cybersquatting has never gone away. Poachers can use the names to give criminal operations a sheen of legitimacy; but more often they are used simply to attract web traffic and profit from advertising. A site that carries nothing but ads can make a few hundred dollars a day, provided it draws the traffic, until such time as the brand owner recovers it. Examples are seen in the batch of dispute rulings issued daily by the World Intellectual Property Organisation (WIPO). A typical example: francetelekom.com has been transferred to France Telecom from someone in Panama. The website was just a collage of ads for telecoms services. The owner did not fight.

A brand owner can take a squatter to court, demand the return of a name and request damages. With luck, it will also recover some of its costs. The costs are high – five figures is common if the case is contested – and higher still if the target is overseas. But location is irrelevant when the target can't afford to pay.

Arbitration is a less expensive, more popular forum. The service run by WIPO is an example, where you can evict a squatter for $1,500 plus your lawyer's fee. (All such .eu disputes will be handled by the Czech arbitration court, where fees start at €1,190.) In each case, the name is transferred – but no damages are awarded. And there's the problem. A squatter can ignore a claim, lose the name and still make a profit. Consequently, brand owners feel compelled to buy all variants of their own name because it is cheaper than legal action.

New domains are swelling these portfolios of defensive registrations. Some moderation is prudent, as Verizon learned a few years ago. The US telco registered more than 700 Verizon-themed names, many of them derogatory. It lost this word game when someone registered VerizonEatsPoop.com and launched a gripe site. Germany should have learned from Verizon. The EU allowed member states to submit a list of banned .eu names – so Germany blacklisted 3-reich.eu, fuehrer-deutschland.eu and more. This is surely pointless.

Perhaps it's time to change the rules, to introduce a deterrent. Give the arbitrator discretion to make the losing party pay his fee. It might be difficult to enforce, but it is surely better than the status quo. Only when cybersquatting becomes unprofitable can brand owners relax. They certainly can't afford to relax just yet: ICANN, the domain oversight body, is currently mulling the introduction of .tel, apparently intended to help people manage their contact information online. No doubt a stampede for .tel names will be misinterpreted as success.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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