In February 2008, MarkMonitor, Inc released its latest Brandjacking Index. The Index summarises data collected by the US company on how popular brands are abused online. Significantly for trade mark and brand owners, the Index indicates that cybersquatting increased by 33% over 2007. Studies into the practice have found that cybersquatters are now targeting more popular consumer brands over a wider range of industries. Trade mark owners and brand name users must remain vigilant in monitoring use of their brands online to ensure that their interests are not diluted by unauthorised use.
A cybersquatter is an individual or company that in bad faith registers a domain name identical with or similar to a well-known trade mark, brand or other name. Usually, cybersquatters register a domain name with the intention of transferring the domain name at an inflated price to the legitimate owner of the name. Cybersquatters may also use the domain name to siphon online traffic to illegitimate or unrelated sites potentially damaging the reputation of the brand on which the domain name is based. To combat cybersquatting, legitimate trade mark owners and brand name users must avail themselves of the available registration and dispute resolution mechanisms to seek to remain in control of their brand use on the internet.
The Australian Domain Name Administrator (auDA) administers the registration and use of open second level domains (2LDs) in the .au domain, including .com.au, .net.au, .gov.au and .org.au. All auDA accredited domain name registrars are bound by auDA published policies. The enforcement of auDA's policy for Domain Name Eligibility and Allocation Rules for Open 2LDs is an initial step in restricting the ability of cybersquatters to register domain names in bad faith. Under the policy, domain name licences for all open 2LDs may only be allocated to an Australian registrant. To be eligible to register a .com.au or .net.au 2LD the registrant must also be, among other things:
- an Australian registered company;
- trading under a business name registered in any Australian state or territory;
- an Australian partnership or sole trader; or
- the registered owner of or applicant for an Australian trade mark.
Importantly, .com.au and .net.au domain names must exactly match or be an acronym or abbreviation of the registrant's company or trade name or trade mark or be otherwise closely and substantially connected to the registrant. This is unlikely to be the case for a cybersquatter. All registrants in the .au domain space are required to satisfy the policy rules issued by auDA and warrant to the relevant registrar that they satisfy the rules. An aggrieved party that believes a domain name has been registered in breach of the policy or in bad faith should notify auDA, which has the right to revoke the domain name licence in such circumstances.
Trade mark owners and brand name users may also take action against cybersquatters in accordance with either the Internet Corporation of Assigned Names and Numbers (ICANN) Uniform Domain Name Dispute Resolution Policy (for domain names ending in .com, .net and .org) or auDA's Dispute Resolution Policy (auDRP) for .au domain names. The auDRP incorporates and adapts the ICANN policy for use in the .au domain space. Under each policy, 'applicable disputes' must be referred to mandatory administrative proceedings. 'Applicable disputes' include a complaint made by a third party that:
- a registrant's domain name is identical or confusingly similar to a trade mark (or any name in the case of the auDRP) in which the third party has rights;
- the registrant has no rights or legitimate interest in the domain name; and
- the domain name has been registered or used in bad faith.
The following circumstances will be evidence of registration or use of the domain name in bad faith:
- the domain name has been registered or acquired primarily for the purpose of selling, licensing or transferring it to another party for a fee exceeding the out-of-pocket expenses directly related to the domain name;
- the domain name has been registered to prevent the owner of a trade mark (or name in the case of the auDRP) from registering that mark or name as a domain name;
- the domain name has been registered primarily to disrupt the business or activities of another party; or
- the domain name has been used intentionally to attract, for commercial gain, internet users to a website by causing confusion as to the complainant's name or mark being the source of or in some way affiliated with the website, or products or services offered via the website.
Remedies available to a successful complainant under each policy are limited to cancellation of the domain name or transfer of the domain name to the complainant, provided the complainant meets the eligibility requirements in respect of the domain name. Damages are not available as a remedy.
The auDA Clarification of Domain Name Licence - Prohibition on Sale of Domain Name Policy and the Transfers (Change of Registrant) Policy (due to be updated in mid-2008) also serves to prevent cybersquatters from selling or transferring registered domain names in bad faith. Accredited registrars are required to enter into a binding Registrant Agreement with each registrant to which they license a domain name. Registrant Agreements must include conditions that the registrant will not register a domain name for the purpose of selling it and must not purport to transfer a proprietary right in any domain name. The Prohibition on Sale policy reminds registrants that they only have the right to use the domain name under licence and do not own the domain name itself. If auDA determines that a registrant has offered to sell a domain name it will request the registrant to withdraw the domain name from sale. If the registrant fails to withdraw the domain name from sale, auDA will instruct the relevant registrar to delete the domain name registration and make it available to the public for registration by the usual means. The current auDA Transfer policy reinforces the prohibition on sale by only allowing a transfer of domain name if, among other things, the proposed new registrant is eligible to hold the domain name and the transfer does not breach the Prohibition on Sale policy. Although the updated Transfer policy will relax limitations on the transfer of domain names between eligible entities, auDA has confirmed that the prohibition on registering a domain name for the sole purpose of transferring or selling it will be retained. A trade mark owner or brand name user with a legitimate interest in using a registered domain name should report the registrant of that domain name to auDA if the registrant offers to sell the domain name or otherwise transfer it to them at an inflated price.
Aggrieved parties should be aware that the ICANN and auDA policies do not preclude other action being taken against cybersquatters under the Trade Marks Act 1995, Trade Practices Act 1974, any other legislation or under the common law in a court of competent jurisdiction. To avoid recourse to litigation and other dispute resolution methods and to protect brand names against cybersquatters, businesses seeking to develop new products or services are best advised to conduct both trade mark and domain name availability searches and secure registration before selecting a brand name and actively marketing any new product or service under it.
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.