Summary Paper: Legal Implications of the Cyber-Squatting
Jorge L. Atencio-Parra
Bus-670: Legal Environment
Instructor: Dr. Gary Gentry
December 12, 2010
The purpose of this summary paper is to describe a possible legal situation we can affront in the working environment. Since I’m working in the IT industry, I would like to describe an interesting legal situation known as Cyber-squatting. Cyber-squatting is a derogatory term and means registering, selling or using a domain name with the intent of profiting from the goodwill of someone else's trademark. It generally refers to the practice of buying up domain names that use the names of existing businesses with the intent to sell the names for a profit to those businesses. Cyber-squatters usually ask for prices far greater than that at which they purchased it. Some cyber-squatters put up derogatory remarks about the person or company the domain is meant to represent in an effort to encourage the subject to buy the domain from them. The World Intellectual Property Organization (WIPO) saw a 20 per cent increase in the number of cyber squatting (abusive registration of trademarks as domain names) cases filed in 2005 as compared to 2004. In 2005, a total of 1,456 cyber squatting cases were filed with WIPO's Arbitration and Mediation Centre, according to a WIPO release. Many cyber-squatters also register many variants of a popular trademarked name, a practice known as typo squatting.
Legal Implications of the Cyber-Squatting
The practice that's come to be known as cyber-squatting originated at a time when most businesses were not savvy about the commercial opportunities on the Internet. Some entrepreneurial souls registered the names of well-known companies as domain names, with the intent of selling the names back to the companies when they finally woke up. Panasonic, Fry's Electronics, Hertz and Avon were among the "victims" of cyber-squatters. Opportunities for cyber-squatters are rapidly diminishing, because most businesses now know that nailing down domain names is a high priority. Common examples of cyber squatting include the reservation of sites that include the names of celebrities or companies. This guarantees the cyber-squatters a profit whenever a celebrity or company decides to set up an official Web site and needs that domain name. A 1999 law and an international arbitration procedure crack down on people looking to profit from other people's trademarks. If a person owns a trademark and find that someone is holding it hostage as a domain name until the owner of the trademark pays a large sum for it, the owner of the trademark is the victim of cyber-squatting. Amitabh Singhal, Acting CEO of National Internet Exchange of India (NIXI), says that all domain names, except those which have been reserved for use by the Government, constitutional bodies and the registry, are open for registration on a first-come-first-served basis. This is a standard global practice. The Electronic Commerce Bill, which has been tabled before the Indian Parliament, does not deal with the issue of cyber squatting. The imperative need of the hour is therefore for the legislature to catch up with the technical developments and pass a separate law prohibiting cyber squatting or any other malafide registration of a domain name. In India in the absence of requisite cyber laws to prevent cyber-squatting, the cases involving cyber-squatting are decided under the relevant provision of trademark laws. However in the UK, if someone has registered a domain name incorporating a trademark, then the domain name holder could be in breach of section 10 of the Trademark Act, 1994 that states “a person infringes a registered trademark if he uses identical or similar to the registered trademark in relation to identical or similar goods or services". Recognizing the problems raised by clash between domain...