Cyber Squatting

October 5, 2010, by | Start Discussion

Idea of "Cybersquating" was originated at a time when most businesses were not savvy about the commercial opportunities on the Internet. Some criminals registered the well-known companies names as domain names with intent of selling them back to the companies when they finally woke up. With increasing use of online business for advertising, promotion & selling of products, domain names of company’s gained equal value as of Trademark. Like increase in other Cyber Crimes, matters of infringement of Trademarks & passing off are also increasing. This is called as “Cybersquatting”. Existing Laws are still learning how to deal with Cyber Squatters.

What is Cyber Squatting?
Domain names serves as an identity on the Internet. They can be closely identified with the company, as customers surfing Internet believe that domain reflects company’s name, as the courts suggested in MTV Networks Inc v/s Curry*(S.D.N.Y. 1994), that, “A domain name is mirroring a corporate name may be valuable corporate asset, as it facilitates communication with a customer base.

A Cyber Squatter identifies popular trade names, brand names, trademarks, & even names of celebrities [Miss Universe Sushmita Sen was also a victim of Cybersquatting] & registers domain name on their name with the malicious intention of extorting money from persons who are associated with that domain name.
In the famous case of “Intermatic Inc v/s Toeppen (USPQ2d1412), the court expressed its opinion about Cyber squatters as :
They are the persons who attempt to profit from the Internet by reserving & later re-selling or licensing domain names (incorporating a famous mark) back to the companies that own the mark.
In this sense Cybersquatters are violating fundamental rights of trademark owner to use their trademark.

International Scenario
Internationally, the United Nations agency “World Intellectual Property Organization” [WIPO] has been working since 1999 to provide an arbitrational system where a trademark holder can register a claim against squatted site.

Keeping in view the practical difficulty in traditional litigation, ICANN (Internet Corporation for Assigned Names & Numbers) approved the UDRP (Uniform Dispute Resolution Policy). However, one of the shortcomings is that it just focuses on arbitration of dispute, not litigation. Further decisions of UDRP can be overruled by traditional courts.

Some countries have specific laws concentrating on “Cybersquatting” along with the traditional Trademark laws.
First country to have legislation on this is “United States of America”, they have introduced “Anti-Cybersquatting Consumer Protection Act, 1999”  Under this Act a cybersquatter can be held liable for actual damages or statutory damages in the amount of a maximum of $100,000 for each name found to be in violation.

Australia also has a law to prevent Cybersquatting. It entitles the interested person to register business name with an Australian Business Number (ABN) issued by the Australian Taxation Office. However, this has failed to protect Australia from such cybersquatting acts. Any Australian citizen over the age of 16 can obtain an ABN (which is free) and use it to register as many domain names as he/she wishes.

Considering the number of cases filed with WIPO, in 2010 1796 cases are filed with WIPO while in 2009 and 2008 it was 2107 and 2329 respectively.

On average, 84% of claims are decided in the complaining party's favor. (Source WIPO Website)

Indian Scenario
Indian judiciary, after realizing the importance of domain names have woke up & responded strongly against Cybersquatting. They have formulated some legal principles regarding this ever increasing crime.

.IN is India's top-level domain (cTLD) on the Internet. It is governed by the official .IN registry. IN registry was appointed by the government of India, and is operated under the authority of NIXI, the National Internet Exchange of India.                         The registry has formulated many policies for the registration and administration of .IN domain names. Most important policy is “.IN Dispute Resolution Policy (INDRP)”. It has been formulated in line with UDRP, and with the relevant provisions of the IT Act. Under INDRP there are two important documents:

  • The .IN Domain Name Dispute Resolution Policy (INDRP)
  • INDRP Rules of Procedure

INDRP disputes are decided as arbitration procedure.

On my best knowledge the first reported Indian case on the topic is
Yahoo Inc. v/s Akash Arora, 1999Defendants domain name “” was identically similar to plaintiff’s business name “Yahoo”. Court expressed their views that though “Yahoo” is a dictionary word, it has acquired uniqueness & moreover it is a business name of plaintiff. Such words have received maximum protection.

There after till date around 150 cases are filed under INDRP policy.

There must be some uniform law on this highly increasing crime as it affects the goodwill of the owner of Trademark as well as it will increase many other crimes like Credit Card fraud, cyber bullying & even pornography & ordinary people will suffer a lot.

Talking about India, currently cases relating to Cybersquating come under Tort of Passing off & infringement of Trademarks. It is not a quick process & a speedy trial. To fight with it the current Trademark/Copyright Act should be amended to include Cybersquating as an offence.

One of the major problems is about applying punishment:
One view says that, though Cybersquatting is a frame of blackmailing; it will be too harsh to apply criminal punishment of blackmailing for the offence of cybersquatting.
Another view says that though cybersquatting is a crime affecting society, its basic victim is Trademark owner & he should apply for ‘Permanent Injunction’ restraining its use.

Better solution for this is to make blacklist of cybersquatters. ICANN can create such a policy that punishes anyone found by Court of Law to have cybersquatted. It may be loosing domain name registrations incl. those which are legal & take off all other benefits which he would probably receive from the use of Internet. This would serve as a deterrent on other “Future” cybersquatters because, infringing the benefits from the use of Internet would definitely harm anyone in today’s world.

Moreover, the process of registration of Domain Name is not as strict as that of Trademark. Anyone can approach a Domain Name Registrar & register any available domain name.

Delhi High Court in Aqua Minerals Limited v/s Pramod Borse [2001] PTC 619 (Del.) observed that,
If any person gets the domain name registered with the Registering Authority, which is actually the trade name of some other person, the Registering Authority can’t inquire into it to decide whether the Domain name was registered before as a Trademark & belongs to some other person.

Such an inquiry is necessary. Most important thing is that, there must be co-ordination between ‘Registering Authority of Domain Names & Trademark Registration Authority.’
Many times people find that paying the cybersquatter is the easiest choice. It may be a lot cheaper and quicker to come to terms with a squatter than to file a lawsuit or initiate an arbitration hearing, these court processes will save substantial time & money. This should be stopped. All Trademark owners should get unite & decide not to fulfill Squatters demands.

If we see WIPO’s experience, it shows that UDRP disputes are mainly concentrating in the .com domain. Attention must be paid to establish preventive mechanism against illegal registration in new generic top-level domains [gTLDs]. E.g. in 2005, ICANN approved creation of new gTLDs like .travel, .jobs etc. If there is no strict policy for its assignment, Trademark owners have to compete with cybersquatters for their own Trademark.

Sagar is a Law graduate. He is Head at Asian School of Cyber Laws(Maharashtra). He specializes in Cyber Law, Intellectual Property Law and Corporate Law. He teaches at numerous educational institutions across India.

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