Cybersquatting: where do we stand?

The age of new gTLDs has brought with it more opportunities for cybersquatters. Nathalie Dreyfus of Dreyfus & Associates reports

The Internet Corporation for Assigned Names and Numbers (ICANN) launched the new extensions project in 2008. In January 2015, the number of registered domain names among 500 new active extensions reached the four millions. Within a few years, the number of new extensions continuously increased from 20 to more than 1,000. Some 506 of 1,930 initial applications for new gTLDs have been integrated to the root of the internet, while 1,208 files are still pending as at 9 February 2015.

Sixty percent of these applications consist of generic terms, ie, they are not protected by intellectual property rights, such as .shop, .song or .weather. In 2014, the top three extensions—.xyz, .guru and .club—alone accounted for 23 percent of registrations in new gTLDs. Donuts is one of the most active actor, having submitted around 300 applications, of which more than 120 are already active.

The launch of a new extension takes place in different stages, with the sunrise period reserved for trademark holders. The .paris gTLD opted for an original sunrise period. Indeed, the launch of .paris took place over a unique period of 63 days, during which five categories of applications were accepted in order of priority:
  • Category one: rights holders having a mark registered with the Trademark Clearinghouse and protected in France;

  • Category two: public authorities from Ile de France region;

  • Category three: holders of trademarks protected in France or holders of geographical indications;

  • Category four: holders of other rights; and

  • Category five: landrush period begins.

  • During that period, 1,600 trademarks and companies reserved their names in .paris. Then, since the opening of this extension to the public on 2 December 2014, more than 12,000 domain names have been registered.

    Strategically, new gTLDs may constitute an advantage through their meaning, but also by improving referencing on search engines.

    New gTLDs, therefore, completely changed the internet and ended the dominance of .com. In January 2015, there were 119 million .com domains, accounting for only 40 percent of all domain names.

    Combating new gTLD cybersquatting

    Just as generic TLDs, legacy TLDs and several country-code TLDs, new gTLDs still benefit from the Uniform Domain Name Dispute Resolution Policy (UDRP) procedure, as well as the Uniform Rapid Suspension (URS) system. The meaning of the extension in which a registration is made may have an impact and may be taken into account when considering the three conditions in the UDRP procedure. World IP Organization (WIPO) experts, in a case concerning the domain name (.co corresponding to Colombia) mentioned this just before the delegation of new extensions (OMPI DCO2013-0017, Tesco Stores Limited v Mat Feakins). In addition, the URS procedure was designed specifically to limit cybersquatting in new extensions.

    In spite of these procedures, it was necessary to act at an earlier stage. There are mechanisms specifically intended for new extensions such as the TMCH and Domains Protected Mark List (DPML). The TMCH is a mechanism designed by ICANN that allows trademark holders to protect their rights as part of the expansion of new extensions. The goal of the TMCH is to prevent cybersquatting in new extensions. Registration with the TMCH allows the enforcement of trademarks and to benefit from a preferential right of reservation during the priority sunrise period reserved for trademark holders. TMCH registration also makes it possible to be informed of any unwarranted reservation that is comprised of a domain name that addresses or imitates a trademark and to notify the applicant of a possible infringement.

    Some new gTLD candidates also proposed setting up additional protection tools for rights holders. Donuts set up the DPML in order to supplement weaknesses of the TMCH. The DPML is a rights protection mechanism used by private registries on their new gTLDs. It is a database of trademarks composed of registrations previously validated by the TMCH. It allows for the blocking of domain name registrations that contain these trademarks in new gTLDs, as long as it is being used by a registry through which the rights holder made its blocking application.

    All registered and maintained trademarks in the TMCH, and for which an SMD (signed mark data) file has been generated, are eligible. The blocking of a trademark can be achieved either for identical or contained terms. For example, for the ‘Sony’ trademark, the names ‘sony.tld’ and ‘sony-pictures.tld’ could be blocked, but not ‘soni.tld’. This blocking is active for as long as the trademark remains in the TMCH.

    Mathematical increase of risks

    It has often been highlighted that the setting up of so many new gTLDs at the root of the internet could affect its stability and security, even though this risk has not yet been proven. Among the risks are conflicts between domain names, but also and mainly, an increase in cybersquatting. With regards to possible conflicts between domain names, the delegation of .corp and .home has, for example, been extended indefinitely to limit that risk. For the time being, this avoids confusion with private internet spaces, such as companies’ intranets. Some new extensions may constitute a risk on their own, for example, extensions linked to a function, such as .email, .jobs, or .careers, or those connected to the freedom of expression, including .wtf, .fail, and .sucks.

    Cybersquatting inevitably affects many new gTLDs. In fact, the increase in new gTLDs automatically augments this risk. The only difference lies in the fact that there is now a higher number of domain names likely to be cybersquatted. Of the last 400 UDRP and URS disputes, new gTLDs are 15 times more represented than usual.

    According to WIPO and National Arbitration Forum statistics issued in May 2014,.guru was involved in 10 complaints and .email in nine. Other extensions that featured in UDRP actions included .holdings, .ventures and .clothing.

    IBM was the first company to win a dispute in which new gTLDs were involved in a decision delivered on 12 February 2014 over domain names and The case of Yoyo Email perfectly symbolises the increase in cybersquatting in new extensions. In that instance, that British company Yoyo Email had registered more than 4,000 domain names in the following form: Dozens of UDRP and URS complaints were filed against this company and experts ordered the suspension or transfer of the domain names in most cases. The .email gTLD has also given rise to legal actions in the US.

    Limited effect of current mechanisms

    The UDRP and URS procedures are now often used for new extensions. While URS is cheaper and quicker than UDRP, it can only achieve the suspension of the domain name and not its transfer. Also, recent URS decisions show that case law is very uncertain and that the burden of proof is very important for the plaintiff in these proceedings. As such, a vast majority of URS actions that were dismissed could have been accepted in the context of UDRP. As URS does not allow a domain name to be secure, due to its strict conditions and the fact that it can only achieve suspension, it is more appropriate to turn to UDRP procedures to obtain the transfer or cancellation of important domain names.
    Nevertheless, the URS turns out to be helpful in urgent cases.

    The efficiency of current tools is therefore limited. They are not always suitable to combat cybersquatting in new gTLDs. As early as 2013, the alarming risk of cybersquatting on domain names of reputed American companies became apparent. A study performed on several new extensions showed that the 50 most reputable trademarks in the US were subject to pre-reservations of domain names by third parties.

    With regards to other protection mechanisms such as the DPML, they can be efficient to combat cybersquatting, but they also carry a number of disadvantages. In spite of its simplicity and its affordable prices for companies, it is imperative to unblock each registered domain name individually, or to renew registration of the corresponding trademark in the TMCH in order to keep the DPML freezing in place.

    According to TMCH statistics issued on 22 January 2015, 34,000 trademarks are registered in the TMCH, half of which have been registered for several years. It appears that the notification of a possible breach has a beneficial interest for the defence of trademarks on the internet. According to the TMCH and the latest statistics, as at 1 February 2015, more than 25 million notifications have been sent to applicants of domain names in new extensions, highlighting a likely potential breach of trademarks. The dissuasive effect seems to work.

    However, irrespective of the tools that are or will be used, the new extensions will necessarily increase cybersquatting in the whole world by their rapid and recent increase. Therefore, the new extensions are no exception to cybersquatters, even though specific tools were set up to defend trademarks. In the future, it may be necessary to develop more systems, or to amend current ones, by taking into account the acquired experience from this cycle of new extension launches. The discussion has already begun.
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