Cybersquatting:
Domain Names in Cyberspace, Settling a New Frontier

by Michelle A. Flores

Introduction

By the 1850’s, huge land acquisitions had filled out the continental United States.  Despite great hardships, settlers continued to push westward, seeking land of their own in a new frontier, often squatting, the act of settling unoccupied public lands in order to claim it as their own. The sheer vastness of the country reinforced the belief that the public domain rightfully belonged to the people. Almost 150 years later, a new group of settlers began seeking out another frontier. They are called cybersquatters and they are not seeking acres of land with a stream or pasture, but rather valuable cyber real estate in the form of domain names. Just as the land squatters of the 1800’s became part of the unique history of settling the western frontier, cybersquatters have carved their own niche into settling cyberspace, the newest frontier.

What is a Cybersquatter?

In plain English, cybersquatting is registering Internet addresses containing someone else’s name, in the hopes of selling that address back at a profit. Imagine you own a company called XYZ Corporation. You have had the name for some time, and have built a successful marketing campaign around it. Then the Internet comes along and you realize you want to have a web site with the address www.xyz.com. When you attempt to register the name, you find out somebody else has beaten you to the punch. You contact that person and quickly realize they are not going to let the domain name go for cheap money. You begrudgingly pay the "ransom" because you realize you need that domain name to have a successful Internet web site.

To fully understand what cybersquatters are doing, it helps to understand what a domain name is. A domain name is basically a character string that serves as an Internet address, pointing your web browser to the "real" Internet Protocol (IP) address, a string of numbers that would be extremely difficult to use and remember (Mueller 1). For example, most Internet users know if they want to buy books on-line, all they have to remember is amazon.com. Can you imagine having to remember 208.216.182.15? Even less likely is Amazon’s advertising section successfully marketing a seemingly meaningless string of numbers. Most domain names consist of three levels, top, second, and third. For example, in www.amazon.com, com is the top-level domain that tells the purpose of the organization; amazon is the second-level domain that defines the organization; and www is the third-level domain, the server that handles the Net request. The most common top-level domains in the United States are:

Why do Cybersquatters do What They do?

Early on, enterprising individuals realized the potential money making ability of cyber real estate. Thus began the "World Wide Web’s gold rush, when foresightful techies locked up every domain name with vaguely commercial potential" (Woolley 244). They also began registering domain names for people in all lifestyles, whether they were famous at the time or not. Aran Smith, owner of a company called We Got Games in San Francisco, California, has spent over $15,000 to own more than 200 Internet addresses, mostly the names of promising high school athletes (Cohen 58). Scott Hazelton is a 6’8" teenager from Lawrence, Massachusetts who dreams of making it to the NBA. He may not be famous yet, but Smith has the domain name www.scotthazelton.com locked up.
 
"A few minutes online and two weeks to wait for snail mail proved all it took for Quittner to own McDonald’s trademarked name as a domain name."

Smith’s gamble may not have paid off yet, but for other cybersquatters, the payoff has been enormous. Until recently, almost anyone could register any domain name that was available, regardless of the name’s origin and if it was trademarked. In October of 1994, Joshua Quittner wrote an article for Wired Magazine called "Billions Registered: Right now, there are no rules to keep you from owning a bitchin’ corporate name as your own Internet address." Although the general thrust of the article was very amusing, an amazingly serious thing happened. In the progress of researching his article, Quittner realized there was no mcdonalds.com on the Internet. He called McDonald’s, and after getting nowhere, he decided to find out how long it would take him to register mcdonalds.com. A few minutes online and two weeks to wait for snail mail proved all it took for Quittner to own McDonald’s trademarked name as a domain name. When he received the letter, he described his reaction, "My fingers trembled, as if ripping open a Big Mac.  Oh, that’s McCool. I feel like McPrometheus. I have stolen McFire" (Quittner). Eventually Quittner relinquished mcdonalds.com to the McDonald’s Corporation.

Quittner’s intuitive article made light of a serious situation which escalated as more and more domain names were snatched up. Even recently, individuals have tried to gain financially from the sale of a sought after domain name. In October of 1999, Morgan Stanley Dean Witter & Company were ready to launch their new on-line stock trading service, only to find out the domain name they wanted, www.msdwonline.com, had already been purchased. A 17-year-old from Los altos, California, Ivan Wong, created the site and said he named it after a shop that sold him his mountain bikes, Mud Sweat’s Downhill World. According to an article on The New York Times web site, the chain of events were as follows:

It is no wonder cybersquatters have profited. Even generic domain names are being bought and sold at phenomenal prices. A visit to www.greatdomains.com, the web site of one of the leading domain name brokers, details which domain names are for sale and which have brought in the biggest money. Table 1 represents a small section of GreatDomain.com's inventory as it was posted on 3/31/00.  If you have an extra couple of million lying around, you too can bid for income.com. Prices range from a modest $14,500 all the way to $7.5 million, the recent sale price of business.com (Chen 184).

Selling domain names is not the only way cybersquatters have profited from the domain name boom. Variations of popular trademarks or names are often registered to intentionally lead an Internet browser to another site. In April of 1999, a federal court forced a pornographic web site to relinquish wwwpainewebber.com (missing a period to distinguish it from the investment company’s site) (Cohen 58). In addition, hundreds of top celebrities have had their names hijacked by cybersquatters. Try typing in www.tomcruise.com. You will not see the official web site of Tom Cruise, but rather Celebrity 1000, a commercial site.

How is the United States Combating Cybersquatting?

A major factor at the root of the cybersquatting problem has been the management of the domain name system (DNS). Until recently, Network Solutions, Inc. had the sole responsibility for registering domain names. The history of the DNS dates back to the early 1980’s when the Internet was used mainly for research and was managed by the Department of Defense’s Advanced Research Projects Agency (DARPA). The task of maintaining a list of host names and addresses became overwhelming and the DNS was developed to improve the process. In 1991-92, the National Science Foundation (NSF) took over the responsibility for managing the non-military portion of the Internet infrastructure.  They solicited competitive bids from private companies to provide many various infrastructure services, including domain name registration services. The company that won the bid was Network Solutions, Inc. As the Internet grew and became more commercial in nature, the government realized "it becomes less appropriate for U.S. research agencies to direct and fund these functions" (National Telecommunications and Information Administration). When the five-year cooperative agreement with the National Science Foundation ended on September 30, 1998, the U.S. government set up a non-profit, private sector corporation called the Internet Corporation for Assigned Names and Numbers (ICANN) to take over management of the DNS. ICANN has a 19-member volunteer Board of Directors made up of a broad coalition of the Internet’s business, technical, academic, and user communities. On their web site, they address many issues that concern dissenters who say that the creation of ICANN will stifle the creative and diverse nature that is the Internet’s origins:

In the past, many of the essential technical coordination functions of the Internet were handled on an ad hoc basis by the U.S. government, its contractors and volunteers. This informal structure represented the spirit and culture of the research community in which the Internet developed. However, the growing international importance of the Internet has necessitated the creation of a technical management and policy development body that is both more formalized in structure, more acco untable, and more fully reflective of the diversity of the world’s Internet communities. Specifically, ICANN is assuming responsibility to coordinate the stable operation of the Internet in four key areas: the Domain Name System (DNS); the allocation of IP address space; the management of the root server system; and the coordination of protocol number assignment. (ICANN Fact Sheet)

One of the first goals ICANN accomplished was to provide open competition in the market for domain name registrations. Internet users can now go to numerous web sites that have authorization to register domain names. The goal in providing open competition was to "drive down registration costs and improve consumer choice for businesses and individuals" (ICANN Background). In addition, in August of 1999, ICANN established procedures for settling domain name disputes. The first case to be decided dealt with the World Wrestling Federation (WWF) challenging Michael Bosman of Redlands, California, a self-proclaimed cybersquatter, who approached the WWF in October of 1999 with a proposal to sell the rights to worldwrestlingfederation.com for $1,000. The case was ruled in the favor of the WWF and ordered Bosman to return the rights to the domain (Parkes 20).

While ICANN was busy working out all the growing pains of a new organization, the U.S. Congress passed the Anticybersquatting Consumer Protection Act in November of 1999. The act gives corporations and individuals another method to protect themselves from domain name cybersquatters, and remedies for getting a domain name back if it does fall prey to a cybersquatter. The act was passed "despite opposition from the Clinton administration, which felt the bill undermined ICANN’s authority" (Parkes 20). Complainants have the right to sue cybersquatters for damages up to $100,000, going beyond ICANN’s own procedure for resolving disputes. The act protects owners of a trademark, as defined under the Trademark Act of 1946. It defines cybersquatting as:

The registration, trafficking in, or use of a domain name that is identical or confusingly similar to a trademark or service mark of another that is distinctive at the time of the registration of the domain name, or dilutive of a famous trademark or service mark of another that is famous at the time of the registration of the domain name, without regard to the goods or services of the parties, with the bad-faith intent to profit from the goodwill of another’s mark.
(United States Congress)

In an article for the Washington Business Journal, Eidson and Bonello, attorneys for the Technology Business Law Practice Group in Washington D.C., outlined nine factors a court would consider in determining if bad faith exists based on the Anticybersquatting Consumer Protection Act:

1.  The intellectual property rights of the registrant in the domain name;
2.  The extent to which the domain name is the same as the registrant's own name or nickname by which the registrant is commonly recognized;
3.  The registrant's prior use of the domain name in connection with the offering of goods and services;
4.  The registrant's noncommercial or fair use of the mark in a Web site at issue accessible under the domain name;
5.  The registrant's intent to divert customers away from the trademark owner's Web site to a Web site that could harm the goodwill of the mark;
6.  The registrant's intent to sell the mark without intent to utilize the mark for any other bonafide purpose;
7.  The registrant's provision of material and misleading false contact information when applying for the domain name;
8.  The registrant's acquisition of multiple domain names which the registrant knows are identical or confusingly similar to, or dilutive of, others' marks; and
9.  The extent to which the mark in the domain name is distinctive.

With this new legislation, more and more cases of cybersquatting are making it to the courts. However, the results are not always in favor of the large corporation. Avery Dennis Corporation, well known for their office products since the late 1800’s, has web sites at avery.com and averydennison.com. They sued small business owner Jerry Sumpton who registered the domain names avery.net and dennison.net. Sumpton’s business is registering surnames and then selling e-mail addresses with those domain names. Initially, a district court ruled in favor of Avery Dennison and said Sumpton had to transfer the registrations to the corporation. In October of 1999, the United States Court of Appeals for the Ninth Circuit overturned the ruling, saying that "Sumpton did not dilute the well-known trademarks Avery and Dennison" (Kaplan).

Conclusion

Cybersquatting has definitely made its mark on cyberspace, making many people a lot of money quickly, forcing a monopoly to dissolve, changing policies, causing controversy, and providing the incentive for new legislation. Some people simply do not believe what cybersquatters have done is wrong, holding on to the vision of the Internet as a freewheeling world, where freedom of speech reigns supreme and the newest domain, Internet domain names, belong to the public. Whether they are right or wrong, one thing is certain, this new frontier of cyberspace will undergo many trials and changes before it is settled.

Bibliography

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