Sealing the cracks: a proposal to update the anti-cybersquatting regime to combat advertising-based cybersquatting

Abstract

Recent years have seen a resurgence in the practice of cybersquatting, and in particular cybersquatting that monetizes domain names through pay-per-click advertisements. Existing statutory and administrative anti-cybersquatting tools were not designed to cope with the advertising-based model of cybersquatting. As a result, brand owners lack effective tools to combat modern cybersquatting. (1) Where cybersquatters originally monetized their domain name portfolios by ransoming small numbers of domain names to brand owners, they now use pay-per-click advertisements spread over massive portfolios. Technological advances in the domain name system will continue to increase the opportunities for cybersquatters to expand these portfolios. (2) Existing statutory and administrative anti-cybersquatting tools are out-dated and ineffective. The Uniform Domain Name Dispute Resolution Process is procedurally incapable of coping with large portfolios of infringing domain names and substantively out of sync with national IP laws. Traditional litigation is too expensive and inefficient to offer a workable solution for brand owners. (3) Both administrative and legal remedies for cybersquatting have inherent flaws that cannot practically be remedied. A new anti-cybersquatting regime must therefore allow them to work together. The UDRP should be procedurally updated to allow limited discovery and facilitate large-scale cases, and an optional choice of law clause should be introduced to bring UDRP panel decisions more in line with national IP laws. Likewise, those laws should be revised to give explicit deference to UDRP decisions in litigation arising from the same facts as the UDRP action. Cybersquatting can injure a mark's distinctiveness and online recognition, and contextual advertisements can divert customers from the targeted brand's website. If anti-cybersquatting tools do not keep pace with cybersquatters' strategies, these problems will make it increasingly difficult for brand owners and customers to connect in the domain name system. The proposed revisions to the anti-cybersquatting regime will enable brand owners to protect their domain names more efficiently and to deter cybersquatters.