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Business should fund domain name police, says expert

A technology law expert has called on the business world to set up a policing outfit to tackle cybersquatters. The call came as Dell raised the stakes in the fight against domain hoarders, demanding compensation of $1 million per name in a lawsuit.04 Dec 2007

Dell is claiming that a series of alleged cybersquatting instances constitute counterfeiting of its trade marks and is seeking damages of $1 million per domain name infringed.

John Mackenzie, an intellectual property and technology law expert at Pinsent Masons, the law firm behind OUT-LAW.COM, said that businesses should band together to tackle the multi-million dollar cybersquatting industry pro-actively.

"What is really needed and what may occur is a trade organisation pushing a policing function whose only purpose is to chase these people," said Mackenzie, saying that it could be similar to business-funded copyright protection groups such as the Business Software Alliance.

"Brands have no choice," he said. "This is turning from the opportunistic registration of domains with people making small amounts of money in garden shed operations into activity from highly sophisticated organisations who are operating around the world."

Dell has sued in the US District Court of the Southern District of Florida claiming that a series of linked companies has registered 1,100 domain names that are 'confusingly similar' to its trade marks and therefore violate its rights. Controversially, though, it also claims that a further set of domain names are almost identical to its trade marks, and that this constitutes counterfeiting.

"Many of the Infringing Domains are substantially indistinguishable from, and thus counterfeits of, Plaintiffs' Marks," said its court case.

Dell claims that the counterfeit domain names include dell-biz.com, dellaccount.net, dellconsumercare.com, dellmotherboards.com and dell-outlet.com.

It is harder to prove that a domain name is indistinguishable from one of your trade marks than that it is confusingly similar.

The penalties for counterfeiting, though, are substantially higher than those for cybersquatting. Dell's suit seeks $100,000 for each cybersquatting domain, but $1 million per counterfeit domain "due to the wilfull nature of Defendants' counterfeiting", according to its suit.

The World Intellectual Property Organisation (WIPO) and others run a dispute resolution process called the UDRP through which trade mark owners can reclaim domains from cybersquatters. Unlike courts, though, that process cannot award damages.

Mackenzie said that as the business of cybersquatting mushrooms, businesses are taking a more formal approach to the problem.

"Brand owners are becoming increasingly disillusioned with the sheer cost of pursuing these people through the UDRP process," he said. "It costs $1,500 to bring a case over a single name and effectively you get nothing in return. You may get your domain but you are out of pocket."

"What brand owners will move to, I think, is taking the same amount of money spent on UDRP proceedings and spend it on court proceedings. There is no real answer to using a copy of someone's brand to attract traffic: it's trade mark infringement," said Mackenzie.

"If you go to court in the UK you will get costs. In the US you will get statutory damages of between $1,000 and $100,000 per domain," he said. "Even if you get just $1,000, one thousand domains at those damages is $1 million."

Dell's case is against Belgiumdomains, Capitoldomains, Domaindoorman, Netrian Ventures, Iholdings and Juan Pablo Vazquez. Its case said that those companies acted together to keep domains within the five-day 'grace' period after which no fees are due.

Cybersquatting has turned into an industry in recent years as the growth of internet advertising has made the holding of domains visited by mistake profitable. OUT-LAW.COM revealed earlier this year that the world's 500 biggest companies all suffer from typosquatting.