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Local businesses battle global cybersquatters

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Businesses with an established name and reputation are at risk of a second cycle of cybersquatting – the the act of registering domain names to profit off of a similar trademark.

The original squatters made money by registering .com or .net names and then selling them back to the owner of a trademark or business, usually at an inflated price.

Businesses are now aware of the need to register most possible uses of their name, but round two of this game is set to start.

Luke Dale, intellectual property law specialist at Adelaide commercial law firm Kelly & Co, told InDaily the next online corporate “gold rush” is more complex with the arrival of generic top-level domain names (gTLDs).

“New domain name extensions such as .clothing and .technology are starting to become available to the general public,” Dale said.

“A few dozen of these gTLDs (which form alternatives to the traditional .com and .net) have already launched with the potential for over a thousand more to appear over the course of the next few years.

“South Australian businesses are forced to compete in an expanding global market to secure their brand’s place in the crowded race for the online consumer dollar.

“While some companies are pro-active, others appear to be unaware of the full extent of the rapidly evolving search engine-driven online environment.”

Dale said registering gTLDs may save a brand or business from being held to ransom by a cybersquatter at a later date.

“When you consider the millions of dollars companies invest in their brands, there’s a lot at stake,” he said.

“It’s not just retailers for which this applies.

“With gTLDs such as .consulting, .technology, .construction and .marketing now surfacing, companies within sectors ranging from professional services to manufacturing and building are all on notice.”

Dale said he’s already observed some unusual registrants for domain names corresponding to major brands including bensherman.clothing and supre.clothing which are registered to individuals in Wagga Wagga and Point Cook, Victoria, respectively.

“No-one knows for sure just how much online traffic these gTLDs will generate in the future or how they will be treated by search engines such as Google.

“However, the actions of some of the world’s largest companies in buying up gTLDs suggest the corporate world is taking them very seriously.”

So, what’s the value of an online domain?

Dale says it varies.

“Opportunistic technology companies have been established to buy up and later trade generic domain names via a reverse auction process.

“In some instances, companies have been willing to pay anywhere from a few hundred dollars up to several million to secure a domain name and add another asset to their online brand portfolio.

“The good news is that there are administrative processes that allow trade mark holders to make complaints about infringing domain name registrations or seek the suspension or transfer of gTLDs that have been registered or used in bad faith.”

IBM has become one of the first parties to take action via the Uniform Rapid Suspension scheme to successfully have the ibm.guru and ibm.ventures domain names suspended.

“The big question for South Australian businesses is do they take the plunge and stake their gTLD claim now or run the risk of an individual opportunist or competitor getting in first to plant their flag,” Dale said.

“The cost of preventative action is likely to be substantially less than taking on a cybersquatter later.”

 

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