A leading law firm is warning that businesses in Wales are still not doing enough to protect themselves from the threat of cybersquatters.
Capital Law, which operates from Cardiff Bay and London, says companies in Wales especially small and medium sized enterprises (SMEs) need to do more to prevent themselves falling victim to cybersquatters, who can damage their brand and cost companies tens of thousands of pounds in legal action.
Cybersquatting, also known as domain squatting, occurs when someone registers or uses an internet domain name that is the same as, or similar to, a name belonging to someone else; usually a company, charity or celebrity’s name. Typosquatting is also popular, where someone registers a popular misspelling of a company’s brand name as a domain name.
The cybersquatter, typically an individual acting alone, buys a domain name for just a few pounds and aims to profit from the goodwill attached to a company’s brand, by selling it back to them at an inflated price or by using the domain name to divert traffic from the legitimate brand’s website to their own. In 2008, there were a record 2,329 cases of cybersquatting according to the World Intellectual Property Organisation (WIPO) - just the tip of the iceberg as WIPO only records cases referred for dispute resolution.
Wayne Beynon, an Associate at Capital Law, who specialises in intellectual property claims including trademark, design right and copyright infringement, and ‘passing off’, said: “Many businesses in Wales are still not doing enough to protect themselves from cybersquatters who typically hold website names hostage and then demand a high ransom to transfer them to their rightful owners.
“Cybersquatters use various tactics to profit from their unlawful activities, either offering to sell the domain name to the company whose trade mark it infringes, or to one of its competitors. They may also use the domain name to offer similar goods and services to those of the trade mark owner benefitting from the goodwill attached to the recognised brand name.
“In some cases the infringing party can create a mock website with misleading and derogatory comments about the legitimate company. The cybersquatter can also make money by directing visitors to pay-per-click advertising, which can earn them money every time a user clicks on certain adverts. More worryingly, criminals can use cybersquatting to collect customer passwords or credit card details,” he added.
When companies register their domain name they frequently use one or two suffixes such as .co.uk or .com, providing cybersquatters with the opportunity to use a company’s name with another suffix such as .org, or .net etc. Businesses that fall victim to domain name infringement can fight back says Capital Law by implementing various cost effective dispute resolution processes.
Mr Beynon said: “Companies with a registered trademark can take legal action for trademark infringement or, where no trademarks have been registered, action can, in certain circumstances, be taken against the cybersquatters for ‘passing-off’.
“While businesses can seek emergency court injunctions against cybersquatters within a matter of days, this is often costly and, where the cybersquatter in question is a private individual, there may not be the potential to recover legal costs even if successful.”
Mr Beynon added: “When it comes to cybersquatting there is no one size fits all solution and prevention is better than cure. Taking the correct preventative measures can dramatically reduce the potential for cybersquatting. The best way for companies to protect themselves is to consult with legal specialists early to ensure there are no gaps in their domain name portfolios and to remain vigilant.”
Detective Constable John Cherry, Regional e-Crime Wales Business Support Officer said:
“A simple way to stay on top of your online reputation is to set up a ‘Google Alert’ for your company name or brand. This is an automatic free internet search which emails you new postings or websites results at chosen intervals, bringing suspicious activity to your attention early.
“The ease with which cybersquatters can operate highlights an opportunity for savvy businesses to increase their exposure to potential customers. Businesses who register not just .co.uk but .com or .org along with common misspellings of their domain can drive more visits to their sites while also averting the risk of falling victim to cybersquatters. The cost of this would be minimal compared to the cost of purchasing from cybersquatters.”
