Don’t Call Me a Cybersquatter!

Someone owns a domain name you want to use for your website and they aren’t using it. Before you say, “That cybersquatter has a domain name I want,” take a step back.

The term cybersquatter is often misused, and people who buy and sell domain names are rightfully frustrated when they hear the term. There’s a big difference between cybersquatting and investing in domain names. It’s a difference you should understand before you label someone a cybersquatter.

Let’s clear the air and look at the differences between cybersquatting and domain investing.

Defining Cybersquatting

The terms ‘squatter’ and ‘cybersquatter’ originate from the early days of the web in the 1990s.

During that time, people started registering domain names in droves and there weren’t any rules. It was the wild west. If someone wanted to register a domain such as CocaCola.com, it was easy for them to do it. Trademark laws hadn’t yet been updated to address the use of domain names.

And then in 1999, cybersquatting became codified in U.S. law.

The Anticybersquatting Consumer Protection Act (ACPA) was enacted by Congress that year. The U.S. Government defined cybersquatting with this act, and its definition is what most people use as the litmus test for calling someone a cybersquatter. 

The law counts cybersquatting as someone registering, trafficking in, or using a domain name in bad faith that meets one of these three criteria:

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or

(III) is a trademark, word, or name protected by reason of section 706 of title 18 or section 220506 of title 36. (Author note: this is a special provision for domains related to The Red Cross and the U.S. Olympic Committee.)

Let’s unpack this by noting the qualifications in the first two parts. The trademark has to be distinctive at the time of registration for it to be considered cybersquatting.

So if someone registers domain names with famous trademarks like Nike or Coca-Cola, in most cases they are cybersquatting.

A cybersquatter is someone who tries to profit by registering domains matching or similar to trademarks with the goal of profiting from the domains. Some cybersquatters try to sell the domains to trademark holders. Others profit by showing ads on the domains.

This can include typosquatting, in which a person registers a typo of a trademark with the goal of attracting errant traffic from internet users. Typosquatters often show ads to make money from the traffic.

What about Domain Squatters? 

The ACPA defines cybersquatting as noted above. 

Some people drop the “cyber” and just call someone a squatter, but they mean the same thing. 

By using these words, someone is implying that someone is violating the law, but they aren’t always using cybersquatter or domain squatter accurately or fairly.

How Domain Investing Differs

Cybersquatters register domain names that match, or are similar to, existing company names and trademarks.

A domain investor, on the other hand, tries to profit by registering generic, descriptive, or dictionary words. They do not target a trademark holder.

That means that if someone registers domain names without a trademark holder in mind, that’s not cybersquatting, even if someone later creates a business using that name. In other words, even if one of those domain names later becomes associated with a trademark, that’s not cybersquatting.

Domain investors intentionally register terms that reference hot trends as well as made-up words. They gamble that the terms they register will make a good brand someday but aren’t currently used by a brand.

There’s another important distinction between legitimate domain investors and cybersquatters. Many dictionary words are trademarked, but registering one of these does not necessarily constitute cybersquatting. If you registered the domain Apple.com back in the 90s and used it to promote your apple farm, that would not have been considered cybersquatting. 

Interestingly, if you register a domain but didn’t use it, and didn’t register it intentionally with a trademark in mind or try to profit from the association, that’s generally okay as well and not considered cybersquatting.

You can regard domain investors just like any other kind of investors. They essentially take chances on unused “property,” just like real estate investors, hoping that in time the domains will increase in value just like a home or hotel. Sometimes they get ahead of demand and make a killing—but just as often, their investment never turns a profit. Like any other investors, they have to follow trends and try to make educated guesses as to what the next hot property is going to be, and the most successful domain investors are the ones who can anticipate future needs. 

Use the Right Term

When you go to register a domain and find out that someone else owns it (and maybe is asking a big chunk of change to sell it to you), you might accuse them of cybersquatting.

But is that a fair accusation?

If someone owns a domain name you want, you need to ask the following:

• Do you have a trademark on your business name?
• Would the current domain owner have known about your trademark prior to registering the domain?
• Did they register the domain after you registered your trademark?

If any or all of those cases are true, then the registrant might be a cybersquatter. But if none of them are true, then it’s more likely they are a legitimate domain investor (or just an individual who happens to already have your domain).

But if you reach out to the owner and angrily call them a cybersquatter, it will immediately get the negotiation off on the wrong foot. Legitimate domain investors don’t like to be called a cybersquatter and may be less likely to want to negotiate with you in good faith.

So be careful what terminology you use. 

And if someone calls you a cybersquatter….hopefully now you can set the record straight.