Forbes just published a story entitled “Cybersquatters Get Rich New Territories With Generic Domains”
The Forbes Article of course chats about Donuts which Forbes says “raised $100 million to take control of as many generic top-level domains as it could.”
The story goes on to quote Jeffrey Stoler, a partner with Holland & Knight, who complained that Donuts appeared to have close ties with Demand Media, a domain registry operator with a long history of complaints about cybersquatting, “typosquatting” (registering scam websites a character or two away from legitimate trademarks) and distributing malware”.
“Stoler noted, however, that Stahura applied for and Demand now owns Patent 7539774, which covers methods for obtaining large numbers of web addresses at low cost including near-misses to trademarked names.”
“With the patented technology, he complained, Donuts could “insert parking pages on such names, including on typographical variants of trademarks and generic names, at very low cost.”
Stoler said that ICANN “further compounded the problem” by consolidating applications for similar top-level domains so that the winner of .law, for example, would also win .lawyer and .lawyers as well.
“”With applications for nearly 2,000 new domain names outstanding, each one of which will function as a miniature .com registry under the control of the winning bidder, the new territories will be exponentially harder to monitor than the existing world of .com, .edu, .gov and a handful of generics like .travel and .museum”.
“”It’s going to be a very confusing, expensive and time-consuming process for trademark owners,” said Joanne Ludovici, a partner with McDermott & Will in Washington who’s among the many lawyers that will be trying to protect their business clients from losing control of valuable trademarks in the new wilderness of domain names. ”It’s a bigger enforcement landscape.”
We disagree.
We don’t think the cybersqatting is going to be a huge problem with the new gTLD’s (with one caveat).
There are several reason why.
The economics are unfavorable for cybersquatters.
The days where someone can register a famous long established trademark and sell it to the trademark holder are over and have been over for a many years.
The cost of registering a new gTLD domain name are going to be costly compared to .com.
Prices for new gTLD will be higher than .com in 98% of the cases.
$15-$30 its seems will be the sweet spot for most new gTLD’s registries although many will be priced higher.
So if a registrant of a domain can’t make money by selling the domain to the trademark holder the only other way they can make money is by parking the domain, or monetizing it in some way.
Problem is even the most bullish of new gTLD supports have to admit that its going to take years if ever for the new gTLD extensions to get meaningful random type-in traffic or typo traffic like .com’s domains experience.
The High cost of entry, the lack of a market to sell TM infringing domains to, and lack to random and typo traffic to monetize the domains is not an appealing business.
Couple that with cheaper, quicker and simpler ways that ICANN has approved to take domains away from domain holders and give them to trademark holders, know as the URS, all adds up to adds up to simply traditional cybersquatters are not going to come to play in the new gTLD space.
I promised a caveat to the above and here it is.
Free domains offered by a huge company like Google.
Google has been rumored that is will give away free domains for one or more of the 98 new gTLD applications it has applied for including a .FREE
If in fact Google gives away domain names for FREE using .FREE and/or other new gTLD then all bets are off.
At zero cost cybersquatter will play.
So Trademark holders should not fear traditional new gTLD operators they should fear FREE domains.
Agreed. There’s even data to support this. If .xxx is any indicator, there won’t be as much cybersquatting as people fear. The first full year of operation for the .xxx domain yielded only 16 disputes filed with WIPO.
.com was the domain most recovered from cybersquatters by brands, with more than 3,475 domain names − nearly triple the number of disputes in all other gTLDs combined.
Check out this recent analysis by Melbourne IT with more facts from WIPO: http://www.businesswire.com/news/home/20130207005394/en/.com-Continue-Dominate-Domain-Disputes-gTLDs-Loom.
It just seems unlikely that these new gTLDs will drive cybersquatting to new highs.
Agreed. The costs and risks outweigh the likely profits for cybersquatters when it comes to the new gTLDs — except, as you say, in the case of free giveaways from Google.
Even if some naive people try squatting on typos and trademarks in these new gTLD spaces, the traffic they’re likely to see would be so negligible that trademark owners could ignore them as safely as you or I might ignore a mosquito 10,000 miles away! Soon they’d give up their unprofitable game and drop the offending domains without sucking so much as one drop of blood.
Google — if the rumors of free domain giveaways are true — introduces numerous problems. When there is no barrier for entry, parasites will enter in large numbers. We may see with domains what we see with Youtube piracy. Uploads of copyrighted material are contested less often than they should be. And the same might be true of cybersquatting .WEB domains, provided that a behemoth like Google ends up being the other litigant in any dispute. Already, we see Amazon.com paying mafia-esque protection money to AdWords in order to recover some of the traffic intended for its website by people typing “Amazon” (minus the TLD) into Chrome. Might we also see Amazon.com paying millions to Google for the rights to use Amazon.web? It seems a likely possibility.
Those of us involved with domains must remember that the term “cybersquatter” is applied very loosely. Many people refer to any domain investor in this derogatory way, without reference to either the legal definition of cybersquatting or economic reality. We must also remember that publicists for the new gTLDs possess two main arguments to use in their marketing: (1) New Opportunities, and (2) Fear of Loss. The first says, “Get Ahead”; and the second says “Get Yours Before It’s Too Late!” One is a positive argument; the other is negative. And the negative argument tends to imply the popular notion of “cybersquatting”. I’m sure that every applicant for a new gTLD has calculated their expected revenue from defensive registrations. Furthermore, they’re undoubtedly banking on that figure in order to recoup their expenses; and magnifying the quantity of defensive registrations is crucial for their bottom line.
Leaving aside cases of authentic cybersquatting … (I almost said “bona fide cybersquatting”; but there is of, course, no such thing as cybersquatting in “good faith”!) Anyway, leaving aside the typo domains and trademark violations, we will see an explosion of domain duplications and overlaps. These appear to fall into 2 distinct classes: (A) ChicagoLawyer.com will have to contend with Chicago.lawyer; and (B) Amazon.com will worry about Amazon.web, Amazon.shop, and so forth.
Whether or not duplications and overlaps like these represent legitimate investments or opportunistic squatting really depends on the registrant. To paraphrase the Bible, “Whosoever looketh on brand-directed traffic to lust after it hath committed cybersquatting in his heart.” I’m not a .COM purist; so I think some genuine opportunities for branding will be found within this flood of new gTLDs. Some speculation on the new gTLDs will be welcome and legitimate; but plenty will be parasitic, aiming to extort money from specific established brands — trademark or not.
Numerous registrations of near-duplicate and overlapping domains are bound to occur — by legitimate investors, by new online startups, by extortionists, or by established companies afraid of the preceding three groups. And publicists for the new gTLDs will engage in a certain amount of fear-mongering in order to scare these established companies into becoming registrants. As I’ve said, defensive registrations must account for a large percentage of their revenue. And the only way of selling the idea of a defensive registration is by scaring somebody into self-protection. All these new gTLDs represent new vulnerabilities for existing brands. More vulnerability means more fear. More fear means more protection. And more protection means more money for registrars.
Such scare tactics are bound to tarnish the image of domain investing in some quarters. I do not say that every new gTLD registrar will do this to an equal degree. Innocent until proven guilty, after all … But I find it unlikely that (as a group) they would refrain from encouraging defensive registrations — which often occur at premium prices prior to the period of open registration. Many of these defensive registrations will not be aimed at cybersquatting in the technical sense — that is, no clear trademark violations will be involved. But the idea of defensive registration is motivated by fear, and inculcating that fear plays off the popular notion of cybersquatting. Once the wave of new gTLDs hits the market, I predict that we’ll see a tremendous spike in the search numbers for “cybersquatting”.
I foresee the coming flood of new gTLDs creating a public perception that cybersquatting — in a loose sense — is on the rise. This fear will generate revenue for some people. And the revenue coming from fear of “cybersquatting” is very similar, in my opinion, to revenue coming from actual cybersquatting.