How to Fight Overseas Cybersquatters
Don’t let international companies cherry pick upon your success
on November 9, 2018
Updated on February 8, 2021
As your business grows and becomes more successful, you’re at increasing risk of becoming a target of cybersquatting—that is, the practice of registering well-known names as internet domains with the aim of reselling them at a profit.
Laws are different in other countries, and this is especially true in the area of intellectual property and the protections that many businesses rely upon. Cybersquatting has become a lucrative practice in countries like China due to its laws regarding trademarks. In the United States, one must prove use and uniqueness of a mark in order to apply and be approved by the United States Patent and Trademark Office (USPTO). This often takes time and, occasionally, informs the practice of filing for protective marks. In China, the rules for acquiring a trademark are less stringent and often based solely on the first person to file.
A business trying to wrench its trademark back from a squatter who filed first would have to prove that the brand is famous in China, and that the entity registering the trademark did so in bad faith. In theory, this should be relatively simple for a business that has been using its name internationally for years. But in practice, it can be extremely difficult—even for popular consumer brands and world-renowned celebrities.
Apple had to shell out $60 million for a settlement to get the use of its iPad trademark in China in 2012. More recently, in 2016, a high-profile case has given hope to foreign brand owners. Michael Jordan won a ruling from China’s highest court, the Supreme People’s Court of the People’s Republic of China, that gave him back the rights to his own name from a squatter after previously losing the fight.
Another practice for squatters is to purchase domain names that are similar to popular brand sites. Osborne Clarke is a law firm who has a dot-com domain, but a Chinese company dropped the ‘e’ and purchased osbornclarke.com. Then they entered negotiations with the parent company to pay for the domain. Chinese law does recognize that companies doing this maliciously are not allowed to do so. These arguments have been successful in part by pointing out that the Chinese firm also had registered websites using the names of other law firms.
Generally speaking, best practices involve filing trademarks earlier than you think you should, and in as many places as you can foresee needing protections. This is especially true for companies large enough to pique the interest of cybersquatters. Perhaps the best idea would be to file for protections before mergers and expansions happen.
As for the purchases of domain names, each business will have to determine its own level of protection-to-risk ratio, as one could buy every approximation of its domain name, but that comes at a cost.
No matter what, be certain to hire a reputable and experienced intellectual property attorney to assess and diagnose any and all risks you may have, while solidifying the protections of your brand.
For more information on this area of law, see our intellectual property overview.