Domaining Versus Cybersquatting

There is a popular misconception that registering domain names for resale, development, or monetization constitutes a practice known as cybersquatting.

Perhaps this accusation arises from indignation over the unavailability of the desired domain name, the relatively closed and opaque nature of the domain investment industry, the negative press that actual cybersquatters have wrought upon the industry, or a combination of all these factors.  Nevertheless, domaining, the legitimate practice of reselling generic domains for profit, has been gaining broader global respect in recent years.

In the mid-1990s, Internet speculators frequently engaged in the morally repugnant practice of registering domains, such as MicrosoftOffice.com or Madonna.com, corresponding to established trademarks and reselling them to the trademark holders for cash.  The IP holders lacked recource against such extortion until President Bill Clinton signed into law the Anticybersquatting Consumer Protection Act (ACPA) in 1999.  In short, the ACPA entitles a trademark holder to exact, in addition to the domain name, up to $100,000 in damages per name from a domain owner who:

• Registered or purchased a domain name that is identical to, confusingly similar to, or dilutive of that trademark,
• Has no legitimate personal interest in that domain, and
• Has bad faith intent to profit from that domain name.

Because the process of seeking legal suit under the ACPA could take years, however, the central domain registry (the Internet Corporation for Assigned Names, or ICANN) established a process called the UDRP (Uniform Domain-Name Dispute-Resolution Policy) for expediently securing forced transfers of domain names under dispute from cybersquatters, as defined in terms similar to those under the ACPA.

It's worth nothing that merely registering a domain name which coincides with a registererd trademark does NOT constitute cybersquatting, particularly if the domain represents a generic expression and is used for purposes corresponding to that expression's literal meaning.  If one were to register Sprint.com and use it to sell running shoes, for example, the cellphone company Sprint would have no basis for suing her (though Sprint might try as a scare tactic).  The moment she attempts to sell digital phones or profit off pay-per-click advertisements for Sprint cellphones, however, she becomes liable for forcible transfer of the domain to Sprint under the UDRP or ACPA.

DandyDomains.com condemns cybersquatting, as this practice infringes on intellectual property rights, confuses consumers, and tarnishes the reputation of an otherwise respectable industry.

Domain names are the Internet's equivalent of brick-and-mortar real estate.  Just as each property is unique, so is every domain, and premium web names rise in value over time.  Just as real estate requires consistent upkeep to maintain value, domain investors are constantly trimming their portfolios, experimenting with various monetization methods (up to and including full-scale development), and keeping tabs on global trends.  While the prospect of quick cash through domain name investment does attract "bottom feeders" due to the low cost of entry — $10 to register a domain versus hundreds of thousands to purchase property — unskilled speculators quickly rack up debt and flee the industry once they realize that profiting from domains requires extraodinary foresight, patience, business acumen, and attention to detail, among other skills.

There are bad apples in every business sector, and domaining is no exception.  Just as society has successfully learned to distinguish the destructive computer hacker from the enterprising software hobbyist, however, let's work to dissolve the equation between the malicious cybersquatter and entrepreneurial domain investor.