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American E-commerce Brands Report by NetNames.com Underestimates Cybersquatting Problems

By Enrico Schaefer

Poor On-line Domain & Brand Protection Leads to Cybersquatting, But NetNames Grossly Underestimates the Size of the Problem Facing On-Line Retailers:

The American E-commerce Brands Report by NetNames.com concludes that "more than two thirds of leading online retailers in the US currently have at least one domain suffix related to their brand name that is held by a cybersquatter. "

The American E-commerce Brands report evaluated the top 50 online retailers in the US on company registration of the top level domain names. The research is carried out by assessing whether a company has registered their name plus .com, .org, .net, .biz, .info .us.

This appears to be flawed data, grossly underestimating the number of cybersquatters, and especially the version of cybersquatting known as typosquatting, on major on-line retailer brands and trademarks. The number is much closer to 100% of the top 50 online retailers are being cybersquatted by dozens of (and many of those companies hundreds) of squatted domains.

Cybersquatting is now as rampant on the internet as is pornography. Ever web site that is lucky enough to have significant traffic is being cybersquatted. If you happen to be in the Alexa top 10,000 sites, the challenge you face in fighting off cybersquatters is even more daunting.

We do agree with the report's conclusion that US Retailers (and most other companies who live off their web traffic) have failed to realize the severity of the problem they face from cybersquatters. Most don't have any idea that they are being cybersquatted, let alone the volume of domains squatting on their trademarks and diverting their web traffic.

NetNames is using American E-commerce Brands Report (yet to be publically disclosed) to promote their domain protection services, described on their web site as follows:

Although each domain registry makes available formal dispute resolution processes (such as Uniform Dispute Resolution Policy - UDRP for gTLDs), these can often be lengthy and expensive to pursue. Based on NetNames Platinum Services experience, the majority of domain name disputes can usually be resolved through negotiation prior to formal dispute resolution proceedings.

I have to wonder about NetNames' conclusion that it can negotiate a majority of cybersquatting matters.  Those law firms heavily invested in protecting on-line brands from cybersquatters know that that majority of cybersquatters register infringing domains with private registration, control huge blocks of typosquatted domains and rarely respond to threat letter, especially from non-lawyers. In a modest number of cases, a cybersquatted domain is registered by an individual who 'didn't know cybersquatting was illegal" and quickly turns over the cquated domain without a fight. 

Since NetNames is a registrar and are clearly not lawyers, they can not offer legal anlaysis or representation on these matters. It is questionable whether they are violating US state ethics rules with their threat letter "Domain name recovery services." Both the UDRP and ACPA involve legal issues about which only licensed attorneys can provide legal opinions.

Regardless, there is little doubt that 2008 will be the year when corporations wake up to the online theft that is occurring right under their collective noses. And we agree with NetNames when they note:

Top US retailers are leaving themselves at major risk of brand damage online because of poor domain registration practices, according to the American E-commerce Brands report from NetNames reveals. The report reveals more than two thirds of leading online retailers in the US currently have at least one domain suffix related to their brand name that is held by a cybersquatter.

We also agree that defensive domain name regisitration should be an important part of every on-line companies brand and trademark protection plan.

The report also underlined a disturbing general disregard for all domain suffixes apart from .com. The report revealed that the most registered domain by major online US retailers was .com which was 98 per cent registered. However, the report also revealed that other domain suffixes were not nearly so well protected, with 44 per cent of related .net and only 32 per cent of .us domains protected. It is imperative that companies pay more attention to these domain names as they look to expand their presence online and overseas. Failing to register the domains of well known brands has in the past proved a favored route in for cybersquatters, who are profiting from these brands lack of online protection, and by leaving these domains unprotected companies are leaving themselves vulnerable. Cybersquatters register domain names relating to these brands, either with malicious intentions or often posting Google-style pay-per-click advertising to make money from people stumbling across their sites looking for official information. James Lambright, Chief Strategy Officer for NetNames, commented: ?Considering that these retailers rely on e-commerce as a significant part of their business, it is alarming to see that so many do not seem concerned about one of the most vital elements of online brand protection. Not registering relevant domain names is the online equivalent of leaving your storefront open overnight.

Here is the press release. We have not yet seen the report but look forward to analyzing the data.   Technorati Tags: cybersquatting, netnames, Brands Report

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Full post as published by AntiCybersquatting Consumer Protection Act Blog on January 17, 2008 (boomark / email).