Cybersquatting is the bad-faith registration of a domain name that includes or is confusingly similar to another party’s trademark. The Anti-Cybersquatting Consumer Protection Act (or ACPA) was passed in 1999 to address some forms of domain name abuse, but cybersquatting remains an underestimated and largely unmitigated threat. Many consumers, brand owners and policymakers have yet to understand the full scope and impact of cybersquatting.

By using domain names to exploit the trust that consumers have in legitimate brands and trademarks, cybersquatters are able to harm consumers through spam, spyware, malware, phishing, and the sale of unwanted counterfeit goods. The magnitude of the problem is great. The overall number of domain names has more than doubled since 2003, and the growth of cybersquatting has exceeded that pace. According to a recent independent report, cybersquatting increased by over 200% in 2007 vs. 2006 alone.

The Economic Impact on Brand Owners

According to research conducted by CADNA in conjunction with the domain and market research consulting firm FairWinds Partners, the economic impact of cybersquatting is significant:

• The practice costs brand owners worldwide over $1 billion U.S. dollars every year as a result of diverted traffic, the loss of hard-earned trust and goodwill, and the increasing enforcement expense of protecting consumers from Internet-based fraud.
• Depending on the brand owner’s industry, the total impact of cybersquatting on a single brand could be tens of millions of U.S. dollars when factoring in the value of lost leads and sales, costs of brand dilution, consumer confusion, poor customer experiences and millions of lost unique visitor impressions each week.
• Excluding less-tangible costs such as lost goodwill and poor customer impressions, the impact of cybersquatting on trademark holders is in excess of $1 million per brand, per year. Some well-known brand owners will face losses many times this figure.

These figures include the estimated increase in search engine keyword click fees due to PPC sites and the enforcement costs associated with addressing just 5% of the domains secured by cybersquatters.