How to avoid risks and precautions in domain name squatting?

Many people are unsure whether domain name cybersquatting is illegal. In fact, many people are confused about this issue. Domain name cybersquatting itself is not illegal, but it can be illegal if done carelessly. So, what are the legal implications of domain name cybersquatting?

The term "domain name cybersquatting" first appeared in China around the end of 1995. According to statistics, by 1996, over 600 well-known Chinese companies and trademarks had their internet domain names squatted, including Changhong, Quanjude, Rongbaozhai, Jianlibao, Wuliangye, and Hongtashan.

After the promulgation of the "Interim Measures for the Administration of Internet Domain Name Registration in China" in 1997, large-scale domain name cybersquatting in my country was gradually curbed, but it still occurs from time to time. Domain name cybersquatting began several years earlier abroad, and there have been some ironic incidents. For example, at the beginning of the domain name system, the domain name of the Internet Network Information Center (Inter-NIC), the organization responsible for global domain name registration, was once squatted.

Domain name hijacking, also known as malicious registration and use of domain names, refers to the practice of preemptively registering another person's registered trademark, company name, or other domain name as their own. There are three main reasons for domain name hijacking: First, domain names differ significantly from trademarks in terms of management systems and legal protection, creating opportunities for hijackers.

For example, trademark and trade name registries typically conduct identical and similarity searches before granting applicants exclusive rights to register a registered trademark or trade name. However, when registering a domain name, registries do not conduct searches for identical trademarks or trade names; the responsibility for this search falls on the applicant. This creates an opportunity for applicants to maliciously register and use well-known trademarks or trade names as domain names. Second, the technical limitations of the current domain name management system and the absolute uniqueness and exclusivity of domain names make competition for domain name space far more intense than for traditional identifiers like trademarks.

The current domain name system is based on the principle that each internet-connected host corresponds to a unique IP address. Unlike trademarks, which can have multiple owners depending on the type of goods or services, and trade names, which can vary by region, domain names are globally unique. Therefore, there may be many applicants for the same domain name, while it can only be owned by one person. This leads to much more intense competition. Furthermore, the potential commercial value of domain names in a market economy, coupled with the desire for profit, such as "free riding," are the fundamental drivers of domain name squatting. These factors together contribute to the widespread prevalence of domain name squatting.

In practice, domain name squatting primarily involves registering another person's trademark as one's own domain name. This includes both domain names owned by well-known trademark owners and domain names owned by ordinary trademark owners. Since well-known trademarks are rare and generally provide extended protection, most countries and regions have established through legislation, administration, or judicial means that domain names must not conflict with well-known trademarks. Therefore, in practice, domain name squatting more often involves registering domain names owned by ordinary trademark owners.

Regarding domain name cybersquatting, the Uniform Domain Name Dispute Resolution Rules (UDRP) adopted by ICANN (Internet Corporation for Assigned Names and Numbers) in August 1999 stipulate that when the following three conditions are met, the domain name registrar may determine that the registration of a domain name is cybersquatting and has the right to revoke, change and transfer the domain name registration. It also stipulates that the court has the final jurisdiction over domain name disputes:

(1) The domain name is identical or confusingly similar to a trademark or service mark owned by the objector;

(2) The domain name holder does not have any rights or legal interests related to the domain name;

(3) The domain name has been registered and used in bad faith. The UDRP also stipulates specific criteria for determining bad faith, including the purpose of registering a domain name to promise to sell, lease or transfer the domain name to the owner of the trademark or service mark or its competitors, to prevent the trademark owner from registering its own trademark as a domain name, to interfere with the normal operation of competitors, or to deliberately create confusion to attract users to visit its website for commercial gain. In addition, to prevent the owners of trademarks, corporate names, etc. from using their trademarks or corporate names to arbitrarily threaten domain name holders and reverse hijack domain names, the UDPR stipulates that domain name holders enjoy domain name rights and related interests in accordance with the law under the following circumstances:

(1) The domain name holder has used the domain name in good faith or has evidence to prove that it is preparing to use it in good faith before receiving the objection notice;

(2) The domain name or other names related to the domain name;

(3) Although the domain name holder has not obtained the right to the trademark or service mark, as the domain name holder, its domain name has become well-known to the public;

(4) The domain name holder is using the domain name legally, and such use is not for commercial profit and does not have the intention to mislead consumers or damage the trademark or service mark.