Cybersquatting

What it means

Cybersquatting is registering or holding a domain that trades on somebody else's trademark, in bad faith. The typical shapes are offering it back to the rights holder at a markup, running a site that diverts their customers, and registering a common misspelling of a well-known destination to catch traffic. It turns on intent and effect rather than on the string itself, which is why two people can hold similar names and only one of them be squatting.

Where the line is

Registering generic words, dictionary terms, descriptive phrases and invented names is ordinary domain investing, and the fact that a company would like your name does not make you a squatter. The distinction is where the value comes from. If a name is valuable because of what the words mean, that is investing. If it is valuable because of somebody else's brand, that is the other thing, and holding it patiently does not change the analysis.

How bad faith is judged

Nobody reads your mind; they read the record. Offers to sell the name to the rights holder, evidence you knew of the mark when you registered, a site that trades on the confusion, and a pattern of similar registrations all point the same way. So does a parked page carrying ads for the mark owner's competitors, which is the most common way a holder converts a weak position into an indefensible one without meaning to.

What it costs to be wrong

A trademark holder can bring a domain dispute and, where the case is made out, the name is transferred away with no compensation for what you paid. In some jurisdictions statutory damages are also available. Since the downside is losing the asset entirely, the practical rule is to check any name containing a recognisable brand, product or misspelling before buying it, and to walk away when the answer is uncertain.