Domaingrabbing

The term domain grabbing describes the registration or reservation of several domains for the purpose of profit maximization. These are mostly domains with generic terms, but often also protected company, brand and product names which are registered as top level domains. It can also be called cybersquatting. Those registering are looking specifically for such terms and for exact match domains, as well as expired domains in order to earn money in different ways with these Internet addresses. Either the registrations can be sold to the rights owners or the domains can be parked. The latter is supposed to generate advertising revenues by placing ad links that earn commissions on clicks, for example.

Domain grabbing is a component of the legal domain trade, which works according to the principle, first come, first serve. However, the deliberate infringement of word and image trademarks by domain grabbing is by no means allowed under current law (as of 09/19/2016). The prerequisite is that the plaintiff has the rights of ownership. Alternative terms for domain grabbing are domain hijacking, domain warehousing, and reverse domain hijacking, (in this case the owner of a domain is accused of domain grabbing).

General information

Domain grabbing was standard practice especially in the beginning days of the Internet. Many companies failed to register their brand names as a domain or to research relevant terms. Agencies, hosts and retailers, on the other hand, did so in many cases, then sold the domains to the actual rights holders of brand names or sold domains with generic terms to other companies that wanted to position themselves in the respective niche. Since the legal situation was still unclear, domain grabbing was an integral part of the domain trade.

With technological development of the last decades, this has changed. The case law for digital products has been specified and differentiated. The result was a clear differentiation between domain trading and domain grabbing. If the purpose of a registration is to hinder or damage the rights owner of a trademark in any way, this can be punished as unlawful domain grabbing and possibly result in claims for damages.

How it works

The DENIC (German Network Information Center) is responsible for awarding top level domains with the ending .de. If an entrepreneur or a private individual wants to register a domain, they first have to contact their Internet service provider. DENIC also manages domains directly, but its members are the first contact for domain registration. If the ISP who offers the requested domain is not available, DENIC can mediate. Otherwise, the DENIC direct service can be utilized. DENIC is primarily a registration agency that collaborates with ISPs. Domains can only be applied for directly in exceptional cases, although hosting, email servers or other IT services are not included in the DENIC portfolio. Moreover, if you want to register domains with other endings such as org, .com or .info, companies and members accredited by ICANN would have to be contacted.[1]

Four types of domain grabbing

A domain being registered with a generic term is not automatically an infringement, but in many cases a recognized business activity. Trading of domains, even with similar generic terms is therefore not illegal per se. Quite the contrary, domains with specific keywords can be registered and sold if these keywords are not a registered trademark or trade name or otherwise protected. Not every registration of a domain is illegal under the German Act against Unfair Competition (UWG).

The definition of domain grabbing therefore includes the intention of the person registering, which could result in prohibition injunctions according to UWG. In the legal assessment, the individual case is always decisive. Before a court makes a decision on domain grabbing, various factors are examined and above all, the intentions of the person who registered it.  

  • If a domain is registered with the aim of preventing a third party from using this domain,
  • and if the goal is to sell the domain to a third party or to have it licensed, it is highly likely that it is in violation of competition law. Added to that are cases, which work with forwarding or are traded as part of domain parking.
  • If a very similar domain name has been registered and automatically redirects this domain to another site,
  • and if a known domain name is registered, which is supposed to attract as many visitors as possible to this page, this is also regarded as domain grabbing from a legal point of view and may be illegal.

If one of these four types of domain grabbing can be demonstrated, it may result in prohibition injunctions. These injunctions, however, go hand in hand with other legal provisions, such as Internet and trademark law. If you do not protect brand names and other legal trademarks, you cannot make claims against domain grabbers. It is therefore always recommended to seek legal advice, to examine all possibilities, and regulate the use of domains which are similar to brand names. Negligent behavior with regard to Internet law often leads to problematic cases, which are then decided in favor of the defendant. Companies should therefore be aware of the legal framework of the domain trade and new domain applications should be examined for possible legal violations by third parties.

Examples of domain grabbing

Numerous cases exist in which a type of domain grabbing has been used. The difference between domain hijacking, domain parking, and reverse domain hijacking is partially blurred. This also applies to typo-squatting, which refers to domains with incorrect spelling.

  • Apple Inc., failed to extend the domain apple.com in 2002. The contract expired and a private individual, who had reserved this domain beforehand, was awarded the Internet service provider. Apple had to agree to an extra-judicial settlement with this person, since legal proceedings would have lasted months, during which time the domain would not have been reachable.
  • A private person requested a change of provider for the domain ebay.de in 2004. Due to lack of examination of the applicant, not only the provider was changed, but the domain was transferred to him. For approximately 90 minutes the domain ebay.de was directed to a website determined by the applicant.
  • In 2007 the domain google.de was inadvertently released for sale and was transferred to a new owner. An Internet company from Wiesbaden reserved the domain and forwarded the traffic to a site still under construction. It was assumed that the Internet service provider had made a mistake. The domain was again available after a few hours.

Relevance to online marketing

The registration of a domain is common in online marketing practice and initially done without much consideration. The definition of domain grabbing is defined by the decisions of the courts and cannot be determined universally. Many agencies register hundreds of domains, park them, and advertise on websites for monetarization purposes. Internet service providers usually have a portfolio of Internet addresses that includes thousands of domains. Only if it can be proven that one of the above-mentioned types of domain grabbing is involved, will affected companies be able to make legal claims. The legal situation is thus oriented around individual cases and can be judged only in light of other legal areas (law governing naming rights, trademark law, Internet law, competition law). It is therefore advisable to get legal advice as well as permanent control of your own domains, if these are not automatically extended.

References

  1. ICANN-Accredited Registrars icann.org. Accessed on 09/16/2016

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