Cybersquatting, sometimes called domain squatting, is a practice of registering, using or trafficking in a domain name with bad faith intent to benefit from the goodwill of a trademark that belongs to someone else. Cybersquatters then offer to sell the domain to the owner (a person or company) of a trademark contained within the name at an exaggerated price.
The term stems from “squatting” which refers to the act of occupying an unoccupied building or space that the squatter has no rights to (does not own, rent, or otherwise have permission to use).
Cybersquatting differs from squatting in that the cybersquatters usually pay for the „squatted” domain names through the registration process. When selling domain names, cybersquatters usually ask for much higher prices than that at which they purchased the domain names.
On some occasions, cybersquatters post derogatory remarks about the trademark holder (person or company the domain is intended to represent) in order to encourage the subject to buy the domain from them.
Some cybersquatters post paid links to the actual website that they want to direct traffic to via paid advertising networks, such as Google, Yahoo!, Ask.com, thus monetizing their squatting. Some Internet system abusers, also known as Domain Kiters, engage in the act of reserving a domain name, testing it out and releasing it at the end of ICANN’s five-day grace period only to re-register the domain. By placing banner ads, Domain Kiters do not have to pay for owning the domain; they often place banner advertisements to produce more revenue and test the domain for its money-making potential. As a result, by unknowingly paying for the click ads, the legitimate trademark owner faces significant loss of revenue. Additionally, these sites usually create real consumer frustration, ultimately leading to a loss of trust and hard-earned goodwill of the brand.
Research shows that recovering a lost or highjacked domain can cost several hundred times more than registering the domain from the beginning