Googol?

Harvard University researchers in a recent study, estimate that Google could be making $497million a year from the practice known as ‘typosquatting’ according to ZDNet

How does typosquatting work?

Typosquatters register domain names, usually a well-established trade mark, in bad faith to gain a commercial advantage. This usually involves holding the domains in a portfolio for web advertising revenue. The function of the domain is to attract traffic and generate click revenue.  The revenue is by way of a commission from Google or other search engines. Although the amounts per click may be quite low, for a high volume site the numbers soon mount up to large figures.

Pay Per Click advertising

The reason the revenue comes from Google or other search engine is that these will feature their advertisers’ Pay Per Click ads on the ‘content network’ (those of their advertisers that have not opted out of the content network distribution).  These include sites run by cybersquatters, who receive payment whenever someone clicks on the ads.

The way Pay Per Click works is that in order to get their ads listed high in Google’s or other search networks’ paid search results advertisers bid on keywords.  So, if the amount being paid per click for a keyword like “computer equipment” were $3.06, then Google or other search engine would keep the entire amount if the click on the advertiser’s ad came directly from the results displayed on its own pages.

But if the ad is sub-contracted out to others who are part of the wider content network, then these third party sites will display the ad too.  So if the click on the advertiser’s ad comes from a third party’s page or website then Google or whichever other search engine has the primary contract with the advertiser, would share the $3.06 with the click farmer, as they are sometimes called.

Click farming

The model specifically depends on the small number of surfers (15-20%) who type a url into a web browser rather than entering the name into a search engine. So, if a common mistyping of a brand’s url is entered into the browser, this “direct navigation” traffic (as opposed to indirect traffic through a search engine like Google) goes straight to the page at which the domain is “parked”(that is the place the domain address arrives at), or to its website if there is one developed, as there sometimes will be.  Then ads relevant to that brand will be displayed on the page in question. 

Example of typosquatting

So, for example, if the typosquatter has registered ‘micresoft’ and  by accident when you are seeking information from Microsoft, you type into your web browser “micresoft.com”.  Instead of going to  Microsoft’s page you reach a website populated with related keywords – possibly selling computers or software. The domain owner, (sometimes referred to as a “click farmer”) would collect revenue each time you clicked on one of the featured ads, while Google or other search engine, would also take their cut from the advertisements.

The difficulties that have arisen between trade mark owners and registrants of certain domain names have been some of the main reasons giving cybersquatters a bad name, and it is interesting how online businesses such as Google are profiting from what is direct trade mark infringement by the cybersquatters.  Until the trade mark owner takes action to recover the domain name from the typosquatter, money is made from the ‘wrong’.  Also interesting is that while the typosquatter might receive a claim in damages from the trade mark owner, Google seems to get away scott free, although there were moves last year by litigants in the USA to claim against Google. Do any readers have more information about that?

So, Facebook’s recent announcement to companies who pre-registered to protect their company trade marks from misappropriation, that they cannot protect their intellectual property rights unless they get a Facebook Page, is noteworthy.

We have previously mentioned Facebook’s username policy changes here and here.

For companies hoping to establish a strong online presence the opportunity to register their Pages presented an interesting opportunity. Instead of http://www.facebook.com/pages/Azrights/11572066631, the Azrights page could be located at a much more memorable http://www.facebook.com/Azrights.

Initially, the minimum requirements to register a username for a company page included having had one thousand fans, or people that had expressed an interest in the page, by the 31st of May. For popular musicians, or big-name companies running promotional offers, this restriction had very little impact. However, such a target is out of reach for smaller businesses, or businesses less likely to cultivate a similar following.

Later it became clear that this requirement was only temporary, and registration would be opened to all on the 28th of June, but when that date arrived the policy changed once again, and the minimum fan base was set at twenty five. This modest requirement did not last long, and it currently stands at one hundred fans.

This inconsistent behaviour led to a great deal of confusion, and supports the impression that the supposed trade mark protection strategy was in fact a marketing exercise designed to encourage companies to register a Facebook presence, and then to promote it.  Otherwise, what is the reason for changing the number of fans needed to register a Page?

Unless another change occurs many businesses will find themselves unable to register a username for their page. Is this a problem? As explained in earlier posts participation in social media and the reputation of a company on the internet are becoming increasingly important to businesses. A Facebook page will attract more visitors with a shorter, catchier URL that consumers can remember, or even guess, and for this reason groups have sprouted to help members overcome the fan base barrier to registration.

Azrights recently made the half way mark, but as a law firm we are much less likely to attract a fan base than a rock star. Does that make us less deserving of our own Facebook username? It is desirable that opportunists are prevented from registering Azright, Azmights, Aznights and so on as usernames, but perhaps sacrificing the functionality Facebook is trying to protect, by setting the entry requirements too high, is going too far.

For those who have missed the chance to register their business names with Facebook (see earlier post) the solution is to set up a Page and then register your company name once registration of further usernames opens.

Facebook does have a grievance procedure allowing you to report if someone’s username infringes on your intellectual property or publicity rights.

In the meantime, I noticed when I accidentally misspelt Facebook that the opportunists are fast at work buying up misspellings of Facebook user names. See here.

I predict a spate of cybersquatter and typosquatter disputes as Facebook and some of the brands whose names are registered in this way decide to challenge the registrations.

However, it is clear from the case of blogger and investment advisor Mike Morgan reported in out-law that such purchases are a waste of money because people can use some other version of the brand name if they wanted to criticize the brand.  The lack of the sucks.com name will not be a barrier. 

For example, Morgan is using the domain name goldmansachs666.com to vent his anger against  Goldman Sachs, the investment bank.�
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He has received a letter to cease doing so, and is fighting the case.  His chances may be quite good given that both WIPO and the US courts, (before whom Mike Morgan may have to appear to justify his use of the domain name) generally regard legitimate protest sites as acceptable uses of a brand name.

In the Red Bull case control over the domain name redbullsucks.com was handed to Red Bull – however, that was because the site hosted there sold a rival drink and was not a legitimate protest site.

Where there is simply non-commercial use, then ‘gripe sites’ or protest sites as they are often called, are unlikely to be making trade mark use of a brand.  Therefore there would be no risk of confusion.  In such situations it is possible to argue there is a ‘legitimate interest’ in using the brand name, and no ‘bad faith’ to justify transfer of the domain name to the trade mark owner.

Google Adsense?

As a result of a recent decision against Google in the USA, a new weapon should be considered by  trademark owners like Microsoft in the battle against cybersquatters.  If misspellings or other versions of trademarks are registered as domain names by third parties who are earning click revenue from Google’s adsense program,  suing Google may be an option worth considering.

The adsense program effectively allows Google to profit from cybersquatting.  To understand why that is, it is worth taking a  look at how Google’s Adwords program works. 

When a surfer searches for specific terms Google’s search results along the top and on the right hand bar of the page are the advertisements of businesses who are participating in Adwords – that is paying Google to feature their ads 

Adwords involves ‘bidding’ on keywords, so that whenever your desired keyword is searched on by a surfer (for example, Azrights bids on the keywords ‘register trademark’) your ad will appear among the results.  As such your site stands a chance of being visited (clicked on) by the surfer.  As these surfers are specifically looking for the product or service that your website offers it is a good way of promoting your services to potential buyers Each time a surfer clicks on one of youre ads, you pay google something  for the click.  Some keywords are more expensive than others.  If  only very  few advertisers are bidding on a keyword that term will be less competitively priced. 

Google uses a number of third party sites to display its advertiser’s ads, in order to promote your ads more widely.  Amazon is an example of a third party site that participates in Google’s adsense program.  So, for example, if you are looking at books about brands and  trademarks on Amazon you will notice some ads by our competitors about trademark registrations.  Our ads would not appear because we have opted out of  adsense. 

Similarly, many  domainers or ‘click farmers’ websites and parked pages also participate in adsense, so that their parked pages or websites will feature lists of  Google’s featured ads. .  Sometimes such pages purely exist as a page of links, such as trademark.co.uk does for trademark ads.  ,

If a cybersquatter has registered a misspelt trademark name such as MIROSOFT they too are likely to use a parked page to receive Google’s ads.  Their page   will feature a selection of ads by Microsoft’s competitors or by businesses  offering similar goods and services to those that Microsoft would sell.  So, the technology Google uses clearly enables it to decide which of its advertisers have suitable ads for such a page, and therein lies the argument as to the liability Google should bear for the wrongdoing.

The third party site receives a share of Google’s  revenue.  So if Google collects 60 pence per click from the advertiser it may  pay 20 pence a click (this is a complete guess) to the owner of the third party site.  Therefore whenever a surfer  clicks on an ad on a third party’s site rather than on google’s own search result page the surfer’s click generates revenue for the cybersquatter (a term that applies to anyone who has registered someone else’s trademark as a domain name).  What’s more it is Google that has created the possibility for the cybersquatter to earn anything from its wrongdoing..Google’s practice was  successfully challenged in the recent litigation by Vulcan Golf in the US District Court in Illinois see here .   They argued that under the Anticybersquatting Consumer Protection Act (ACPA) Google’s role in facilitating such profiteering by cybersquatters should attract liability.  The court agreed.

Of course, there are perfectly legitimate uses of parked pages, and it is difficult for anybody to claim rights in names like ‘trademarks’.  Therefore, the question is to what extent should  Google be expected to police the rights of trademark owners.  Where should it draw the line when if it notices that the parked page could possibly belong to a cybersquatter rather than to a legitimate domainer who has good reason to own a domain name, that on the face of it might be someone else’s trademark. 

While for brands like Microsoft it may be quite clearcut that a variation of the name Microsoft is likely to be held by a cybersquatter, it is not always easy to know whether or not a domain name is actually infringing someone’s trademark rights, especially where the brand name is a generic word like APPLE.

The case was brought under the Anti-Cybersquatting Consumer Protection Act which is a US Federal Law that was enacted in 1999. The law basically codifies similar principles as the UDRP.  So, in order to bring a claim under the ACPA, a trademark owner must establish that their mark is distinctive or famous, that the domain name and trademark are confusingly similar (or dilutive for famous trademarks) and that the registration or use of the domain owner constitutes bad faith to profit from the mark.

OnlineNIC did not appear in court so Verizon was given a default judgment. The court ruled that OnlineNIC had acted in bad faith and owed Verizon $50,000 for each domain name.

Many commentators think that the award was so high due to the fact that when Verizon first approached OnlineNIC the company told them that they wanted $50,000 per domain name. It remains to be seen whether Verizon will actually be able to collect this amount of money since OnlineNIC is owned by a Chinese company.  American companies often find it extremely difficult to get a judgment enforced abroad especially when the defendant did not appear in court.

A good next step for Verizon would be to push for ICANN to revoke OnlineNIC’s accreditation. This would be precedent setting since ICANN have yet to revoke accreditation of a registrar purely following a civil matter. They have revoked accreditation previously when the president of ESTDomains was convicted last year of several criminal charges including fraud and money laundering.  At the least ICANN will probably launch an investigation into OnlineNIC and its cybersquatting.