What Is Cybersquatting?

Domain names are allocated first come, first served. It has to work this way: there are far more businesses with similar names than there are matching domains to go around. That scarcity is exactly what creates a market where people buy and sell these names as assets, which raises a common question. If someone registered a domain before you and now wants to sell it to you, isn't that cybersquatting?

What Cybersquatting Actually Means

Cybersquatting is registering a domain in bad faith, specifically to profit from the trademark goodwill belonging to someone else. Buying and selling domains generally isn't that. If a domain was registered before the trademark existed, or before the registrant could reasonably have known about it, it isn't cybersquatting, no matter how much the trademark holder might want it now.

Why a Domain Being for Sale Is a Good Sign

A domain being for sale is actually good news: it means it's acquirable. Plenty of domains never become available at all. A domain investor who grabbed a name early is usually open to a deal. The end user who got there first often isn't.

End users hold onto domains for reasons that have nothing to do with price. A small business might have modest prospects but real financial stakes riding on that name. Some people register a domain built around their child's name, with the kind of emotional attachment no offer will touch. These domains were never going to be for sale in the first place, selling was never the point.

Proving Cybersquatting: The UDRP Test

If a domain owner genuinely believes they're dealing with cybersquatting, there's a formal process for it: the Uniform Domain-Name Dispute-Resolution Policy, or UDRP. To win, a complainant has to prove all three of the following, not just one:

• The domain is identical or confusingly similar to a trademark the complainant has rights in.
• The domain's registrant has no rights or legitimate interests in it.
• The domain has been registered and is being used in bad faith.

All three, together. A domain that merely resembles a trademark, held by someone with a plausible legitimate interest, registered without any intent to exploit that trademark, doesn't meet the bar for cybersquatting.

Entitlement and Sticker Shock

First come, first served cuts both ways, and a lot of people only clock that once they're on the losing end of it. The domain they assumed would just be sitting there waiting turns out to be owned, and the asking price is nowhere near what they expected. Asking prices in this market are often genuinely high, and also genuinely negotiable. But the real sticking point is usually the assumption that a domain should simply be handed over because someone wants it enough.

Reverse Domain Name Hijacking

The UDRP exists to stop genuine cybersquatting, but it can be misused too. When a trademark holder files a dispute in bad faith, hoping to strip a legitimate owner of a domain they have every right to, it's called reverse domain name hijacking. A UDRP panel can formally declare this the abuse that it is.

This comes up most with generic or descriptive terms. Owning a trademark doesn't entitle anyone to every domain built from that word. If someone registered a generic domain before your trademark existed, or before they had any reason to know about it, that's not infringement, it's just first come, first served. Trying to take it anyway through the dispute process is reverse domain name hijacking, not a legitimate claim.

People love to say domain names don't matter that much, right up until their dream domain is taken and no cheaper alternative will do.