Legal expert warns SMEs to consider registering XXX domain names to prevent cyber squatting

Businesses are being warned to register their trademarks under the new .xxx domain name system so that cyber squatters don’t get in first, leading to the possibility of consumers being misled or a brand being tarnished.

The warning comes as the domain name market has received quite a lot of attention this year, especially as the top-level domain name system is set to start receiving applications next year.

Kelly & Co intellectual property partner Luke Dale says that after the International Corporation for Assigned Names and Numbers approved domain names with the .XXX extension, the business is now warning its clients to start registering their domains so “cyber squatters” won’t steal it first.

“The issue here is that you’re opening up another entirely new area of the internet, and essentially allowing people to bring up a red light district online.”

“For brand names, it’s a similar situation to when the first domain names came up, and cyber squatters started setting up websites, fooling some people to thinking websites were related to a particular brand or celebrity.”

Dale refers to Madonna.com, a website registered by someone other than the famous pop star, which sparked a series of dispute processes to get control of the domain name back.

“To extrapolate this, you might see something like Qantas.xxx or Fosters.xxx being registered by other people if they don’t do anything about it. They might not think it’s an issue, but you wouldn’t want to keep clicking on Qantas.xxx and have someone derive revenue from that.”

The International Corporation for Assigned Names and Numbers is set begin registering the first .xxx domain names this month. Dale says while these are dedicated for adult content, businesses need to get their act together.

“What we’re saying to our clients is that during this sunrise period, you have an opportunity to take your brands off the market for a minimal cost of a few hundred dollars. It’s a one-off fee, and it stops the problem.”

“The issue is that in the future it could dilute your brand, it could diffuse the messages, and it does have unsavoury connotations if someone is using a .xxx domain for your brand. It could cause angst among conservative consumers, or a number of different issues.”

The sunrise period for non-members of the adult entertainment industry will begin from September 7, but Dale warns that businesses must have a trademark in order to apply for a .xxx domain.

“For SMEs, it is really a case by case basis to determine if they’ve registered their trademarks, because there is a misunderstanding there about how you go about doing that. You have to have a separately registered trademark before you apply.”

“All we’re trying to do here is highlight the potential consequences of leaving it up to individual companies and brands to determine whether or not this is an image problem. It’s only a low cost of registering but the consequences not doing so could be damaging.”