Domain Law and Cybersquatting: What Lawyers Recommend for Domain Protection

Essentially, a domain is the address of a business or a private individual on the internet. It is the address that is entered into the browser to reach the company or person. A short, memorable domain, therefore, has high brand recognition. For this reason, domains have significant value. A domain that matches the company name (ideally without any modifications) and can be directly found and accessed by any interested party is especially valuable. The domain has an even greater value for purely online businesses.  

The term “domain law” refers to the legal framework for using and trading domains. In Germany, domain law is not codified in its own statute. It is a cross-cutting legal field encompassing trademark law, aspects of civil law (such as name rights), and competition law. Depending on the individual case, different legal areas become relevant. When exactly they apply is determined by the German supreme court rulings. Lawyers specializing in domain law know precisely when the regulations of trademark law, competition law and civil law must be applied and how they interrelate. Since a lot of domains have considerable economic value, cease-and-desist letters also play a frequent role in domain law.

Since domain law is – as mentioned above – an intersectional legal area and not codified in one specific statute, there are different categories that play a relevant role or frequently become important in domain law:

When registering a domain, the issue often lies in the fact that the registration is not done by the page owner but rather by the so-called provider. This provider registers the domain at DENIC (the German Network Information Centre). It is important to note that neither the provider nor DENIC are governmental or public law entities, but rather completely private enterprises or organizations. This leads to private contractual obligations, meaning, that the general law of obligations in German Law is to be applied. Consequently, in each individual case, it must be determined what rights and obligations exist between the parties. If the parties do not or cannot find a mutual solution, the only remaining option is judicial determination of the legal issue.

After having a domain registered, it is possible to trade it. In Germany, this also falls under private contractual obligations, so German sales law is applied. Since such a purchase of rights falls under the principle of ‘private autonomy’ (a German legal institute that gives both private parties the right to freely decide what their contract consists of), the drafting of the contract ought to be carefully considered. This way, many legal issues can be initially prevented or minimized. Our lawyers are here to support you in drafting a contract.

As mentioned above, the domain is directly connected with the respective business. Therefore, it is necessary to conduct a due diligence examination before purchase. Otherwise, there remains the risk that a domain is purchased with a high cease-and-desist risk or, in the worst case, one where use is being completely prohibited.

Similar to other registered intellectual property rights, a registered domain confers rights that enable the rights holder (the domain owner) to take action against infringements. This means that when the domain is being wrongfully used by third parties, the rights holder can assert a legal claim to cease-and-desist the use. The claim for injunctive relief can be based on various legal grounds. The most important legal grounds are designation rights, particularly trademark rights and name rights. Violations of these rights are typically addressed through a cease-and-desist letter that includes a contractual penalty clause.

In some cases, other cancellation claims should be considered. These are only permitted if every possible use of the domain by the domain holder would infringe upon those rights. A claim to transfer the domain does not exist in most cases. The only exceptions are very well-known trademarks, where consumers expect a specific business, such as ‘otto.de’ – a famous German online retail service.

Cybersquatting or domain squatting is a praxis in which domains are registered with the purpose of later selling them to individuals or businesses who (could) have a legitimate interest in the domain.

These are the typical forms of domain squatting:

• Trademark-related Cybersquatting: Registration of domains that match or resemble well-known trademarks, in order to profit from potential confusion or to later sell the domain to the trademark owner.
• Speculative Cybersquatting: Registration of generally valuable, generic terms as domains, such as “insurance.com” or “travel.com”, to profit from their market value.
• Typo squatting: Registration of domains with common typing errors of well-known websites, such as “googel.com” instead of “google.com”.
• Identity-related domain squatting: Registration of domains containing the names of well-known personalities.

If domain squatting violates the legal areas listed above, it may be unlawful. This is particularly often the case when:

• Trademark rights are infringed (Sections 14, 15 of the German Trademark Act (MarkenG))
• Name rights are disregarded (Section 12 of the German Civil Code (BGB)), or
• Anti-competitive behaviour exists (Sections 3, 4 of the German Act against Unfair Competition (UWG)).

Cybersquatting or domain squatting can be challenged with claims for injunctive relief, transfer of ownership, and even claims for damages. The prerequisite, of course, is that you are the rights holder, meaning you own the respective trademark or have the right to the name.

As a full-service law firm, our attorneys offer not only expert legal assistance in intellectual property protection law, but also in all related legal matters such as contract design, cease and desist letters with penalty clauses, or due diligence examinations, ensuring that your successful domain project is always in the best hands.