Microsoft Launches Enforcement Campaign Targeting Web Site “Cybersquatters” Who Use Online Ads

REDMOND, Wash., Aug. 22, 2006 – It may have happened to you.

You’re surfing the Internet, and rather than clicking on a Web page hyperlink or using a bookmark in your favorite Web browser, you manually type in a domain name (like “xbox360.com”) into your browser’s address bar. Only, you accidentally misspell the name, instead entering something like “xbox360com.com.”

Or, perhaps you are not certain of your destination, and enter a word or phrase in the browser’s address bar, like “microsoftrebate.com.”

Microsoft, in fact, does not maintain a Web presence at either of these domains. But, as alleged in lawsuits announced by the company, “cybersquatters” and “typosquatters” have registered these domain names containing trademarked terms or misspelled words – and hundreds of other domain names like them – with the goal of illegally profiting from them via online ad networks. Thousands of such domains targeting Microsoft are being registered each day.



These and other such domains are not maintained by Microsoft, but by professional domain name holding operations that illegally profit through the misuse of Microsoft’s intellectual property.

Surfing to these Web pages leads site visitors to a screen chock full of pay-per-click advertisements and little meaningful content. Each click on one of these ads yields a transaction that delivers revenue to the cybersquatter paid through an online ad network. The result: potential confusion for visitors to Microsoft’s legitimate Web sites and illegal profiteering through the misuse of Microsoft’s intellectual property.

Internet Safety Enforcement Attorney Aaron Kornblum leads Microsoft’s new enforcement campaign that targets Web site cybersquatters and typosquatters. Kornblum says that Microsoft’s Trademark and Internet Safety Enforcement groups began to notice a surge in domain name registrations containing the company’s intellectual property earlier this year while monitoring Web sites registered by online fraudsters known as phishers. This existing anti-phishing “Domain Defense Program,” operated in conjunction with Microsoft vendor Internet Identity of Tacoma, Wash., will be expanded to incorporate these new anti-cybersquatting initiatives.

“Microsoft has witnessed a virtual land rush for Internet domain names with the goal of driving traffic for profit,” Kornblum says. “Placing a high profile or pop culture trademark in your domain name is a tempting but illegal way to generate pay-per-click revenue.”

And it’s a temptation that many cannot resist. Rod Rasmussen, Internet Identity’s director of operations, carefully monitors Internet activity that pertains to Microsoft trademarks and intellectual property. He said that on an average day more than 2,000 domain names are registered that contain Microsoft trademark terms. Of those, his company can readily categorize that at least 75 percent are owned by what are believed to be professional domain name holding operations. Approximately one quarter of all domain registrations containing Microsoft trademark terms are registered via so-called “privacy services.”

“These are all very conservative estimates,” Rasmussen says. “We’re thinking that we’re really looking at 90 percent or more of domain registrations containing Microsoft trademarks as being these kind of operators.”

As described in the examples above, these operators are trying to capture Web traffic from people who do not use search engines, but instead type their intended Web destination directly into the browser’s address bar (this also is known as “direct navigation”). Advertisements displayed to Web site visitors generally are related in topic – or “contextual” – to the domain name. For example, visiting the cybersquatter-held Web site “msnfinance.com” will produce a Web page containing ads with hyperlinks for “Screaming Stock Picks” and “Stocks Ready to Explode.”

In fact, registering Web site domains containing trademarked terms with the bad faith intent to profit from them is forbidden under the Anticybersquatting Consumer Protection Act (ACPA). Signed into law by President Clinton in 1999, ACPA is a part of the Lanham Act, the nation’s primary federal trademark statute. ACPA imposes civil liability of up to US$100,000 in statutory damages for anyone who, with a bad-faith intent to profit, “registers, traffics in or uses a domain name that is identical to, confusingly similar or dilutive of” an existing trademark.

Microsoft’s announcement of a new enforcement campaign targeting cybersquatters includes:

First, Microsoft has filed two civil lawsuits against a total of four named defendants who allegedly are profiting from domain names that infringe on Microsoft trademarks. These two lawsuits include federal law claims under ACPA and the Lanham Act as well as state law claims for statutory unfair competition and common law unfair competition and conversion. The defendants named in these actions are:

Jason Cox, of Albuquerque, N.M.; with Daniel Goggins, of Provo, Utah, and John Jonas, of Springville, Utah, and d/b/a/ Jonas and Goggins Studios LLC and Newtonarch LLC. Microsoft alleges these three individuals are working together to target marks owned by Microsoft and have registered 324 domain names targeting Microsoft. This lawsuit was filed in the U.S. District Court for the District of Utah, Central Division, Cause No. 2:06cv00692 TS.

Dan Brown, of Long Beach, Calif., d/b/a Partner IV Holdings. Microsoft alleges that Mr. Brown registered 85 domain names that directly target Microsoft. This lawsuit was filed in the U.S. District Court for the Central District of California, Cause No. 06 cv 5247 R.

Second, Microsoft also is taking action to unmask defendants who have used privacy protection services to conceal their identities. This can be challenging, Kornblum says, because some domain registrars have created services that protect the registrants’ personal information at a minimal cost. To unmask those identities, Microsoft is filing a ‘John Doe’ lawsuit aimed at identifying cybersquatters and typosquatters who have used privacy protection services to conceal their identities, and naming as defendants:

John Doe defendants 1-217. Microsoft soon plans to issue subpoenas to multiple registrars of domain names infringing on Microsoft’s intellectual property. This lawsuit was filed in the U.S. District Court for the Western District of Washington, Cause No. C06-1192 RSM.

“The purpose of this legal action is to unmask the now anonymous registrants of infringing domain names,” Kornblum says.

Lastly, Microsoft is working to aggressively halt online auctions of infringing domain names. With increasing frequency, people purchase a domain name and, if it generates a compelling amount of traffic, resell the domain name for a profit. To address the problem of domain auctioneering, Microsoft will expand its systematic searches of such auctions and seek to have them removed from the auction Web site.

Kornblum notes that all of these initiatives build on the cutting-edge research and investigations carried out earlier this year by a team of Microsoft Researchers led by Yi-Min Wang called the Strider Typo-Patrol Project. Wang’s group meticulously tracked typosquatting schemes for several months and focused public attention on the targeting of big-name trademark owners with high-traffic Web sites. The team developed a downloadable software tool, the Strider URL Tracer, to enable Web domain owners to pinpoint potential infringers and thus help protect their brands online.

The work is part of Microsoft’s broader commitment to help keep its customers safe online as well as protect its intellectual property.

“Microsoft hopes to help Web surfers reach their intended Internet destinations,” Kornblum says. “Where you cross the line is when you misuse someone else’s intellectual property in your domain name. Microsoft is aggressively targeting those who misuse Microsoft’s intellectual property for monetary gain.”

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