Web3 Leads to Cybersquatting 2.0: Here’s What Brands Can Do

Have you ever wondered why so many Web 2 company names are vowelless derivatives of dictionary words? Think about it: Flickr, Tumblr, and even Twitter (originally named Twttr).

In some cases, fine-tuning is easier to register a trademark. But in another example, startups are plagued by decades of cybersquatting practices. In cybersquatting, speculators register domain names that include simple words and well-known trademarks (tiktokcharts.com, secure-wellsfargo.org, paypal.net, etc.) and make the domain the actual trademark owner (TikTok, Sell ​​to Wells Fargo, and PayPal).

After rampant cybersquatting caused headaches for some of the world’s largest brands, legislators enacted two legislation in 1999 aimed at curbing that practice. United States Anti-Cybersquatting Consumer Protection Act (ACPA) and ICANN Uniform Domain Name Dispute Resolution-Resolution Policy (UDRP). ACPA was intended to prevent cyber squatter from registering Internet domain names containing trademarks and selling those domain names back to trademark owners. Meanwhile, UDRP has provided trademark owners with the right to prohibit or acquire the transfer of domain names that use the trademark. It can cause confusion around it.

In Web3, the cybersquatting game remains the same, but it’s happening in ENS instead of DNS.

Now, like the traditional Domain Name Service (DNS), which links seemingly arbitrary numeric server addresses to user-friendly names. Ethereum name service (ENS), a service using the blockchain that recently registered the 1 millionth user.

One crypto wallet user can’t send or receive digital assets simply by entering another user’s username or email address, so registering ENS names such as Vivek.eth and PartyParrot.nft complicates people and transactions. You can redirect to the wallet. address.

As we saw in the 1990s, squatters are actively acquiring .eth domain names, including well-known trademarks.upon High seasFor example, both nike.eth and amazon.eth are sold to buyers who want to get seven numbers. The market is wide and relatively active. Adele.eth recently sold for $ 6,000 and boy.eth for $ 65,000, while other low-priced domains will survive for months without sale. In general, .eth domain registrations are increasing quarterly.

The emergence of .eth domains also poses legal issues. Unlike DNS, ENS is an open, decentralized naming system that utilizes the Ethereum blockchain. This puts the .eth domain name out of the jurisdiction of ICANN. That is, traditional UDRP claims can fail due to lack of jurisdiction.

Without the help of ICANN, what would a brand owner do when he discovers that the mark is claimed as an .eth domain by someone else?

There are two strategies that can help you adopt, but neither of them forces the domain to be handed over to the trademark owner.

First, the trademark owner must send a removal notice to the marketplace that sells the infringing .eth domain. OpenSea, Rarible, and Nifty Gateway all take steps (with varying degrees of effectiveness) to address intellectual property infringement.

For example, when a delete notification is sent to OpenSea, OpenSea notifies the domain owner that the list has been deleted due to a delete request (that is, it will not be open to the public). This notification allows the owner to contact the brand owner. This could lead to more rational negotiations as the domain was delisted. This approach may provide a more lasting remedy.

ACPA provides In REM .eth Domain name jurisdiction. This refers to the jurisdiction of the physical asset, not the person accused of cybersquatting.

However, this tool can only be used if the registrar that issued the domain name is deployed. If these entities are not located in the United States for jurisdiction, such efforts would be a waste of time. (However, popular .eth registrars like Unstoppable Domains are in the United States.)

If successful, the brand owner can permanently disable the domain. This may be more effective than the first option, which gives .eth domain owners the opportunity to simply list domains in another marketplace.

However, brand owners, especially those who own well-known trademarks, should not sleep on the opportunity to shrink rapidly to protect their .eth domain. However, given the new challenges presented, efforts to do so must be strategic and permanent in order to avoid harming the brand.