Dell claims that organizations doling out domain names have deployed a network of shell businesses that profit from internet web surfers who make typos while entering URLs. These internet users use direct navigation by entering the URL directly in the address bar of their web browser, as opposed to using a search engines such as Google. It is becoming clear that a larger number of people use direct navigation and that a significant percentage of those people mis-type the URL into the browser address bar. Unfortunately, this business model works best when the typographical error is related to a famous web site or company with preexisting trademark rights. Typographical errors by direct navigators looking for famous companies, such as Dell, creates enough traffic to make it worthwhile for typosquatters to pay for these domains and run the risk of lawsuits by trademark registrants. In this lawsuit, Dell alleges that these typosquatters have created a scheme to avoid paying any registration fees at all.
Dell's federal suit, filed in October with the U.S. District Court for the Southern District of Florida, names three registrars -- BelgiumDomains, CapitolDomains, and DomainDoorman -- and claims they have set up a string of Caribbean-based shell corporations that gain rights to typo domain names and take in the pay-per-click revenues, according to The Washington Post.
People making the typing errors wind up on sites crammed with advertising, and the advertisers pay the shell companies for the hits, according to the Post's account of the lawsuit.
Because the typo sites' names are similar to those of legitimate, trademarked Dell sites, Dell claims the dummy corporations are illegally profiting from the company's assets. Not only did the accused businesses engage in this typo-squatting, they managed to dodge paying anything for the typo URLs, the suit says. They would sign up a URL, use it on a free trial for five days and return it. Then another of the dozen or so shell companies would immediately scoop it up for another free trial. By passing URLs around among themselves, the companies could avoid paying anything, at least until they decided whether it was worth the US$6 it costs to register the name for a full year.
Dell's attorney claims the accused companies sampled 30 million to 60 million sites per month, paying for a full year's rights for 50,000 to 200,000 of them, according to the Post story.
This is sure to be an important lawsuit, one which Traverse Legal is watching closely on behalf of its domain portfolio clients. There will be legal issues of interest to domain name dispute attorneys, trademark registrants, domainers and domain tasters alike. As this particular brand of abusive typosquatting finds its way into the public eye, public awareness and sympathy will certainly turn in favor of trademark holders.