Plan to Foil Cybersquatters Backed

The Cabinet on Tuesday approved a proposal by the Economic Development and Trade Ministry to eliminate the link between registration of brands and Internet domain names, making it easier for companies in Russia to defend themselves against cybersquatters.

The proposal one of several by the ministry that were approved. The proposals were backed "without criticism," Deputy Economic Development and Trade Minister Andrei Klepach told a news briefing after the Cabinet meeting, Interfax reported.

Under the amendment, in Part 4 of the Civil Code, the registration of trademarks cannot be refused on the grounds that an identical domain name already exists. The amendment does not, however, actually prevent cybersquatting, the widespread practice of registering domain names to sell them on at a profit.

"This is a welcome development because it addressed one of the concerns of intellectual property advocates," Eugene Arievich, a partner at law firm Baker & McKenzie, said by telephone Tuesday. "But it only partially solves the problems [with cybersquatters] because it only addressed the issue of trademark and domain registration."

To put an end to the activities of cybersquatters would require additional provisions in the Civil Code, as well as an overhaul of case laws on the issue, Arievich said.

Cybersquatters usually adopt domain names likely to be used by well-known brands, denying genuine companies the ability to use such domain names to promote their product.

Companies can be faced with having to pay anything from $500 to $100,000 to get their preferred domain name, Arievich said. Litigation costs even more because, unlike in the West, there is no quick and inexpensive way to resolve the problem here, he said.

"The only recourse is to the courts, usually the arbitration courts, and this can cost from $5,000 to $50,000," he said.

The amended law on intellectual property, which forms Part 4 of the Civil Code, came into effect earlier this year and was widely expected to grant protection to brand names.

Cybersquatters, however, are expected to continue to exploit loopholes in the law to obstruct any foreign company from registering domain names, analysts said.

Mikhail Chekanov, head of marketing at Rambler Media, said cybersquatters have registered all the imaginable .ru names for resale.

Chekanov said, however, that the effects of cybersquatting were exaggerated, as for small businesses, advertising and good product positioning remain the most important things.

Andrei Vorobyov, head of communications at Ru-Center, the body authorized to register .ru domain names, said the new law had already reduced the incidence of cybersquatting by 50 percent since its introduction in January.

However, around 10 percent of the 1.4 million registered .ru domain names still belong to squatters, Vorobyov said.

"To some, cybersquatting is a very lucrative business," Vorobyov said. "An interior designer who registered the vodka.ru for $100 a few years ago sold it recently for $50,000."