Cybersquatters target family business

Lakshmi Mittal – head of family steel firm ArcelorMittal – has fought back against a businessman who bought website domain names in his name and offered them back to the UK-based billionaire at a hefty £6 million price tag.

The recently settled “cybersquatting” case is the latest example of big family businesses being targeted online – with Virgin and Swarovski falling victim to similar offences – and experts say firms should take precautions to protect themselves from such attacks.

This week research released by brand protection and domain name specialist Netnames revealed 60% of UK businesses had no strategy to protect online intellectual property, but 92% had a strategy to protect their brand elsewhere.

According to intellectual property solicitor Paula Williams, trademarks can make brand protection online more effective.

She explained that Mittal had been at risk of the cybersquatter selling the domain names to a competitor or using them himself. Ultimately, Mittal took the case to Nominet – the UK body that polices domain names – and the holder was forced to hand the “abusive registrations” over for free.

He would have had to have relied upon his trademark, however, if any damage had been done to the Mittal brand through the hijacked domain names, and he had wanted to take matters through the courts.

Williams, a member of the family business team at Veale Wasbrough Vizards, said a trademark is easier and cheaper to enforce than an unregistered trademark.

"Although a family business will build up unregistered trademark rights in its name through use, these can be difficult to enforce.”

She said unregistered trademarks are often limited to the region in which they are used, and are also limited to the products and services for which they've been used.

Phil Spray, a spokesman for Nominet, agreed with Williams, stating while a trademark is not essential to win an abusive registration case, it would help a great deal when the case was not clear-cut.

He said while Nominet could confiscate a domain name – as happened in the Mittal case – it couldn't award damages or compensation.

He explained, however, that trademark infringement could be taken before the courts if either side disputed the decision made by a registration service.

Emma Fordyce, adviser and consultant with the International Centre for Families in Business, explained for family businesses protecting the brand was especially important.

She said a family firm brand is often linked to the family behind it and will usually have built up a significant reputation over several generations of family ownership.