A company’s domain name is a valuable business asset. It represents the online identity of the brand and often serves as the first point of contact for customers. However, the growing importance of domain names has given rise to certain unethical practices such as cybersquatting and passing off. While both involve misuse of domain names, they differ in nature, intent, and legal implications.

What is Cybersquatting?

Cybersquatting occurs when an individual or company registers a domain name without any genuine intention to use it. The primary goal is to block others, particularly legitimate businesses, from registering the same or a similar name. For instance, if you operate under name.co.za and attempt to register name.com, you may find that someone else already owns it, yet no active website exists.

In many cases, the registrant offers to sell the domain at an inflated price, exploiting businesses that want to maintain a consistent brand identity across different domains. This practice can lead to financial loss for companies and disrupt their online presence.

Cybersquatting is generally considered a bad-faith registration. Various international and national frameworks, including the Internet Corporation for Assigned Names and Numbers (ICANN) Uniform Domain Name Dispute Resolution Policy (UDRP), provide mechanisms to challenge and recover domain names that have been registered with malicious intent.

What is Passing Off?

Passing off, by contrast, involves active deception. Here, a website operates in a way that misleads users into believing it is associated with, or owned by, another company. This can involve copying a business’s name, logo, website layout, or other distinctive branding elements. The intention is to benefit from the goodwill and reputation of the legitimate business, effectively taking advantage of its established credibility and customer trust.

In common law countries such as England, Australia, and New Zealand, passing off is recognised as a common law tort. It protects businesses from misrepresentation that damages their goodwill or causes confusion among consumers. The tort of passing off can therefore be used to enforce unregistered trade mark rights where a company’s reputation and distinct identity have been established through use rather than registration.

Key Differences Between Cybersquatting and Passing Off

While both cybersquatting and passing off undermine brand integrity, the distinction lies in motive and execution.

• Cybersquatting involves holding a domain hostage for profit without using it.
• Passing off involves using a domain or website to impersonate a business and deceive consumers.

Cybersquatting is a passive act intended for financial gain through domain resale, whereas passing off is an active misrepresentation that exploits another company’s reputation.

Protecting Your Business Online

Understanding these differences is important for businesses to protect their online identity. Companies should:

• Secure relevant domain names early, including variations and extensions.
• Keep registrations up to date to prevent opportunistic registrations.
• Monitor domain name activity and report potential infringements promptly.

Taking these steps can help prevent exploitation, financial loss, and damage to your brand’s reputation in the digital space.