This is a guest post by Cliff Hyra of Hyra IP.  He also has a personal blog with tons of great insights on patents, Patents 101.

Cyber squatting is a very common problem these days, especially for any business that has a large web presence. And really any business that’s going to have a website that’s important to them should know 3 things.

1. They should know what cyber squatting is
2. What steps they can take to prevent cyber squatting problems
3. What you can do once cyber squatting has already become an issue for you.

So in this podcast, I’m going to talk about the first two of those issues. And then in the next podcast I’ll address what you can do once it’s already become a problem for you.

What is Cyber Squatting?

Cyber squatting has become a big issue now that the internet has obviously become so huge. And what cyber squatting is has evolved over the years. There are  businesses who’s entire business is domain names It’s buying, holding, selling domains. These are well capitalized companies, some with tens of millions of dollars. They have automated programs that go out, they detect what domains are receiving traffic. And then they automatically register those domains in bulk. And they throw up content automatically onto each site. Many of them own hundreds of thousands of sites, and each one may be filled with advertising links, from Google and Google Adwords, or other automated advertising programs. And these domainers, they don’t really care what the domain is, as long as it gets traffic. And so if they can pull in $12 a year in revenue from traffic going through their advertising links, and it costs them $10 to register and host the site, that’s great for them. I mean it’s only a few bucks, but multiply that by hundreds of thousands of domains, and you have yourself a good business. But where it changes from just domaining into cyber squatting is that there’s no real way for them to account for what domains other people have rights in. And so if they register a bunch of domains that other people have rights in, that’s known as cyber squatting.

Why might it be an issue for your business?

Well here’s a common scenario. You decide that you’re going to develop a website. You put a lot of time and money into it. Search engine optimization, Google Adwords, just building and driving traffic to your site. It becomes popular, it becomes very important to your business. And pretty soon you’ll find that hundreds of similar domain names have been registered by cyber squatters. Basically every imaginable typo of your domain name. They’re all going to be registered because they’re all going to be getting substantial traffic as a result of the popularity of your website. And just the fact that people are going to be making mistakes typing in your domain name, ending up at these slight misspellings of your domain name. So if you’re not paying attention, you’re going to find that your customers are being diverted. It may not be a large percentage, but it can be numerically a very large amount of customers who are looking for your site, they’re ending up at a cyber squatter site. And you have no control over the content of the cyber squatter’s site.

They can then redirect to another site. It could be a gambling or pornographic website, or a competitor’s website. But probably the most common thing to do, as I mentioned earlier, is to throw up an automatically generated page just covered in links, sponsored pay per click links. And so the issue with that is that those links that are up there are going to be related to the domain name. So most likely they’re going to be links to your competitors. And they may even be links to your own website. If you advertise with Adwords, Google Adwords, they automatically place your ads on relevant sites that will include these cyber squatter sites. And you’ll be paying to have your own customers sent back to your site. Or even worse, your customers will be distracted, see a link to a competitor’s site, and go there instead. And you will have lost a customer. So the bigger your web presence is, the more business you generate online, the bigger a problem this is.