Monday, March 9, 2009

The illegal use of trademarked brand names online, known as brand-jacking, continued to rise last year, with the great majority of abusive sites now mature e-commerce efforts with life spans of up to two years, according to a new survey.

Cyber-squatting — in which crooks set up a Web page containing a trademarked name to hawk counterfeit goods, spread malicious software or sell pornography — continued to be the most prevalent form of brand abuse online, according to MarkMonitor, a firm that works with trademark holders to protect their image online.

MarkMonitor’s survey, which tracks abuse of the top 30 global brands by searching billions of Web pages, found nearly 450,000 cyber-squatting sites active at the end of last year — a rise of 18 percent since 2007.

The survey also found that, in contrast to the conventional view of brand-jacking sites as “fly-by-night” operations, 80 percent of such Web pages observed at the beginning of 2007 continued to be active at the end of 2008.

“We’re seeing online brand abuse mature” as a criminal activity, said Frederick Felman, the chief marketing officer of MarkMonitor.

Mr. Felman said brand-jackers were increasingly using sophisticated search engine optimization techniques — such as creating networks of links to their cyber-squatting pages — to push them higher in lists of search results and drive unwary consumers to their sites.

“Abuse is economically sustainable for fraudsters,” he continued. “We expect [these] attacks to grow both internationally and in complexity.”

Abuse of apparel brands rose fastest in 2008, the survey found, growing by 28 percent. High-tech and automotive brand abuse grew the second fastest, at 21 percent each, with food and beverage and media brand abuse growing at 17 percent and 11 percent, respectively.

Nearly 70 percent of brand-jacking sites are hosted in the United States, with 9 percent in Germany and 4 percent each in the United Kingdom and Canada, the survey found. About 70 percent of sites illegally using domain names in their Web page titles were in the .com domain, with about 30 percent in the so-called country-code top-level domains, such as .us for the United States or .ru for Russia.

Mr. Felman said arrangements for companies to contest the registration of domain names involving unauthorized trademark use are inadequate and require “companies [to be] spending hundreds of thousands of dollars to defend themselves.”

ICANN, the Internet Corp. for Assigned Names and Numbers, the international nonprofit group that oversees Internet addresses, has since 2000 operated a framework for resolving disputes known as the UDRP, or Uniform Domain-name-dispute Resolution Policy.

All the registrars that are accredited by ICANN to lease domain names have to subscribe to the policy, which allows companies to contest a domain-name registration that illegally uses their trademark in court or through an ICANN-accredited administrative dispute resolution service provider.

Last month, for example, Citigroup Inc., filed suit against a Nepalese entity that had registered the domain name via an ICANN-accredited registrar in Canada, according to Legal Times.

“UDRP doesn’t work because of the expense and time involved,” said Mr. Felman, who said the procedure cost an average of $5,000 in addition to up to 20 hours of legal work.

“Companies cannot afford the time or the money,” he said, adding that companies are responding with a touch of “Network” anchorman Howard Beale. “They’re mad as hell, and they’re not going to take it any more.”

ICANN said it keeps the procedure constantly under review and is working on ways to improve it.

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