Magazine article Journal of Banking and Financial Services , Vol. 116, No. 1
If you were asked to name a company's most valuable asset, the answer would most likely be staff, customers or shareholders. It's certainly an issue that creates considerable discussion around any boardroom table.
Arguably, however, the most valuable asset is a company's name. It is this name and the attached intellectual property that drives most companies' day to day operations.
Just as traditional brand names have proven value, the same holds true for a company's domain name in cyberspace. Domain names, or the internet addresses that help customers and investors locate a company's website, are becoming increasingly valuable assets. Just look at the trend to companies advertising on the basis of their domain name alone.
The job of protecting a company's name has changed significantly in the last five years as a result of the internet. Today, protecting a company's name and brands involves far more than instructing company lawyers to register trademarks.
On the internet, companies are now competing in global domain spaces like .com, .net, .org and in country code spaces like .com.au, .co.uk and .co.nz.
This means companies must pay careful attention to registration and renewal policies and to ensure domain names and valuable online brands are secure and protected from the practice of `cyber squatting'.
Cyber squatting happens when a person does not have a legitimate interest in a domain name, or has registered in `bad faith' and intends to profit from registering the name.
The standard cyber squatter's method is to register domain names for websites and just hold on to them, without putting any content up on the site. Then when a company or organisation tries to register the name for itself, it is encouraged to buy it from the cyber squatter, usually at an inflated price.
Some companies in Australia have encountered cases of alleged cyber squatting, most notably in the .com space. In September 2000, Coles Myer took action against a Mexican cyber squatter to stop the cyber squatter from linking its trade name on a website to the home page of a rival retailer.
The cyber squatter had registered the domain name, www.coles-myer.com, and linked it to the Woolworths home page, www.woolworths.com.au. In January this year, Coles Myer won the rights to the name at arbitration.
Other public cases in Australia have involved Tabcorp, Alta Vista and Telstra Bigpond. Even the Australian Stock Exchange has experienced some difficulties, while overseas companies including Christian Dior, Nike, Deutsche Bank and Microsoft have also been subjected to cyber squatting.
The issue in Australia is high on the agenda of the Australian Competition and Consumer Commission.
"Cyber squatting can be a significant impediment to consumer confidence in the online world," ACCC commissioner David Cousins said earlier this year.
"Users have a reasonable expectation to participate in online commerce and other activities knowing that a particular domain name ... will take them where they expect to go and present them with the content they expect to see."
For Australia's commercial watchdog to take such an interest in the issue reflects the damage cyber squatting can do to a company's reputation. It can not only weaken a company's brand, but can also divert website traffic and mislead customers, creating huge financial costs.
Why does it happen? …