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Pay-Per-Click Ad Model Becomes Thieves' Cash Cow

Cybersquatters spoof legitimate Web sites and register them with Google's ad service, observers say.
Microsoft isn't alone. Most major brands have thousands of these sites using their trademarks. Take, for example, www.boeing747.com. It's not owned by Boeing and has pay-per-click ads. "Just pick a brand," challenged Rasmussen during the interview. While there's between one million and two million domain names registered daily, Rasmussen estimates. "Cybersquatting has become easy to monetize through legitimate services," Rasmussen said. "Of the domains registered in a day, at least one third are related to cybersquatting."

Often the domain names are kept for a few days to measure the traffic, and then sold off on eBay Inc., or marketplaces to buy and sell domain names like Dotster Inc., GoDaddy.com Inc., and Sedo.com LLC, if they don't produce lucrative advertising revenue.

If the domain names don't turn a quick profit they're resold on sites like Sedo. Tim Schumacher, CEO and cofounder of Sedo which buys and sells domain names, says the company launched a "Rights Protection Program" about one year ago as a way to reclaim the names that possibly infringe on their trademark.

Since the program launched, Sedo has received "a couple of dozen inquires that we managed to address in days," Schumacher said. "We have more than 5 million domain names for sale on the site at any given time, about two to three times more than our closest competitor and really no way to monitor the list."

Alan Dalinka, partner at DLA Piper Rudnick Gray Cary US LLP 's Chicago office, advices trademark owners to purchase similar spellings and park the domain name, so Cybersquatters and typosquatters intending to make a profit can't buy them.

Companies also hire employees to watch for infringers. "It's a new line of work for the trademark investigator, and now even the old traditional gumshoe detectives are doing electronic research," Dalinka said.

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