When a merchant develops an affiliate program, sometimes, they are not prepared for what happens next. 
Basically, the roll-outs happen like this:
- First your develop your program, partnering with an affiliate processing company (like BeFree or Commission Junction) and then you start to get sign-ups.
- The volume of sign-ups has you excited and you start to see a few referred sales. It's working!
- You find at the end of the first or second payment, some affiliates are doing great! They have CRAPPY looking sites, but darn, they sure know how to refer sales!
- Your Intellectual Property Monitoring Service calls you. The top 5 affiliates have all registered domain names which are redirecting to the site.
- "SO!?" You ask.
- We will shut them down if they do not cease and desist....
On the surface, it may seem innocent, and can't affect you too much, right? Well, Intelluctual property is one of the few assets that have the most value for any company today. The rights to trademarks, domain names and other company identifiers, whether filed with the USPTO or not, have incredible value. When an individual registers a mis-spelling of your domain name or other company marks, they are actually violating the law.
There is also a grey area as to whether misuse of domain names could be considered copyright infringement.
Violating The Law?
Yep, the Anti-Cyber Squatting Protection Act (ACPA) provides for penalities of fines up to $100,000 per domain found to be in violation of this statute. Not such a slap on the wrist! This level of fine isn't found on most "petty crimes," and in fact, one gentleman, found to have tens of thousands of domains he was "squatting," John Zucarelli, was fined $500,000 for five offending domains. During the period of "appeal" of his case, he regsitered several thousand additional domains, earning between $800,000 to $1,000,000 monthly in referral fees and advertising fees for all of his redirected domains.
Incredible. Don't let your company find you with your "pants down," openly exposed to these abuses by affiliates, or others.
There are a few key things you must do:
- Ensure that the mis-use of your company trademarks is covered in your site terms of use and affiliate agreement.
- Ensure that you cover 'domain squatting' and the ACPA in your affiliate newsletter from time to time.
- Make it very clear in your affiliate "confirmation" or "approval" email sent following registration as an affiliate that it is completely unacceptable and all violators will be punished to the maximum extent of the law.
- Offer "amnesty periods" to your affiliates to turn in offending domain names which violate any of your policies.
- Include a 'commission repayment policy' in your affiliate agreement, holding them liable for any fraudulently referred sales.
Affiliate programs can be fraught with trouble, but with proper planning and affiliate communication most situations can be resolved. Often, domain squatters are not affiliates at all. But keep your eyes open, partner with someone like lonny.paul to monitor your domain name activity.
You'd be surprised at the violations out there, in fact, Apple doesn't even own appl.com. Big mistake. Bet they get TONS of traffic to that domain.
This column was written after speaking with a 'domain name' offender, registering
DOMAINNAME-1.com. When speaking with her, she said 'How do you expect your affiliates to send you sales then?' Wow. She really thought this is how you were supposed to do it. So, I spent the next ten minutes explaining how people build traffic and buy adwords to get referred sales to our site.Don't let this happen to your company. Contact us today. Continue to research on the trademark and copyright categories @ our founder's website.
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