Picture a consumer typing in a domain name that intends to reach you. Instead, the consumer slips up in typing the address and ends up with a goody bag full of spyware, viruses, and trojan horses on their computer. That hypothetical occurrence is far more common than you may think. McAffee recently reported their findings on a study of cybersquatting. Each time a consumer types in a domain name they have a 1 in 14 chance of landing on a cybersquatted page.
Big brands are especially vulnerable to cybersquatting. By 2007, 8,000 URLs contained the word "iPhone," and Apple reportedly paid $1 million for the iPhone.com domain.
Legally, companies can make a claim against cybersquatters through the Uniform Domain Name Resolution Policy and the U.S. Antercybersquatting Consumer Protection Act, but there are a number of jurisdiction issues, especially when disputes are between parties in different countries. The United Nations intellectual property arm, WIPO, also has a system in which a trademark holder could claim a squatted name, and 84% of these cases are decided in favor of the trademark holder.
Squatting image by seanthecon3000 [cc, 2.0]