Legal Regulation of Malicious Trademark Squatting in the Context of the Digital Economy

Abstract

The fast rise of the digital economy has deeply altered the intellectual property rights landscape, it’s like a double-edged sword, promoting innovation and also providing a place for bad actors to squat on trademarks. In this paper, it is investigated how trademark squatting behaviors mutated in the digital era as the registration process is cheaper due to the digital era and the value of digital traffic which makes it motivating for “bad faith” actors to pre-emptively reserve names tied to trend, internet slang and digital assets like NFTs and metaverse properties. Unlike previous squatting, it is sporadic and targeted squatting; while digital squatting has high frequency, automation, and cross-border characteristics, making it a new type of intellectual property squatting that has been industrialized. Through a thorough review of existing laws this paper finds regulatory gaps mainly because of the difficulty in identifying “bad faith” and regulating non-traditional digital marks. After reading data from statistical data, case types; it has indicated the flaws of facing such a rapid and speedy paced digital mark through the usage-based or registration-based pre-existing system. In the paper a multidimension regulatory approach is proposed, advocating AI use in trademark examination, dynamic “bad faith” blacklist and modification of “intent to use” requirement to counter digital speculation. The results show that we can only adapt a legal evolution that can protect the trademark system from the disruptive nature of the digital economy so that the law can protect real commerce instead of just commerce by extortion.