Cyberquatting is a serious domain problem. In 2006, there were 1,823 formal complaints made over web address disputes with the World Intellectual Property Organization’s (WIPO) arbitration and mediation centre.

Cybersquatting is referred to as "the abusive registration of trademarks as domain names". WIPO complained the domain name system (DNS) was likely to become a mere forum for speculative gain. Cybersquatters have taken many choice addresses associated with major businesses, brands and other names.

The phase is up 25% in 2006 over the previous year, as even Bill Gates lost a case involving his Corbis images company, (presided over by WIPO.

New systems have been developed in order to gain control of lucrative addresses resulting in various trademark owners being caught out when trying to bring products directly to consumers. WIPO reports cybersquatters now use automatic software packages which look to instantly purchase prestigious domain names (that may have temporarily expired). They then park them and install portal sites. The creation by domain registration sites of introductory offers allowing a five-day test period encourages speculators (especially in newly opening top-tier generic domains) and highlights anonymous registrations (which ultimately aid in valuable intellectual property rights).

The most common types of cybersquatting include "Cybersquatting": Bad-faith intent registration; a cybersquatter can sell to the highest bidder, or collect money via domain parking", "Typosquatting": This is cybersquatting with the tendency to mistype words in Internet addresses (e.g. spelling Google as Googel), "Domainer": A purveyor of domain names, making income from buying and selling; "Dropcatcher": Someone rushing to purchase popular domain names quickly when registrations lapses, "Domain Tasting": Using domains for a five-day free refund period to test, then drop for refund the ones which performed poorly; "Domain Parking": Having a small site with only advertising linked to related domain names, where owners are paid a small amount when a person clicks on an ad; (this can add up to millions in some cases).

WIPO deputy DG Francis Gurry recently said, "While electronic commerce has flourished with the expansion of the internet, recent developments in the domain-name registration system have fostered practices which threaten the interests of trademark owners and cause consumer confusion. Practices such as ‘domain name tasting’ risk turning the domain name system into a mostly speculative market." Commandeering of domain names has been made potent by ethical service and hard work and risked capital of entrepreneurs. This not only creates a drag on global economy, but lessens trust as a mode of commerce. Gurry has asked for concrete policy responses for this issue.

Microsoft launched an international effort to recover domain, recovering internationally 1,100 domains related to brands in the last six months alone. They were aided by Microsoft researchers led by Yi-Min Wang, who played a big part in shutting down fake sites. Microsoft attorney Aaron Kornblum said "These sites confuse visitors who are trying to reach genuine company Web sites, which can negatively affect corporate brands and reputations as well as impair the end-users’ experience online. With every ad hyperlink clicked, a registrant or ad network harvests cash at the trademark owner’s expense, while derailing legitimate efforts by computer users who are trying to go to a specific Web site. We hope that our stance and activity on this issue will help motivate and empower other companies whose brands are abused to take action."

Various Internet entrepreneurs have discovered how seriously the software company approaches copyright violations. A Seattle newspaper has stated that Microsoft claimed that every day last year, an average of 2,000 domain names illegally appropriating their trademarks were registered, (three quarters by cybersquatters). In 2004 Microsoft took a Canadian 17-year-old high school student to Court. Mike Rowe, who registered www.mikerowesoft.com defended "Since my name is Mike Rowe, I thought it would be funny to add soft to the end of it. I didn’t think they would get all their high-priced lawyers to come after me."

Microsoft recently filed or amended four suits in the States:

"(1) Microsoft Corp. v. Maltuzi LLC, Case No. C07-1419 (N.D. California); alleging this California company infringed on trademarks through massive domain tasting, registering blocks of company related domain names; keeping some and dropping others depending on profitability."

"(2) Microsoft Corp. v. Sule Garba, Darin Grabowski and Yi Ning, Case No. 06-1192RSM (W.D. Wash.). Microsoft alleges here owners of 217 infringing domain names hid their true identities behind registration privacy options. In the suit, Microsoft used the technique of naming all 217 persons John Doe, which then allows further discovery to establish their true identities, and established all the persons involved. Here, it is claimed just three persons are behind at least 135 infringing domain names."

"(3) Microsoft Corp. v. John Does 1-54, Case No. 07-2-08568-8 SEA (King County Superior Court, Washington). Microsoft filed a civil lawsuit in state court in Seattle, using as above the John Doe method to find the ownership of 54 infringing domain names."

"(4) Microsoft Corp. v. John Does 1-105, Case No. C06-1766JLR (W.D. Washington). In December 2006, Microsoft filed a civil lawsuit in federal district court in Seattle to discover who was registering and parking infringing internet addresses. Microsoft has other cases in the midst of settlement, in the U.S. and worldwide, including a settlement with U.K.-based Dyslexic Domain Company Limited, who had registered more than 6,000 illegal domain names."

Cybersquatting is still a serious issue and can only be properly addressed through government action, laws, groups to lobby against it and the private owner’s vigilance.