Citizen Hawk's anti-cybersquatting strategy

Citizen Hawk's purpose is straightforward enough: it helps businesses whose Web sites have been targeted by cybersquatters -- people who buy up domain names that are similar to that of a legitimate Web site. 

But the company's business model is innovative, says CEO Graham MacRobie.

Rather than charging companies for their service, which includes automated software that hunts down and identifies cybersquatters' identities, Citizen Hawk takes more of a commission approach.

Here's how it works: Citizen Hawk pays up front to file a complaint with the main Internet registrar, ICANN, on every cybersquatter who targets a particular company. Given that each complaint filing costs $1,300 and many large companies have hundreds of such complaints, that's a large up-front expense.

But Citizen Hawk gets it back, and more, by taking a percentage of the online advertising dollars from the Web traffic that its client companies recapture from the cybersquatters. 

"We take on all the upfront risk... but then get a commission on the ad sales," MacRobie says.

After that, Citizen Hawk leaves the cybersquatters alone.

"We're not lawyers, we don't file legal actions," he says.

The 1999 Anti-Cybersquatting Law calls for a  fine of $100,000 per domain name violation.

Founded in 2006, the company has 25 customers, including Overstock.com. Most of their clients would rather not be named, MacRobie says.

Citizen Hawk raised $3 million in early May and now plans to expand.  

"We've proven that the model works, and that we can be profitable on an account-by-account basis. Now we are going to scale it."