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Domain Names, Trademarks and Infringements

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Alamy
Alamy

Most of us have probably run into this: you are starting a new website or expanding your business' current sites to include a new domain, but the domain that matches your trademarked name is owned by someone else. Worse? They're just squatting on it, waiting to sell it someone rather than using it for a website. Often, these sellers will be asking thousands of dollars for the domain name.

Do you pay that money to purchase it? Or should you enforce your trademark (TM) and try to take the domain on infringement grounds?

The legalities of domains and trademarks are not very cut-and-dry. In fact, they're extremely convoluted and even experts in the field can run into questions that they can't answer. There are two basic criteria that most trademark infringements, in regards to domain name registrations, must meet before they can be enforced. These define what's called "bad faith registration."

Dates of registration -- the trademark should usually have been registered (meaning the filing date, not the award date) before the domain name, otherwise the domain is probably not infringing on the TM. The exceptions are when domains are sold or transferred after TM registration, especially if those sales are to competitors to the TM owner.

Foreknowledge of the TM -- the person who owns the domain can sell or transfer the domain, or even legally purchase the domain after TM registration if he or she was not aware of the trademark. In other words, in order for infringement to be shown, the TM owner must have informed the domain owner that he or she owns a trademarked domain.

As an example to illustrate these two points, let us assume that a person has purchased "ABC123.com" and is planning to try to resell the domain because of its search engine optimization possibilities and perceived value due to its top level (dot com) low character count (only six). In the business of domaining, this is a common practice since domains are usually valued by keyword, length, and what kind of dot they carry. Dot com carries more value than dot tv or dot co, for example.

Now the ABC-123 Toy Company owns the trademark for "ABC 123" and has decided to begin a new toy line under the name. They registered the TM a couple of years before, but have not been using it up to this point. When they go to register the domain, they see that the domain owner who recently purchased the domain is asking $10,000 for it.

They have three options: offer to buy it, sue to take it, or inform the owner of the infringement and see if he or she will hand it over. In the first case, a lot of trouble and attorney fees can be saved, but a lot of money is spent regardlessly. In the second case, the fight could drag out and end up costing more than the purchase price. In the third case, the seller may not have any plans to hand it over and might jack up the price now that he knows someone really wants it.

Except that in the third case, the seller has now been informed that someone owns the TM for the domain they have and so the only legal buyer is now the ABC-123 Toy Company. If the seller attempts to sell to another party, or does sell to another party, then the seller or the new owner can be taken to arbitration and will almost certainly lose the domain (with no recompense from ABC-123) because the seller had previously been informed that the domain name infringed on a trademark.

That opens a new can of worms for the seller, who is now likely liable under the law for fraud.

The domain name buying and selling business is not as simple as it used to be, but domainers are usually aware that some of their domains are, eventually, going to infringe on someone's trademark registration. Talking with domainers that I know, I've found that most of them take this as a part of their business and when someone demands a domain based on TM infringements, they will check the trademark and if it's valid, they just hand over the domain. Otherwise, it becomes useless to them as they can no longer (easily) sell it without a lot of headaches appearing post-sale.

There are, of course, exceptions to these rules -- nothing is hard and fast. Neither am I an attorney, so what I tell you here is not legal advice and should not be taken as such. Still, the world of trademarks and domain names is convoluted and the two often bump heads.

How about you? Have you been on the receiving end of either of these scenarios where a domain's ownership was disputed because of a trademark? Let's talk about it.

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