Common Intellectual Property Pitfalls for Domain Registrations

The Internet is always growing. At the end of June, there were approximately 334.6 million registered domain names worldwide.[1] This is nearly 120 million more registrations than the same time period in 2011.[2] The incredible growth in registrations reflects new businesses, marketing opportunities and more domain marketplace sales in the past five years. For example, in February of 2016, a Canadian Jade mining company entered into an agreement to purchase jade.com from its current registrant for $1.25 million.[3] Based on domain WHOIS records, the deal was completed shortly after the announcement.[4] While most domain name sales do not reach millions of dollars, profit margins can be exceptionally high in light of low registration costs.[5] This has led some to compare domain names to internet real estate. Yet domain names face intellectual property questions that real estate does not. For example, a registrant may lose a domain name if the domain infringes on a complainant’s trademark.[6] By contrast, a homeowner does not have to fear losing their home to a company if their property happens to resemble the complainant’s corporate headquarters. Therefore, it is crucial for domain registrants to protect their domain names from potential intellectual property violations.

First, the registrant must first ensure that she is not engaging in cybersquatting. ICANN defines cybersquatting as “bad faith registration of another’s trademark in a domain name.”[7] A common violation would be a registration of a domain name such as microsaft.com or microsoftconsulting.click because these domains infringe on Microsoft’s rights either directly, or with a confusingly similar typo. The Anticybersquating Consumer Protection Act (ACPA), gives nine separate factors for evaluation of bad faith registration which includes “the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain” without intending to use the domain name themselves.[8] Finding of bad faith may result in the forfeiture or cancellation of the domain name.[9] Forfeiture or cancellation need not go through a court process, as most registrars subscribe to ICANN’s Uniform Domain-Name Dispute-Resolution Policy (UDRP) process.[10] UDRP proceedings may also result in a transfer, cancellation or changes to a domain name’s registration, though results may be challenged in court.[11] In the past two years, nearly 92% of UDRP cases have resulted in either a transfer or a cancellation of the domain involved in the complaint.[12]

The danger does not end there. Under the Lanham Act, domains registered in bad faith may be subject to statutory damages of up to $100,000 per domain name.[13] In other words, if someone registers three different typos of microsoft.com, the company can get those domains and seek up to $300,000 in statutory damages along with other costs. Furthermore, even if the domain itself is not infringing on a trademark, website content may also force its deletion or transfer. For example, myenterprise.com was subject to a UDRP transfer ruling because its registrant set up a parking page that monetized keywords based on Enterprise Rent-A-Car trademarks.[14] This does not mean that a registrant should avoid parking a domain name during development or monetization. However, given strong enforcement of intellectual property rights in the domain name space, it is imperative to be cautious.

In order to avoid headaches and substantial penalties, domain registrants should take several preventive steps. First, the registrant should ensure that the domain name does not encroach on an existing trademark. A great way to do so is to check the U.S. Patent Office’s website for existing marks. Second, it would be prudent to observe search results for the domain name by typing it into a search engine. If search results are focused on a company brand, product, or other intellectual property then it may be wise to avoid registering the name without additional research. Google, for example, offers the ability to break down search results by keyword relationship and geographical results through its AdWords product.[15] If the registrant is planning to invest a substantial amount of capital into acquiring a domain name, it is advisable to gain as much insight as possible. Finally, if the registrant plans to park a domain name, it would be highly prudent to avoid any ads or materials that may infringe on third party intellectual property rights. As the old proverb states, an ounce of prevention is worth a pound of cure.

[1] VERISIGN, The Domain Industry Brief, 13 Vol. Issue 3, 1 (2016), https://www.verisign.com/assets/domain-name-report-sept2016.pdf.

[2] VERISIGN, The Domain Industry Brief, 8 Vol. Issue 3, 1 (2011), https://www.verisign.com/assets/domain-name-report-august2011.pdf.

[3] Andrew Allemann, Mining company says it’s acquiring jade.com for $1.25 million (Feb. 29, 2016), http://domainnamewire.com/2016/02/29/mining-jade/.

[4] WHOIS Record Query for Jade.com, DOMAINIQ.COM, http://www.domainiq.com (query jade.com and then search the historical WHOIS record)

[5] GODADDY HOMEPAGE, www.godaddy.com (last visited Oct. 29, 2016).

[6] ICANN UNIFORM DOMAIN NAME DISPUTE RESOLUTION POLICY, https://www.icann.org/resources/pages/policy-2012-02-25-en (last visited Oct. 29, 2016).

[7] ICANN ABOUT CYBERSQUATTING, https://www.icann.org/resources/pages/cybersquatting-2013-05-03-en. (last visited Oct. 29, 2016).

[8] 15 U.S.C. § 1125(d) (2012).

[9] Id.

[10] ICANN UNIFORM DOMAIN-NAME DISPUTE-RESOLUTION POLICY, https://www.icann.org/resources/pages/help/dndr/udrp-en (last visited Oct. 29, 2016).

[11] ICANN UNIFORM DOMAIN NAME DISPUTE RESOLUTION POLICY, https://www.icann.org/resources/pages/policy-2012-02-25-en (last visited Oct. 29, 2016).

[12] WIPO CASE OUTCOME (Consolidated): 2016, http://www.wipo.int/amc/en/domains/statistics/decision_rate.jsp?year=2016 (last visited Oct. 29, 2016).

[13] 15 U.S.C § 1117(d) (2012).

[14] Andrew Allemann, Parking page ad leads to a UDRP loss (Feb. 1, 2016), http://domainnamewire.com/2016/02/01/parking-page-ads-lead-to-a-udrp-loss/.

[15] GOOGLE ADWORDS SUPPORT PAGE, https://support.google.com/adwords/answer/2999770 (last visited Oct. 29, 2016).