If you buy a domain name that contains words that are trademarked, you risk losing your financial investment in the domain name, as well as legal fees and your time dealing with a potential legal issue. Understand and learn how to minimize your risk.
If you are considering buying a domain name, you need to consider the trademark aspects in your due diligence process. Why? Because you could be spending a great deal of money acquiring a domain name and even more time and money developing a website or business using the domain name, only to find it all come crashing down in two months if someone files a legal case against you.
Take, for example, the domain name cragslist.com. No, not craigslist.com, it’s cragslist.com (missing the “i” after the “a”). In May 2011, cragslist.com sold on NameJet.com for $17,000, according to Mike Berkens. For $1,500, Craigslist, Inc. can file a UDRP case. Administrative proceedings under the UDRP generally progress faster than a regular court lawsuit. A decision is typically rendered in about two months, and the onus is on the registrant to present a convincing argument as to why this domain name is not a typographic error for craigslist.com.
Notice: DomainSherpa is not providing legal advice.
What Is a Trademark
According to the United States Patent and Trademark Office
(USPTO), “a trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.” Similar trademark offices exist in other countries, so if you do not reside or conduct commerce primarily in the United States, you should research trademark usage in your desired country.
What Rights Does a Trademark Provide
When you obtain a trademark in the United States, you establish a legal claim and establish stronger rights than someone whose name or mark has not been registered. By doing so, you obtain several advantages, including:
- Public notice of your claim of ownership of the mark;
- A legal presumption of your ownership of the mark and your exclusive right to use the mark nationwide on or in connection with the goods/services listed in the registration;
- The ability to bring an action concerning the mark in federal court;
- The use of the U.S. registration as a basis to obtain registration in foreign countries;
- The ability to record the U.S. registration with the U.S. Customs and Border Protection (CBP) Service to prevent importation of infringing foreign goods;
- The right to use the federal registration symbol ®, and
- Listing in the United States Patent and Trademark Office’s online databases
Why Does Buying Trademarked Domain Names Matter
When companies build and shape their brand, they do so through years of market research, product or service development, corporate branding, marketing, and relationship building (often called “goodwill”). A company’s ability to inspire confidence in customers and customer loyalty takes years of effort. They also register trademarks to protect their claim of ownership.
When another company does anything to potentially reduce the value of a company’s brand, it makes business sense to quickly deal with the situation. In most cases, this involves legal action. This may mean one of a few things:
- Cease and desist letter from the company to you to stop using a trademark infringing domain name
- A Uniform Domain-Name Dispute-Resolution Policy (UDRP) case filed against the domain name registrant
- A lawsuit filed in any district in the United States, which may include punitive damages
The Anti-Cybersquatting Consumer Protection Act (ACPA) is a powerful statute that Congress added to the Lanham Act in 1999 giving trademark owners the power to obtain injunctions, seizure orders, damages and attorney’s fees against trademark counterfeiters.
UDRP is another option to adjudicate cybersquatting claims. When you register a domain name, within the registrar’s terms and conditions you agree to arbitrate any dispute through the UDRP. Any UDRP decision can be appealed by an ACPA action.
Lawsuits and UDRP cases are filed almost every day, and they will only continue to grow in frequency in the future, as they have from 2009-2010 (+25%).
Think it Won’t Happen to You? Think Again
How to Conduct a Trademark Search
To protect your financial investment, be sure to conduct a trademark search BEFORE you purchase any domain name. Performing this search is well worth the effort and, as you will see below, is not very difficult to perform. Remember: failure to perform a comprehensive trademark search before using a domain name is evidence of deliberate infringement on another’s trademark, as ignorance is no excuse in a court of law. Again, consult with an attorney.
When conducting a trademark search, there are three areas that you should investigate:
- The United States federal trademark register
- State trademark registrations, such as the Indiana Secretary of State’s trademark database
- Common-law trademark registration (consult an attorney)
While this process can take significant time, you can outsource the research to a trademark search firm. This reduces your time commitment, but comes with a cost: usually between $150 to $1,000 per domain name. This can eat into any profits you may have estimated from the purchase-sale of a domain name, however, if you are planning to build a long-term company on this domain name – or the domain name purchase cost is in the five or six figures – it may be well worth the cost.
At a minimum, you should conduct a search of the USPTO website, TESS. The Trademark Electronic Search System (TESS) contains the records of active and inactive trademark registrations and applications.
Steps to Conduct a U.S. Federal Trademark Search
Step 1: Visit TESS
Step 2: Click the “Basic Word Mark Search (New User)” link
Step 3: Enter Search Term and Submit Query
Step 4: Review Results
If there are no federally registered trademarks, you will see an image like this:
When results are returned, you should consider whether the trademarks are active (“live”) or expired (“dead”), and whether your intended use of the domain name conflicts with the SIC code (classification of a business according to industry as defined by the US Department of Commerce) of any active trademarks, as trademarks only apply to the SIC codes for which they are registered.
When in doubt, consult with an intellectual property attorney specializing in domain names.
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