01/25/2008

Domain Names Are Valuable Property: Are You Protecting Yours?

Domain name portfolio values continue to rise. Domainers continue to realize exponential returns on the domain registration of generic top level domains.  As noted below, Sedo reported record domain sales through its services for 2007. 

What are most domainers doing to protect their assets from unwarranted attacks by overly-aggressive trademark threat letter lawyers and reverse domain hijacking under the UDRP?   The somewhat incredible answer is that, except for the top domainer dogs, domainers typically don't do much to protect their business model and most valuable assets.

Sedo reports $72 million in sales for 2007 | Dominik Mueller

Domain aftermarket Sedo has released its Domain Market Study for the year 2007. The report says that Sedo sold a total of more than $72 million worth of domain names in 2007, which is a 60% increase from 2006. I’m sure the introduction of Sedo’s new auction system as well as the acquisition of GreatDomains have helped a lot to boost sales last year. Sedo continues to be the power broker of the industry. I interviewed the company’s CEO Tim Schumacher, who is very knowledgable about the domain space and a frequent speaker and domain conferences, for a newspaper article on domain names in 2005. At that time, Sedo had just opened its office in Boston and reported sales of about $11 million for 2004, aiming for $20 million in 2005 (they ultimately exceeded that goal by more than $6 million).

What is also interesting, is that the average sales price per .com domain name sold at Sedo was $5,016, up 54%. The sales prices reported by large domain aftermarkets are a good indicator for the overall domain market, in my opinion, because aftermarkets complete more sales and domain transfers than anybody else. Therefore, they can compile quite accurate stats and give good perspectives of the near future of the domain industry. Given the rise in value of domains in 2007 and the sales we’ve seen this year already, I’m absolutely positive 2008 will be another great year for this industry and set new records when it comes to both the average sales price and the total value of domains sold to end users.

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Domainers would not typically leave their cars and houses unlocked late
at night in an urban downtown environment.  With domain values going
up, domainers need to become more aware of the risks which threaten those valuable assets.  They need to understand the intricacies of trademark law, the UDRP and the ACPA.  While more domainers are hiring attorneys with expertise on domain protection strategy, the vast majority of domainers still leave their domains at risk, or worse yet, create risks with missteps which can result in domain transfer under the UDRP or in rem provisions of the ACPA.

COMMENTS

There are, for all practical purposes, three venues appropriate for in rem proceedings under the ACPA (1) the location of the registrar, (2) Herndon, VA - the location of the .com registry, (3) Mountain View, CA - the offices of Verisign, the .com registry.

Domain name protection, at a minimum, should include an initial risk analysis that identifies which domains could be subject to attack by trademark owners for cybersquatting or trademark infringement. Domain name negotiations should also be confidential when necessary. Domain name sellers should have any written communication reviewed by a domain name attorney. Finally, any domain name sale should be governed by a purchase agreement; ideally to be drafted by an attorney. While there are additional domain name protection tasks all domain owners should follow, these are the ones that can limit liability for the domain owner.

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Cybersquatting: 'How To' Resources

  • Anticybersquatting Consumer Protection Act - Wikipedia
    The Anticybersquatting Consumer Protection Act (also known as Truth in Domain Names Act), a United States federal law enacted in 1999, is part of A bill to amend the provisions of title 17, United States Code, and the Communications Act of 1934, relating to copyright licensing and carriage of broadcast signals by satellite (S. 1948). It makes people who register domain names that are either trademarks or individual's names with the sole intent of selling the rights of the domain name to the trademark holder or individual for a profit liable to civil action.
  • Typosquatting - Wikipedia
    Typosquatting, also called URL hijacking, is a form of cybersquatting which relies on mistakes such as typographical errors made by Internet users when inputting a website address into a web browser. Should a user accidentally enter an incorrect website address, they may be led to an alternative website owned by a cybersquatter.
  • Reverse Domain Hijacking - Wikipedia
    The term reverse domain hijacking refers to the practice of inequitably unseating domain name registrants by accusing them of violating weak or non-existent trademarks related to the domain name.
  • Uniform DomainName DisputeResolution Policy - Wikipedia
    The Uniform Domain-Name Dispute-Resolution Policy (UDRP) is a process established by the Internet Corporation for Assigned Names and Numbers (ICANN) for the resolution of disputes regarding the registration of internet domain names. The UDRP policy currently applies to all .biz, .com, .info, .name, .net, and .org top-level domains, and some country code top-level domains.
  • Cybersquatting - Wikipedia
    Cybersquatting, according to the United States federal law known as the Anticybersquatting Consumer Protection Act, is registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else.

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