Enrico Schaefer discusses what domainers can do in order to avoid transfer orders under the Uniform Domain Name Dispute Resolution Policy (UDRP), and lawsuits under the Anticybersquatting Consumer Protection Act (ACPA). In this short interview, Enrico provides several tips including understanding trademark law and how the UDRP and ACPA work, understanding your domain portfolio to know what domain names may be infringing and how to prepare ahead of time to avoid trademark issues, and the risks involved with parked pages.
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Damien Allen: Good morning, and welcome to cybersquatting law radio. My name is Damien Allen and joining me today is Enrico Schaefer of Traverse Legal. Good morning, Enrico and welcome to the program.
Enrico Schaefer: Good morning, Damien.
Damien Allen: Today we’re talking about what domainers can do in order to avoid transfer orders under the UDRP. What are some tips, Enrico?
Enrico Schaefer: Well, domainers have been around for a long time buying and selling domain names and monetizing domain names in a variety of ways, either selling them at auctions, selling them to end users, or monetizing a domain name by putting up a parking page or web site that drives advertising revenue or otherwise. So, the first thing that domainers need to do in order to protect themselves, they need to understand trademark law and they need to understand the Uniform Domain Name Dispute Resolution Policy (UDRP). It always surprises me, Damien. I go to conferences, I talk to domainers all the time, it always surprises me how little many of them know about trademark law. It would be like a truck driver not knowing what the rules of the road are, not knowing what the speed limit is, and not knowing what the requirements are to run a truck over the road. It always shocks me when I talk to a domainer who evidences a very slight or little knowledge of trademark law. If you’re domaining, the number one thing you need to know as part of your business model is trademark law. And so, the first tip is you need to get in. You need to dig in, it’s not that complicated. You need to understand the trademark principles, you need to understand how the UDRP works, how the decisions come down. So, once you have that knowledge you can start developing a business plan around the reality of trademark law.
Damien Allen: So you get an understanding what you’re supposed to do. What should you do after that, Enrico?
Enrico Schaefer: Well, the second tip, Damien, is that you really need to analyze and understand your portfolio of domains. Certain domainers out there own hundreds of thousands of domains, other domainers own tens of thousands, and other domainers own thousands. It doesn’t matter how big your portfolio is, you need to understand what’s in it. I hear all the time, “well, I’ve got too many domain names…I don’t know what’s in it…I don’t know what trademark issues might be raised by my portfolio… I don’t know what typo’s I have of famous trademarks…there’s just too many domains.” Again, it’s incredible to me for anyone to try and make that argument and if they do, then they have no business complaining about transfer orders under the UDRP, they have no business complaining when they sued under the ACPA. Ignorance of the law is no excuse and certainly in the realm of UDRP and ACPA, the same is true. So, you need to understand what’s in your portfolio. By way of example, Microsoft is very aggressive in dealing with cybersquatting issues. What they will do if they find that you’ve got an infringing domain in your portfolio, is they will sue you under the ACPA. They will file a federal lawsuit and they will serve you with that lawsuit. That will be your first notice that there is a problem. They will claim $100,000.00 in penalties, statutory damages plus attorneys’ fees. And when you come to them and say, “Well, I’ll give you the domain”, Microsoft will say, “well, number one, we want to see your entire portfolio of domains. “ What they’re doing there is that they want to see whether or not you have other cybersquatted or typosquatted domains in your portfolio. They want to see if you’re black hat or a white hat, and they won’t settle with you until you disclose your entire portfolio of domains. Number two, they’re going to make you pay money and sometimes, depending on the number of domains, they’ll be demanding six figures, hundred thousands of dollars in order to resolve the suit. So, there’s serious risk here and you need to understand what kind of risk you’re supporting in your portfolio. There are certainly a lot of folks out there who have been taken down to their knees because they had a bunch of typo or cybersquatted domains in their portfolio and they just assumed the worst that would happen would be a transfer order.
Damien Allen: Now, you understand your trademark law, you’ve looked at your portfolio. What’s an absolute “do not do”, once you’ve got all that under your belt?
Enrico Schaefer: The biggest tip I have for our domainer clients is not to park their highest value domains. If you’ve got some good generic domain names, some good descriptive domain names in your portfolio, and you think that they’re worth tens or hundreds or millions of dollars on the open market, you need to remove those from any parking program. It’s just not worth the risk. The way parking pages work, typically, is that the software optimizes towards trademarks. So, let’s say you’ve got a relatively generic dictionary word such as apple. Let’s say you happen to own apple.com and you throw a parking page up on that. Now, apple can be a fruit and there’s no problem in owning apple.com, in general, but the moment you start throwing computer ads up on that page, you are now a cybersquatter, you are going to have exposure under the ACPA and UDRP, and you now have a big problem because you will probably lose that domain to Macintosh – to Apple – computers and they will take it from you for no compensation. So, is it really worth the hundreds, or perhaps, low thousands of dollars that you might get a year, at best, from parking page monetization over a domain that’s worth hundreds of thousands or millions of dollars, of course not. So, find out what’s in your portfolio, pick out what you believe to be your highest value domains and do not park them. Parking is the biggest risk factor. It’s the number one thing that you could do to put your domain at risk.
Damien Allen: What else can the domainer do to protect themselves, Enrico?
Enrico Schaefer: Well, there’s some sort of innovative things that you could do if you understand how the UDRP works, you’ll understand that there are a number of defenses that can defeat a UDRP complaint and arbitration proceedings filed against you. One is whether or not you have a legitimate business purpose, a non-infringing purpose for the domain. So, again, on your best domains, develop and document and date stamp a business plan for those domains. If you are going to use a particular domain for a geoportal or to offer a particular kinds of services that does not infringe on someone’s trademark, then it’s best to put that in writing in a format that will be documented, send it by email so it’s got a date and time stamp on it, so that when you get to arbitration under the UDRP, you could say Hey! Hey!, this is what our intent is for this domain. We’re going to use it in a non-infringing way. And the problem is this, Damien. You could pick out just about any descriptive or generic word out there such as, apple, and chances are if someone is using that word as a trademark in non-descriptive, non-generic way, apple is an extremely strong trademark because the word apple has nothing to do with computers unless it relates to Apple Computer Company. So, there’s very big shortage of words left in the world that don’t have some trademark issues. So, if you’ve got a domain, and you understand that someone might be using it as a trademark in some niche product or service category, then develop a business plan that is going to be non-infringing that you can show the arbitrator down the line, and say “hey, I’ve got a plan for this domain that has nothing to do with the trademark holder.”
Damien Allen: Is there an ounce of prevention for domainers to keep form paying the pound of cure?
Enrico Schaefer: Yes, there really is, Damian. It goes back to the previous four tips. You need to prepare ahead for trademark claims. You need to understand what the law is. Domainers are infamous for complaining about trademark law and how unfair it is and how unfair UDRP decisions are. I have very little sympathy for those folks including my clients who are domainers and who complain because there’s established precedent. It’s pretty clear how things work out there under the UDRP and the decisions that people complain about the most oftentimes are decisions which were very predictable to me. I could have told them that this result would have occurred. So, prepare for trademark claims. Understand, what’s in your portfolio, be a real businessperson. Understand how the game is played, understand how UDRP decisions are coming down, understand what is in your portfolio and start preparing ahead of time to avoid trademark issues. Domain names can be worth a lot of money and if you believe that they’re going to be increasing in value, as many domainers do, you need to protect those assets just like you would protect any other asset, Damien.
Damien Allen: Well, thank you very much for joining us today, Enrico, and sharing 5 tips for domainers to avoid transfer orders under the UDRP.
Enrico Schaefer: No problem, Damien. My pleasure.
Damien Allen: You’ve been listening to Cybersquatting Law Radio. My name is Damien Allen. Everybody have a great afternoon.
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