It might sound crazy, but it’s true. You can buy a domain name for a million dollars (or more) and not be able to use the domain, or even worse, lose the domain because you are infringing on someone’s trademark. It’s something that many startups don’t think about until it’s too late, but the mistake can be devastating.
The reality is, most people don’t understand the complexities of trademark law and how it applies to domain names. Couple this with the fact that trademark laws vary by country, and the issue only gets more complex. While you might expect that someone selling a domain should know if the domain they’re selling is infringing on a trademark, this is rarely the case.
This means that as a startup founder, it’s up to you to do your due diligence before you pick a name and begin the domain acquisition process. Of course, this rarely happens. Normally what happens is, a startup comes up with a name and immediately jumps to finding the domain name. If they see the domain name is for sale on a reputable marketplace they assume it must be free and clear of any pesky trademarks.
Here’s the rub. It would be impossible for domain marketplaces to do the detailed research necessary to determine if the names they are selling infringe on any trademarks. That’s because there is no simple tool that you can plug a domain into and out comes the trademark details. It’s a pretty involved process and one that most people can’t do themselves without the help of a professional.
Too many people think, “well if I spend good money on a domain name and buy it from a trusted marketplace, then I can do whatever I want with that domain name.” Unfortunately this isn’t the case, and like the title of this post said, you can buy a domain name for $1M or more and if it infringes on a trademark, you might not be able to legally use it…even worse, you could legally lose it, and no you don’t get your $1M back.
So what can you do to make sure the domain you’re buying doesn’t infringe on any existing trademarks? I usually recommend that founders work with a company that specializes in this exact issues. This shouldn’t be confused with a domain broker, and also shouldn’t be confused with an attorney, you really need someone that specializes in both domain names and trademark law as it applies specifically to domains.
“Getting the right domain for your business is just as important as knowing if you are allowed to use it in all the markets you are targeting. Solid advice is crucial before investing in your digital branding.” (Jochen Kieler, Chief Strategy Officer, BRANDIT)
BRANDIT is one of the industry leaders when it comes to helping startups with just about every aspect of the digital branding experience, from domains to trademarks, strategy and brand protection, they eat, sleep, and breathe domain names. When it comes to navigating the complexities of trademark law as it applies to domain names, BRANDIT is one of the best.
Okay, but what if your budget isn’t $1M? I think it’s safe to say that most of us don’t have a million dollar budget. So let’s say you have something smaller, like a $25,000 budget. Even then, spending that kind of money on a domain name and not being able to use it would be a painful and costly experience. While I’d love to say – well if you have a smaller budget just head over to the USPTO and make sure there aren’t any trademarks on the word – it’s just not that simple. Even if you take the time to use an online trademark search service, seeing that come up clean still doesn’t mean you’re in the clear.
To add insult to injury, infringing on a trademark could mean paying even more money in damages even after you lose the domain if the trademark holder feels like you might have profited off of or caused damage to their brand, yikes!
If you register a domain name with a trademark in it, you will be faced with the risk of possibly losing that domain name to the company who owns the trademark through WIPO arbitration initiated by the trademark holder. If the trademark holder also believes you have been profiting off their brand name or have effected their reputation in any way, a lawsuit may also be filed to reclaim lost profits and for recovery from damages you may have caused their company. (Source – NamePros)
Hopefully this article serves as a bit of a wake up call for founders who are in the process of rebranding or buying a domain name. The process isn’t as simple as coming up with a name, finding it for sale, and buying it. Ignoring the realities and complexities of trademark law as it applies to domain names could be one of the biggest branding mistakes you never knew you could make.