Startups beware – only file a UDRP if you know what you’re doing

A couple of weeks ago another founder here in SF that I’ve been friends with for years reached out to me, they had just raised their Series A round and were ready to buy their matching .COM.

The owner came back with a six-figure price tag which I told him was definitely reasonable for the name, it’s a one-word .COM, that’s what they sell for. He emailed me back a few days later and said, “can’t we just file a UDRP and get the name? We’re using it for our business and he’s just squatting on it.”

I did a bit of research, the current owner registered the domain name eleven years ago, at that time my friend hadn’t even picked his college major. “Nope, I told him, it doesn’t work that way, and in fact, you could get hit with Reverse Domain Name Hijacking if you try it.”

This happens all the time. You start a company but then pick a name without looking at who owns the matching domain name. Then you raise millions of dollars, maybe tens of millions of dollars. Where your thinking goes totally wrong is believing that for some reason you’re entitled to the domain, you’re not, and if you file a UDRP, expect to lose and to get hit with Reverse Domain Name Hijacking.

In fact, this just happened to a company that filed a UDRP last week:

A Pennslyvania brewery and winery has been found guilty of reverse domain name hijacking in a dispute over SpringGate.com.

Schoffstall Farm, LLC, which does business as Spring Gate Vineyard, Winery and Brewery, attempted to get the domain name in a cybersquatting dispute at the World Intellectual Property Organization.

The company has traded as Spring Gate since 2014. But the domain’s owner, Ashantiplc Limited, registered the domain name in 2006. Therefore, it could not have registered the domain name in bad faith to target the non-existent brand.

(Source – DomainNameWire)

My advice to startups is, do your research before picking a name for your company, or be okay with paying fair market value for the domain, i.e. not getting it for one one-hundredth of it’s actual value. If you just pick a name and assume you’ll have the rights to it for $5,000 or less once your company takes off…think again. Just know that many people have learned this lesson the hard way, hopefully this article saves you from having to!

{ 7 comments… add one }

  • Bobby May 18, 2020, 8:23 pm

    Right on Morgan!
    Ignorance is damaging.
    These startups need to know whats up!

    Reply
  • Dex May 18, 2020, 9:25 pm

    Reverse Domain Name Hijacking is not nearly a potent enough punishment in the scenario you’re describing. Those people basically want to try to steal someone’s asset from them. That’s theft and it’s a criminal act. if you’re smart enough to raise millions of dollars, you’re smart enough to know what attempted theft is. And if you try it anyway, you should be punished accordingly.

    Too bad the UDRP system is so biased in favor of complainants that all it offers victorious defendants is the occasional lame-o RDNH determination.

    Reply
  • Andrew Hyde May 19, 2020, 4:27 am

    Great article, should be punitive damages awarded. Without damages compensation for, the RDNH label isn’t enough, almost encouraging.

    Reply
  • Emeka May 19, 2020, 9:32 am

    Thank you Morgan for bringing this up again.

    RDNH shouldnt be the only thing they should be found guilty of.The business community should be notified also after they are found guilty and the public should know not to deal with them.

    They raise money and try to abuse the system by terming one a squatter and then steal their names.

    I see companies and lawyers who go towards these line as thieves.

    Reply
  • davea0511 May 20, 2020, 7:37 pm

    Many if not most domain name squaters will lease the name to you and will sign an agreement for a price to sell it at a reasonable price in the future. Get that done first before you raise any funds publicly … Make sure your not on anyone’s radar yet. Once you’re a somebody expect that price to to up 10x … But if you got them to agree upfront, it’s contract law at that point. Also be flexible and use lots of tools and a thesaurus and 100s of permutations, pick your top 10 then negotiate that final price upfront before you ever pick anything. Make sure they know you already have others you’re just as excited about. Domain names is the new Tijuana marketplace. Dicker divkrr dicker.

    Reply
    • davea0511 May 20, 2020, 7:40 pm

      Meant to say holder, not squater

      Reply

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