Monday, January 9, 2012

No, You Can't Register a Famous Trademark as a Domain Name Just Because "It Was Available"

About once a month or more, I get a phone call that goes like this:

Caller: I am a domain name investor. I just got into "the business". I registered about 300 great and valuable domain names, and need some help in selling them and some legal advice.

Domain Name Lawyer: Thanks for calling me. Tell me about the names.

Caller: Well, I found this company called Godaddy that allows you to register domain names. I couldn't believe it, but there were a ton of wicked names available, like YourCocaCola.com, DriveAPorsche.me, and ReebokShoesFit.co.

Domain Name Lawyer: I see. Do you have a question.

Caller: Not really, but I was thinking that one day I might need some legal advice, because I just got a letter from Coca-Cola demanding that I transfer my domain name to them. Would you be able to help me sell YourCoca-Cola to them since you specialize in domain names?

Domain Name Lawyer: Sorry, I cannot help.

Caller: Why not? I thought that you specialize in domain names and even help people sell domain names?

Domain Name Lawyer: Not that kind of domain name, I am afraid.

Caller: Why the hell not?

Domain Name Lawyer: Because registering a domain name like that is unlawful, and offering to sell it to the trademark owner is even worse.

Caller: I don't mean to be rude, but the domain name was available and I paid $10 for it, so it is mine. How can that be illegal?

Domain Name Lawyer: Why did you register the domain name?

Caller: To sell it to Coca-Cola. I came up with this awesome idea of a website all about how people love Coca-Cola, and YourCocaCola.com would be just the perfect domain name for them to launch this site. I can't believe their marketing company didn't come up with this themselves....Anyhow, Coca-Cola earned about 2 Billion dollars last year based upon my research, and I think that 1% of that would be a fair price and I would share what we get with you if you will help me sell it to them.

Domain Name Lawyer: I do not mean to be the bearer of bad news, but registering a famous trademark like that to sell to the trademark owner is unlawful, and you best just hand over the domain name before you get into any more trouble. Sorry I can't help.

Caller: You mean to tell me that Godaddy lets people register illegal names? Are you sure that you are really an expert in domain names? Because I spoke to a couple people before calling you, and they all told me stories of companies paying millions of dollars to get their domain names back after they inadvertently lapsed, or because someone got to them first. So I find it really hard to believe that a big company like Godaddy would allow someone to register a domain name that was illegal.

Domain Name Lawyer: Look, I have been practising domain name law for like 12 years, and there is something called the Anti-Cybersquatting Consumer Protection Act that makes this kind of thing illegal.

Caller: Did you say "legal" or "illegal"?

Domain Name Lawyer: Illegal.

Caller: Are you sure?

Domain Name Lawyer: 100%.

Caller: Well, I better talk to someone else I think, because I am out like $3500 from registering all these wicked names, and the fact that Coca-Cola wrote me a letter immediately after I registered the domain, shows just how interested they are in the name!

Domain Name Lawyer: OK, but here is some free advice: Stop registering trademarked domain names like that, as you are just wasting your money and potentially exposing yourself to massive fines and legal fees. The Internet grew organically, more or less, and there was no system put in place to prevent infringing domain name registrations; it is up to trademark owners to police their trademarks, not domain name registrars like Godaddy. Just because a domain name is "available", doesn't mean that you are legally allowed to register it. Go check out the thousands of ICANN UDRP cases where names were transferred away from cybersquatters.

Caller: But they can't just allow people to register any available domain name and then say that it is illegal! Like, you aren't allowed to just rob a bank!

Domain Name Lawyer: Nothing prevents you from physically walking into a bank and attempting a robbery...It is the law that forbids it and the bank security and/or the police that will catch you, and the judge that will sentence you....With domain names, it is kind of the same thing; you are not physically prevented from registering a trademark infringing domain name, but it is indeed illegal and there will likely be ramification if you get caught.

Caller: But they ALLOWED me!

Domain Name Lawyer: Look, I can add some brown sugar to soda water and call it Coca-cola and sell it off my front porch....But it is trademark infringing to do it, and if I get caught, I will be susceptible to legal proceedings, damages, and costs.

Caller: I dunno, I thought I was calling a Domain Name Lawyer, and you said right on your website that you defend against people accused of cybersquatting. How can you defend people accused of cybersquatting when you are telling me registering names like this is illegal?

Domain Name Lawyer: First of all, some cases are defensible, for example where a domain name is generic or descriptive, such as cars.com for a car website. Some cases, like the one that you will be facing from Coca-Cola, are not defensible at all since it is blatant cybersquatting.

Caller: My brother in law heard of a guy who sold the domain name, Ferrari.com to Ferarri, for a half a billion dollars.

Domain Name: Never heard of that and doubt it ever happened. But even if that were true, that is a one in a million chance, and with those odds, why be in the domain name business at all; just buy a lottery ticket instead.

Caller: Gees. Thanks. I am going to look into this further I guess.

Domain Name Lawyer: Good idea. I am glad that I may have helped you stop wasting your time and money before you got into any more trouble.

10 comments:

Geoff Akerlund said...

This is a great post that illustrates why buying trademark infringing domains is a bad idea. I've never understood why people do this. Not only does it open you up to massive fines and legal fees, but it's just a bad business practice. The number of potential end users for YourCocaCola.com is 1. A generic domain has a much greater end user base and higher resale potential.

Chris said...

Very informative, thank you. I would be interested to hear your comments Zak on what part of a domain name constitutes a trademark.

For example, (and I have just made this up) if there were a brand called Anime and someone registered the domain Ani in Montegro, does Ani.me constitute a trademark infringement, assuming this brand had a presence in Montenegro ? Furthermore, if the brand Anime only operated in the US, could they argue that Ani.me infringed their IP if it were bought in bad faith ?

Zak Muscovitch said...

Thanks for the comment, Chris. Although I cannot comment on any particular examples, it is conceivable that a "hacked domain name", e.g. ABC.ME could be considered confusingly similar to a trademark for ABCME. Nevertheless, unless the ABCME mark is considered a particularly famous mark, there may be room for both companies to operate with their respective domain names/marks, provided that they are in very different businesses.

ed said...

What if the trademark was expired (for 8 years) at the time that the domain was purchased and the next year they reapplied and got the trademark. Now I own the domain and they own the trademark?

Unknown said...

Very interesting post, which creates further doubts.

I'm trying to set up my own startup and I haven't found any possible name whose domain has not already been taken by some vulture, who bought these domain names just because they might be interesting for somebody, and they are trying to sell them for thousands of euros.

If I found a company with a name whose domain has already been bought, can I claim it without spending what they request?

Unknown said...

Very interesting post, which creates further doubts.

I'm trying to set up my own startup and I haven't found any possible name whose domain has not already been taken by some vulture, who bought these domain names just because they might be interesting for somebody, and they are trying to sell them for thousands of euros.

If I found a company with a name whose domain has already been bought, can I claim it without spending what they request?

Zak Muscovitch said...

Many thanks for your comment.

If somebody picked up a domain name before the name was even a twinkle in your eye, than it is THEY and not you that has the right to it, even if you choose to ignore that fact and start a company under that name even though the domain name is ALREADY taken. They would not be a cybersquatter, since by definition, a cybersquatter registers a domain name AFTER a trademark already exists. If he registers it BEFORE, than he is not a CYBERSQUATTER but an investor/speculator. The only exception generally, is if you obtain a registered trademark, and that would not even necessarily force the domain name away from the registrant, since having a tradmeark only gives you a "monopoly" over certain services and goods; not over everything, so the domain name may still usable, and in any event belongs to the registrant....

Alessandro Balbiano said...

Thank you very much Zak for your prompt answer.
I guess I don't have many chances but buying from these vultures.

Regards,
Alessandro

Alessandro Balbiano said...

Thank you very much Zak for your prompt answer.
I guess I don't have many chances but buying from these vultures.

Regards,
Alessandro

Chafik Boukhalfa said...

Hi Zak,

This post is great, but it brings another question.

If you buy a domain name with a piece of it that was Trademarked (as in your example) but do not plan to do anything with said domain name. Are you still required to trannsfer it over if asked?
And lastly, do all companies usually ask politely before suing you (cost effective) or is it up to them?

Thank you very much for your enlightenement