How Should Emerging Companies Protect Domain Names?

Generic top-level domains usually cost approximately US$20–$50 per year for each domain, and can be renewed annually. Companies may be able to achieve some cost savings by renewing domain names for multiple years up front, often for up to nine years.

A number of registrars (e.g., GoDaddy, Network Solutions) register domain names. Companies can go to the registrar’s website, create an account, and register domain names directly with them.

Companies that wish to navigate the registration process themselves should consider registering all of their domain names in the same account with the same registrar, and they should ensure the login information is retained in a safe location. It can be easy for a company to lose track of key information over time, such as what domains they own or which registrars hold them. They sometimes own hundreds (or thousands) of domains with varying details — such as different registrars or login credentials — which can make management extremely difficult.

After purchasing a domain name, a company can manage its settings through the registrar’s portal. For example, a company can set the domain name to automatically redirect to another website (i.e., www.companyonline.com can redirect to www.company.com). Alternatively, the company can enter the required DNS settings of a website still under development — enabling the domain name to point to that website once it has been created. A company’s IT department or web developer typically determines the required DNS settings.

If someone else already owns the domain that a company wants (regardless of whether the owner has an active website at that domain or not), then the company’s only option is to purchase it from the holder. The owner of the domain name may demand any amount to sell the domain or may refuse to sell it at all. Companies may wish to consider using a private investigator to make contact and negotiate a purchase price  who can do so anonymously without divulging the company’s name. These types of acquisitions and negotiations tend to take at least a few weeks, depending on how quickly the owner responds. The response is entirely up to the current owner, and they may even be willing to sell the domain for a few hundred dollars.  Alternatively, if the owner is a big company or if it has a website and is vested in the domain, the company may need to offer tens of thousands of dollars to convince the company to sell.  In a free market, the decision is entirely up to the current owner unless the domain name is being used illegally or improperly.

Because anyone can register any domain name that is available, a company may encounter a situation in which a third party registers the company’s trademark or company name as a domain name. The third party may or may not publish a website at the domain. Although companies can use a mechanism for taking action in this case that is faster and cheaper than litigation in court, the process still can take many months and may cost thousands of dollars. Therefore, the best prevention is to register key versions of the company’s domain, even multiple versions, before someone else can.

If a third party registers a company’s trademark or company name, the first step a company should take is to send a Cease & Desist letter. If that does not achieve results, the company can file a Uniform Domain Name Dispute Resolution Policy (UDRP) complaint, which is an arbitration proceeding, against the owner (registrant). This requires a company to show that:

1. The domain name is identical or confusingly similar to its trademark.
2. The registrant has no rights to or legitimate interest in the domain name.
3. The domain name has been registered and is being used in bad faith.

Thus, if the owner has not acted in bad faith, the company may not be able to recover the domain name even if it is identical to the company’s trademark or company name. Proving bad faith can be difficult. However, a company may be able to demonstrate bad faith by showing any of the following:

• The registrant has demanded an exorbitant amount of money to acquire the domain name (e., they registered the domain name primarily for the purpose of selling it to the company or a competitor for valuable consideration in excess of their documented out-of-pocket costs).
• The registrant has engaged in a pattern of registering domain names in order to prevent the company from using its trademark in a corresponding domain name.
• The registrant has registered the domain name primarily for the purpose of disrupting a company’s business.
• The registrant operates a website that directly competes with the company’s business or drives web traffic to a competing site. More specifically, by using the domain name, the registrant has intentionally attempted to attract internet users to a website for commercial gain by creating a likelihood of confusion with a company’s trademark as to the source, sponsorship, affiliation or endorsement of the website or of a product or service offered therein.