You check under the hood before you purchase a car. You employ an inspector to look into every crack and crevice in a home you consider purchasing. You even smell the bag of lunch meat before you make a sandwich to make sure it is still good. Why don't you exercise the same due diligence before purchasing a domain name?
While registering a domain name may not require the same kind of initial investment as buying a car or home, the costs of buying the wrong domain name may far exceed even the nicest of homes. For example, if you buy a domain name that incorporates the trademark of another (whether it be as a cybersquatter or typosquatter), you are exposing yourself to both financial and legal liability. Your best laid intentions may not be enough to save you from a transfer order under the UDRP or to avoid statutory damages award of $100,000 per domain name under the ACPA. Regardless of what definition you attribute to cybersquatting, you need to know what you are getting yourself into when purchasing a domain name.
At a minimum, you should do the following before purchasing any domain name:
- Determine whether potential trademark rights exist;
- Identify the current registrant of the domain, how that entity became the registrant, and evaluate the current use of the domain name (Note: A relatively recent WIPO UDRP decision makes clear that bad faith underlying the original registration can be imputed to a subsequent registrant of the domain name);
- Have a legitimate use planned, prepared, and ready to be implemented at the time the domain name is acquired; and
- Have an exit strategy that includes steps covering how to sell the domain name.
Experienced Internet law firms offer assessments that will look into these areas and quantify risk for you. In the end, you want to ensure the domain you purchase has or will have value, is protectable should someone assert rights in it, and does not jeopardize the other domains in your domain name portfolio (i.e. clearly cybersquatted domain registrations may serve as evidence of bad faith in a UDRP or ACPA proceeding). Simply put, know what you are getting yourself into so that you can reap the benefits of the domain name.