Legal Implications of Domain Names

Before you register that domain name, you need to consider the legal implications of what you're about to do. If you don't, you could find yourself landing in a courtroom.

How I long for the good old days. The days when the law surrounding domain names was as simple as first come, first served. The days when the law was still developing and nobody really knew if you could get away with registering mcdonalds.com if McDonald's hadn't already done so. It was the Wild West.

In 1994, Joshua Quittner, of Wired magazine, was writing a story like this one about domain names and discovered that Ronald had not yet understood the importance of registering mcdonalds.com. Reportedly, he even called Ronald's managers to warn them that anyone could register their name if they didn't.

Ronald didn't respond so Joshua did. He registered mcdonalds.com. Josh even adopted the e-mail address Ronald@mcdonalds.com for himself.

Arising from its stupor, McDonald's was not happy when officials realized the significance of what Josh had done. Maybe with Holiday Spirit in mind, Josh gave the domain to McDonald's in return for a $3,500 donation to an elementary school.

My all-time favorite domain name story involves Princeton Review and Kaplan, bitter competitors in the test preparation business. They prepare you for tests like the SATs for college admission and the LSATs for law school admission.

I bet you know where this is going. Princeton Review not only registered princetonreview.com and review.com, but also kaplan.com.

In 1994, it simply wasn't clear that registering the trademarked name of your competitor was a no-no. You have to admire Princeton Review's ingenuity. This is about the same time McDonalds hadn't yet figured out that it might want to own mcdonalds.com.

Of course, Kaplan soon discovered that people who typed www.kaplan.com were going to Princeton Review's website. Kaplan was perturbed. When challenged, Princeton Review offered the domain to Kaplan for a case of beer (reportedly domestic or imported). Kaplan refused and went to court instead. The court awarded Kaplan the disputed domain.

When it was all over, Princeton Review's president, John Katzman, is reported to have said that Kaplan has "no sense of humor, no vision and no beer."

That was then and this is now.

You're looking for nothing but trouble if you don't do your homework before you register a domain. The starting point is the Patent and Trademark Office at www.uspto.gov/web/menu/tm.html. (Asking the government to take you to this site with an address like www.trademarksearch.gov is clearly too much to ask.)

If you get an "all clear" from this search, you still need to have your tech lawyer run and then interpret a full trademark search done by one of many private companies that provide this service. Trademarks can be a treacherous area and I caution you that you do need a lawyer's assistance with this.

The penalty for choosing a problematic domain name is that you may find yourself accused of being a "cybersquatter." Loosely defined before the recently enacted Anticybersquatting Consumer Protection Act, a cybersquatter is somebody who registers a domain name for improper purposes, like extorting money from its rightful owner. Of course, the interesting part is giving some meaning to terms like "improper" and "rightful."

The Act takes a stab at these terms by saying that several things are improper. For example, it's improper for you to use another's trademark or personal name with a "bad faith intent" to make a profit. It's also improper for you to register, traffic or use a domain name that's the same or confusingly similar to a mark that was distinctive or famous at the time you registered the name.

A court will use many factors to determine bad faith intent. One part of the analysis is for the court to see if you have any trademark or other intellectual property rights in the domain name. Other factors include the extent to which your legal name is represented by the domain name, your previous use of the domain name in ``bona fide' commerce, your "bona fide noncommercial use or fair use" of the mark, your intent to divert consumers from the proper online site and using false or misleading information hen registering or holding the mark.

If a court finds that you're a cybersquatter, it could award the rightful owner substantial damages. Having said that, even with the Act in place, many times it's still unclear who has what rights to what domain name. As is often the case, the law can be a bit gray.

From practical experience, I've learned if the law's application to your situation is in any way muddy, it still often comes down to a straight price negotiation. If you already have a questionable domain name, you need to know what your rights are, what your risks are and then proceed from there.