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February 12, 2001

Free Advice:
Stay Grounded In Web Land Grab

Companies need to treat domain names more like addresses than trademarks.

By Andrew B. Katz (akatz@cozen.com)

he Wild West of the Internet economy is going to get a bit wilder this year. Businesses are going dot-crazy in response to the decision of the Internet Corporation for Assigned Names and Numbers to expand the num-

ber of commercially available top-level domains from three to 10 as early as the middle of this year. The addition of domains such as .biz and .name to the familiar .com and .org signals the beginning of a land grab as businesses prospect for domain names that can be used to identify new companies, Web sites, and E-mail addresses. A deluge of new trademark questions and disputes looms.

Though this should be good for my business as an intellectual-property attorney, my advice is to think carefully before buying up domain names or worrying about the newly registered domain names of other companies. Simply put, the domain-name expansion doesn't pose a problem to most businesses on the Web. If you're smart, you'll choose what new names to register carefully--and your legal battles even more carefully.

The businesses most affected by the forthcoming changes are those companies with names and Web sites formed by adding a generic term to a domain name, like Cars.com and Business.com, because generic words can't be trademarked in connection with the goods and services they denote. A rival can't copy the entire look and feel of another generic-named Web site, but the changes mean that the root names of many sites are up for grabs when the top-level domains become available.

On the flip side, companies that have "arbitrary and fanciful" names--the term of art for trademarks that bear no relation to the goods or services they promote--will probably find that their trademark rights won't suffer from the new domain names. In fact, the recent Anti-Cybersquatting Consumer Protection Act makes it easier than ever to deal with blatant cases of trademark infringement on the Web. The purchase of rights to a distinctive trademark that also includes the transfer of a domain name derived from that trademark is a much wiser investment than just buying a domain name. Since there's no real limit to how many domain names will become operational, what are you really paying for if you buy only a domain name? I advise my clients to treat domain names more like simple addresses than trademarks.

With that in mind, companies should carefully review their situation before choosing to initiate legal action. If a noncompetitive business registers the identical root name as your business in connection with a different top-level domain suffix, it may be best to have a thick skin and stay focused on your own business operations. But if a competitor does the same thing, then it may be time for legal action. Likewise if a trademark is extraordinarily famous, such as Coca-Cola or Pepsi, any dilution of the mark compromises the trademark's value.

Ask yourself one simple question: What's being offered on the site with a seemingly conflicting domain name? Don't stew about other Web sites unless they're poaching on your customers, misdirecting significant traffic away from your site, or otherwise interfering with your business plans. I believe companies will have to be more, not less, tolerant. If you file suit against every perceived slight against your domain name, you'll be unnecessarily manipulated into spending a lot of money. Branding the product or service on the site itself is infinitely more important than the html. Think content, not just address.

Factors to weigh when considering litigation include the strength of your name, the similarity of the names and goods or services offered, and intangibles such as whether a message needs to be sent to a competitor.

The expansion of domain names is a logical step in the growth of the Internet. It was only a matter of time before such growth occurred, and we can be sure that many more domain names will be made operational in the next few years. The bottom line is to treat your domain name as an address instead of a trademark, and don't rush to judgment when you see a seemingly conflicting domain name. In most cases, all you need to do is concentrate on making your site a powerful marketing tool for your business. Your customers will do the rest.

Andrew B. Katz is a patent attorney and a member of Cozen and O'Connor's intellectual-property department. He can be reached at akatz@cozen.com.