Very often one of a business’ most valuable assets is its internet domain name. Even in large, well-established companies, a portfolio of well-chosen domains amount to a significant set of assets, often driving sales and advertising. Yet many businesses often make poor choices in connection with these assets.
As the World Wide Web began to mature into a viable business method in the mid-1990’s, businesses began snapping up domain names. A significant number of startup companies began attempting to reinvent various categories of business by running them in an online or “virtual” presence. Most readers will recall failed businesses such as WebVan, pets.com and e-toys.com. Yet these businesses failed largely because of overly ambitious business plans which devoured enormous amounts of startup capital with elaborate advertising campaigns or, in WebVans’s case, an insanely ambitious attempt to build a nationwide grocery delivery logistics system from scratch with seed money.
Other “dot com” business models have failed for a much more ridiculous reason. Long defunct internet retailer “waypoinsettia.com” is an excellent example of a failure that should have been obvious from the initial naming of the business’ website. Waypoinsettia.com was a seasonal retailer hoping to cash in on the holiday season retail frenzy during one of the first years that the internet was a viable shopping tool. Perhaps because they had chosen the name “waypoinsettia.com,” the business had not attracted a significant amount of venture capital, thereby limiting its marketing budget and causing the company to narrow its advertising efforts to the drive-time radio audience. Unfortunately, the marketing team at “waypoinsettia.com” apparently didn’t realize that none of its radio listeners would understand how to spell waypoinsettia in order to visit the website. Setting aside the obvious difficulties associated with spelling the word poinsettia, radio listeners also were unable to discern whether “way” was intended to be “way,” “weigh,” or perhaps “whey.” Ultimately the website was such a colossal failure that even now a Google search brings up no remnant of the website and points only to a street in Santa Barbara, California. A similar demise was experienced by internet sporting goods retailer Quokka.com, who learned in short order that naming their sporting goods website after a cat-sized macropod was not a recipe for success.
Other pitfalls also await those who make poor domain name selections. Even a domain name that is well chosen from a marketing perspective may prove to be an expensive distraction for a business. Although a catchy (and hopefully easy to spell) domain name may be available for purchase at Godaddy.com, the mere availability of a domain name for purchase does not necessarily serve as an indicator that use of that domain is a wise choice for your business.
Prior to selecting, purchasing and investing precious resources into developing a particular domain name, a business should conduct a trademark search to determine if any federally registered trademarks exist that may relate to the domain about to be registered. Under certain circumstances registration of a domain name synonymous with a registered trademark may constitute “cybersquatting” under a law known as the Anticybersquatting Consumer Protection Act (“ACPA”).
The ACPA prohibits registering, trafficking and/or using domain names with bad faith in the attempt to profit from the goodwill of the trademark that belongs to another. While a trademark owner bringing an action under the ACPA still would need to prove that a particular domain name was registered in bad faith, a protracted dispute regarding the domain name and brand image of a company is likely to be an expensive dispute that many businesses would wish to avoid. This is especially true where the dispute and its related expenses might easily have been avoided through relatively simple and inexpensive due diligence.