Legal Risk Part of Domain Investing | DomainInvesting.com

Legal Risk Part of Domain Investing

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When buying a domain name, there are many aspects of the purchase you need to consider. You may think about resale possibility, development potential, traffic and revenue, brandability, and other aspects related to the value of the domain name. Legal risk should also be a consideration that should be priced into your purchase.

For the sake of this discussion, I am going to assume most of you avoid obvious trademark domain names that can lead to UDRP filings and lawsuits. I assume the majority of people who read this blog are wise enough to not buy names with famous trademarks, such as Facebook.Club, MicrosoftsOffice2014.com, or something else along those lines.

Even when you are buying “safe” domain names, you need to understand there is some legal risk involved in the purchase of a domain name. There is always a chance a company will file a frivolous UDRP to try and wrest your domain name. Whether they may have rights to the name or whether they are reverse hijacking, the domain owner will need to pay an attorney to respond to the UDRP, especially if it’s a valuable domain name.

The level of risk varies for each domain acquisition, and the buyer needs to price that risk into his purchase and factor that risk into business decisions. For instance, I believe it is rare for a UDRP filing on a numeric .com domain name, so the risk of having to ever mount a defense is low. However, there are occasional filings even on these – for instance 123.com and 222.com. While the risk is low, it is still there, and the owner of those two domain names will still have to pay a lawyer to protect their domain names.

It doesn’t matter whether your domain name should have little risk or not. The unfortunate fact is that some companies and people may try to abuse the UDRP process because it is less expensive than buying certain domain names, and there aren’t really any penalties for abusing the process. This means that all domain owners need to factor in the potential legal risk on all domain purchases and acquisitions.

One recommendation I have is to know the name of a good domain attorney in case you are ever hit with a UDRP or lawsuit. Having a lawyer who is familiar with the nuances of the domain investment business can help you quite a bit when dealing with legal issues.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (8)

    Zaki Ahmed Siddiqui

    Very Important area of concern, what is average range of price/cost for filing a UDRP, does it vary based on country etc, or we have any standard pricing for filing UDRP.

    March 5th, 2014 at 12:13 pm

    Andy Booth

    Totally agree Elliot – I’m now way more cautious when buying ‘brandables’ like Banana.com, Jellyfish.com etc – they’re high-cost domain names and if you don’t have a direct plan with them, you run the risk of drawing a UDRP from a wannabe owner. Nothing’s safe anymore.

    March 5th, 2014 at 12:36 pm

    Jim

    Does a domain name owner receive any damages from the party filing the UDRP if the domain owner wins ? If not, they should . Domain owners have to spend the time and money to defend themselves against these filings and should receive some form of compensation if they win and retain the domain. Some of these filings are large companies with nothing to lose . They need to be accountable.

    March 5th, 2014 at 5:31 pm

    Aaron Strong

    pops,sorry Elliot

    March 5th, 2014 at 6:31 pm

    Alistair B

    March 5th, 2014 at 9:32 pm

      Zaki

      Hi Alistair,
      Thank You Very Much for the Info, this now gives more clarity on this subject.

      In reply to Alistair B | March 5th, 2014 at 11:30 pm

    Picas

    hope that there is very serious penalty for all RNDH cases next year

    March 6th, 2014 at 1:28 am

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