The Legalities of Buying and Selling Domain Names
The public conception still contains many misunderstandings regarding the legalities of buying and selling domain names. Many people have heard stories of malicious "cybersquatters" who deliberately register company names and then demand outrageous sums as a ransom for their return. Regrettably, these few bad eggs have sufficed to give the entire industry a lingering bad reputation, even though their activities have since been brought under control by more up-to-date legislation. One thing is clear, and that’s that domain name disputes are never as simple as they may appear.
The important thing is to know that buying and selling domain names is perfectly legal, as long as the domain being sold does not infringe on the trademark rights of a third party. Today, the vast majority of domain investors operate within this legally-acceptable territory. However, in some cases a domain owner is unaware of, or chooses to ignore, the legal constraints. Fortunately, in these cases, a trademark holder has numerous channels for addressing their ownership dispute. These resources are described below.
Domain name sellers should be aware that it is their responsibility to ensure that their domain name is free from possible trademark infringements before listing it for sale. Ignorance of the law is no excuse! Use the links and information provided here to inform yourself about your rights and the legalities governing domain name ownership to reduce the risk that you will lose your domain.
Trademark holders should be aware that possessing a trademark for a given term does not automatically mean that you have a legitimate legal claim to a domain name. Possession of a valid trademark is only one of three requirements that you need to meet to win ownership of a domain name via ICANN's Uniform Dispute Resolution Policy (UDRP), the policy governing ownership disputes for the generic TLDs (.com, .net, .org, .biz, and .info) or the U.S. Anticybersquatting Consumer Protection Act (15 U.S.C. sec. 1125).
Just as important are the requirements that (1) the domain registrant have no legitimate interests in the domain and that (2) they evidenced bad faith in registering the domain. Both elements require evidence beyond the mere registration of a domain. Please take the time to inform yourself about the UDRP and other legalities governing domain names using the resources provided below.
Before you make a complaint, make sure that you have consulted a qualified trademark attorney with experience in domain names. Legal disputes should generally be considered a last option: the cost for a UDRP case is $1,500 plus legal expenses, and there is no guarantee that you will win (for a complete schedule of UDRP fees).
If you sue and lose, your chances of then being able to purchase the domain from the current owner is greatly reduced. In addition, frivolous UDRP claims against domain owners can result in a finding of reverse domain hijacking - a practice in which trademark holders engage in a bad-faith attempt to use the UDRP to wrongfully strip the legitimate registrant and user of a desired domain name simply because the complainant holds a trademark in that name or one similar to it.
Sigh
