Buying a disputed domain name: price

Many domain name disputes settle by agreement: the domain name registrant agrees to transfer the domain name to the person making the complaint, often in exchange for payment. I am sometimes asked what price should be paid.

My answer usually depends upon three factors: (i) the probability of being able to recover the domain name through arbitration (or court) proceedings; (ii) the probable costs of doing so; and (iii) the value of the domain name to the complainant.

For example, suppose that a competitor of ours had registered <seqlegal.co.uk>.  We might assess our chances of recovering the domain name through the Nominet dispute resolution services as very good (say 90%).  We would know that the costs of recovering the domain would likely be the basic Nominet fee (£750 plus VAT) plus our own time spent preparing the complaint (which for the sake of argument we can value at £750 plus VAT). Taking into account each of these factors, we would be investing £1500 plus VAT in a 90% chance of recovering the domain name.  So, subject to my comments below, £1500 plus VAT would seem to be a reasonable price to pay for a purchase of the domain name (i.e. a 100% chance of recovering the domain name).  If however the chance of recovery was lower, or the costs of arbitration proceedings were higher, the level of a reasonable price would rise. The value of the domain name may also be relevant.  If <seqlegal.co.uk> was critical to our business, I might not want to risk a 10% chance of not recovering the domain name.  In those circumstances, I might pay a premium for the 100% chance of recovering the domain name. Of course, in many cases settlement may be undesirable irrespective of price.

Brand owners may be reluctant to reward a cybersquatter, and a payment may encourage other cybersquatters to try their luck.