Domain name management policies

16 May 2008
Alasdair Taylor

Documented domain name management policies are exceptional. The rule is ad hoc registration of a range of domain names across a range of extensions, the domains being chosen by different people within an organisation at different times and for different purposes. The result: chaos.

If you have been asked to, or have decided to, formulate a domain name management policy for your organisation, this post should help. I have set out below details of what I consider to be the main principles and considerations which should inform any domain name management policy:

  • Individually, domain names are not expensive (costing only a few pounds each per year).
  • Providing domain names are all registered through an efficient domain name registrar or registration agent, managing even large portfolios should not be a significant administrative burden.
  • There are usually many variations of any trade mark or name (including plurals, misspellings, derogatory variations, domains with common prefixes and suffixes, and hyphenations); and there are hundreds of possible domain name extensions (e.g. .com, .org, .de, .cn, .tv). For these reasons, there may be many thousands of domain names that are of (at least theoretical) interest to a trade mark owner.
  • There are three main reasons for registering a domain name (or maintaining a domain name registration): first, because the registrant wants or may want to use the domain name to point to a website; second, because the registrant wants to stop others from registering or using the domain name; and third, as an investment.
  • Domain names are typically registered for one or two or a few years at a time, and they lapse on a regular basis.
  • It is possible to set up a watching service on domain names that “drop” off the register, so that they can be automatically registered when this happens. This practice is sometimes called “drop catching”.
  • It is also possible to set up a watching service to monitor third party domain registrations that may trespass upon the watcher’s rights.
  • Domain names purchased in the secondary market are much expensive than new registrations. During 2007, the average reported price of domains sold via Sedo (one of the main marketplaces for domain sales) was £1,253.
  • Domain name arbitration proceedings are special contract-based administrative proceedings that can be used by trade mark owners to obtain domain names registered by others which trespass upon their rights.
  • Domain name arbitration procedures are generally perceived to be complainant-friendly: around 70%-80% of complaints that go to a decision result in a transfer of the domain name to the complainant.
  • Notifying a domain name owner in advance of commencing arbitration proceedings may lead to the owner taking actions which could prejudice those proceedings (e.g. transferring the domain to a new owner such that it becomes harder to prove that the domain was registered “in bad faith” (in UDRP proceedings)).
  • Domain name arbitration proceedings are not inexpensive, but they are a lot less expensive than court proceedings. Typically, a complainant in a domain name arbitration involving one domain name might expect to pay between £800 and £900 in official fees, and (if professionally advised) £750 to £2,500 in professional fees.
  • Domain name arbitration proceedings are much quicker than court proceedings, typically taking 7 to 9 weeks from start to finish.
  • Shortly after the commencement of a domain name arbitration, the domain name will be “locked” so that it cannot be transferred by the owner during the course of the arbitration.
  • In domain name arbitration proceedings, pre-complaint inter-party correspondence may be disclosed to the panel or expert decision maker – there is no equivalent to the “without prejudice” rule that applies in court.
  • Where a trade mark owner purchases a domain on the secondary market in circumstances where that trade may have been able to recover the domain by means of domain name arbitration or or court proceedings, then that purchase may have the effect of encouraging others (professional cybersquatters and “domainers”) to register and use domain names which trespass upon the owner’s rights.
  • Where a domain name is to be transferred, and the transferee is not entirely satisfied as to the bona fides of the transferor, then the consideration for the transfer will usually only be paid after the domain name is in the control of the transferor or (if this is not acceptable to the transferor) the domain or consideration will usually be held in escrow.
  • UK litigation involving domain names will typically take the form of trade mark infringement and/or passing off proceedings. These kinds of proceedings call for specialist legal representation, and can be very expensive. It would not be uncommon for one party’s legal fees in a case taken all the way to trial to exceed £250,000 or even £500,000.
  • In a trade mark infringement or passing off case, between 12 and 24 months may elapse between the date of issue of the proceedings and the trial (even longer in some cases).
  • It is helpful to a complainant in domain name arbitration proceedings – and very helpful to a complainant in court proceedings – to be able to ground a complaint or claim in registered trade mark rights (rather than unregistered rights).
  • One major advantage of litigation over domain name arbitration is that, in court proceedings, the successful party’s legal costs (or a portion of them) will usually be payable by the unsuccessful party. However, where domain name litigation is undertaken against individuals or companies without significant UK assets, recovering legal costs is likely to prove problematic.

There are of course other factors, but these seem to be to be the critical ones.

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