Domain Name Versus Trademark, Part I

I’ve heard it many times: “I checked that the domain name I want is available, why isn’t that enough?” Registering an internet domain name is easy, but fraught with trouble for the unwary. That trouble stems from the fact that when you “buy” a domain name, you get title to absolutely nothing. Does this story sound familiar?

Your friend, Hector, wants to start a company. He goes to his favorite domain name registrar (Network Solutions^®, GoDaddy^®, or the like) where he performs a quick, free search for the name he has in mind for his company. The domain name Hector wants, KwarxKonsulting.com, is available. So he immediately buys the domain name and proceeds to use a cheap online non-law, self-help firm to register Kwarx Konsulting, LLC in his home state. Thinking he has just saved himself a lot of lawyer fees, he invests that savings and much more into launching his website and doing some marketing for the products and services he wants to associate with his cool new company name.

There is widespread belief that when you “buy” an internet domain name from a reputable registrar you get the right to use that domain name. Said another way, Hector (and many other people) believes that owning a domain name gets him something like the rights of owning property. This assumption is misguided. When someone registers a domain name, they must certify that the domain does not violate someone else’s rights because the act of buying a domain name by itself confers no rights on the registrant.

Ideas are dime a dozen, but society rewards the people who take the risk of creating businesses to act on their ideas. In this case, although “good names” are dreamed up by many people, the first to actually use any given name in commerce receives the rights of being the “owner” of that name. The rights that attach to such ownership are called “trademark rights.” So how do governments keep track of the first to use a name in commerce?

Every State in the US and the federal government have created a registration system to keep track of the ownership of trademarks. The registration system is much like recording a deed to real property. The holder of the registered trademark—just like the holder of a recorded deed—is presumed to be the true owner. It takes a lot of effort to overcome that presumption, so the best way to stake out a claim to the name of a company or product is to register the name as a trademark at the US Patent and Trademark Office. Trademark registration gives the registrant a presumption of ownership that cannot come from merely registering a domain name.

Returning to my story, it may turn out that a group of people started Kwarx Konsulting, Inc. in another State before Hector did, but they are using the domain KKINC.com for their website. What’s more, the original Kwarx Konsulting may have obtained a registered trademark for the name Kwarx Consulting^®. Unlike the domain name Hector bought, that registered trademark is property (“Intellectual Property,” to be exact). And its owner can protect it from infringement—which is like trespassing on land. Because of that, Hector may receive a cease and desist letter from the attorney for Kwarx Konsulting, Inc. It does not matter that Hector didn’t know he was infringing. He still must relinquish the domain, and he may have to stop using the company name itself. Suddenly his entire investment in marketing that cool new company has evaporated.

This sad story happens more often than you might want to believe.

Moral: Always, always, always check the US Patent and Trademark Office in addition to doing a domain name search before you invest anything in marketing the new name of your company or product.