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Domain Name Vs. Trademark, Part III

So you’ve done a trademark search and found that no one owns the trademark for your company name. Is it safe (and wise) merely to buy the domain name and save the fees of registering your company name as your own trademark? The answer is, as all lawyers like to say, “It depends.” But, to put the punch line up front, notice that Network Solutions® and GoDaddy® each have registered their names as trademarks. Why do you think domain name registrars would do that?

In Parts I and II of this series I discussed the requirement that you choose a company or product name and a domain name that do not infringe the rights of someone else, and how you go about searching for such conflicts. The final question is, should you bother with getting a trademark? Why not just be satisfied with the domain name if it is available and doesn’t infringe anyone else’s rights?

There are several factors to consider when choosing a name for a company or domain and whether or not to register a trademark: legal, business, and emotional. Take Max Haot the owner of a software company originally called Mogulus. His emotional considerations are described in a recent Inc.com article. Haot literally got up one morning and decided he wanted to change his company name to something more descriptive of his services. So he paid $100,000 to get the domain name “LiveStream.com.” Was the change worth that level of investment?

Probably not. Gary Levine of WSI Digital Marketing writes, “having a domain name containing a relevant keyword to your business or industry… used to be a positive technique for raising your page’s rankings [but] that value seems to have diminished.”

Still, Haot believes the descriptive name LiveStream was also a great business decision as he credits his company’s success to the name change. That may or may not be true, as Levine concedes that “having relevant keywords in your domain name can have a positive impact on the click through rate. This is because the domain is displayed on search results pages, and a viewer of those results maybe more likely to click the results that indicate a closer match for their search.”

What about the legal considerations? Because “Live Stream” describes the company’s services, Haot is precluded from obtaining a trademark on the name. Haot must have made a conscious decision to go down this path and his emotional consideration trumped all others. But that means anyone is free to use the term LiveStream for their own services. If properly executed, an upstart company could usurp Haot’s current #1 spot in his industry using his own company’s name. To use an analogy in real property, Haot’s company name occupies a temporary structure on common property which anyone else in the neighborhood is free to enter and use. The company named LiveStream may have accrued some good will, but there is no real value in that name itself.

It is not hard to think of companies whose names are not descriptive of their products or services, yet they have enjoyed tremendous success: Apple Computer, Xerox, Shell Oil, Trump Properties, Budweiser Brewing, Nike, Facebook; the list goes on and on. Not only do those companies have enormous good will credited to their balance sheet, those names all have the status of property as trademarks, and thus have independent value.

How can you exploit the independent value of a trademarked name? By licensing or franchising it. Both avenues create revenue streams independent of the initial operations of the company. Complete exploration of the value of registered intellectual property will have to be saved for another post, but think of it like getting rental income from a house you own.

There is of course one more consideration when deciding on registering a trademark or domain name: Cost.

Not everyone pays $100,000 to buy a domain name. But premium domains sometimes cost upwards of $1,000. Ironically, those premium domains are likely to be descriptive so you cannot obtain a trademark on them. Of course many people pay zero to obtain their domain name (but they often still seek descriptive names on which they cannot get trademark).

In contrast you can learn to file for a trademark on your company name yourself (as long as it’s not descriptive or fails for some other reason), in which case your only cost would be the United States Trademark Office filing fee, currently $325. Even if you use an attorney to help you your cost would probably be about $1000.

Of all the investments one might make in starting and running a company, trademark registration offers promise of perhaps the greatest return.

No one would seriously consider buying a house without recording the title to it. And the value that can be built up in a company name could easily be many times than that of a house. So why would anyone invest in marketing a company or product without owning title to its name?

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