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Beware Of Brand Scams By Domain Peddlers

by David Schachter
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Brand ScammedAs you’ve no doubt seen over the past few years, ICANN, the global agency that manages registration of domain names, has opened up a multitude of new Top Level Domains (TLD’s) in an effort to meet the ever-increasing commercial demand for websites and Internet presence. Although this affords numerous benefits, the new expansion has also given rise to a cottage scam industry, aimed at scaring you into buying a domain you don’t really need.

It usually works like this. You own a valuable brand – let’s say, “Badgit”- that sells materials for tradeshows and conferences. You’ve protected your Intellectual Property rights in the trademark and you already own badgit.com, badgit.net and other key domain addresses. You suddenly receive an “urgent” email (usually from China or Hong Kong, and usually sent by someone using a fictitious name working for a fictitious company) advising that your brand has become available on one of the newer TLD registries, such as “Badgit.cn”, “Badgit.biz”, “Badgit.uk”, “Badgit.conference” and so forth. The list of such new TLD’s is now potentially endless. The message goes on to warn you that, if you do not make an immediate purchase, these domains may be offered for sale to another prospective buyer and you’d better act now or face the consequences.

So, Question 1 – Should you be worried about this? Question 2 – If so, what do you do about it?

The first answer is, yes and no. It’s obviously important to maintain strong trademark protection for your brand, and having a domain address that includes your brand name is a fundamentally important element, just as it is important to keep others from using your brand without permission. Thus, it’s obviously good practice to regularly monitor the Web and make sure that no one else is “poaching” your brand on a domain address in order to confuse customers or divert business to a competitor.

But does this mean that you need to lock up every possible domain that might be available, in which your brand name appears in the address? Do you need to keep putting out these fires? As a general rule, this practice at some point becomes a waste of your time and your money. First, if you’ve already established a good portfolio of IP rights, through Federal trademark registration, aggressive commercial use, acquiring key domain registrations and so forth, the mere fact that someone may purchase some other domain containing your brand does not automatically confer upon them a substantive right to use the domain for any purpose, and certainly does not allow them to use the domain to create confusion in your market or to snag prospective customers who might search for your company on the Web by typing your brand into an Internet search query. Your prior trademark rights take precedence in such situations.

Secondly, by not buying the domain there is no legal authority anywhere that would construe this per se as an abandonment or relinquishment of the valuable IP rights that your company has achieved through hard work and careful attention to legal formalities. On the contrary, if you are armed with an established base of legal protection in your brand, there are multiple avenues through which objections can be raised if someone acquires a domain containing your brand and attempts to use it so as to dilute your market or divert business. Otherwise, your portfolio of IP rights could be gutted and you’d be forced to spend endless amounts of time buying up every possible domain that contains your brand, including common misspellings or phonetic similarities. Moderation is the key. Well-budgeted companies do, of course, purchase a “periphery” of domains that might resemble their core Web brand presence, but even these companies stand down at some point although they know there could still be domains out there that might create a problem if used improperly. They are content at that point to rely on domestic and international laws to protect their IP rights.

In summary, you should always ensure that your brand is appropriately protected under Federal trademark registrations, an aggressive Internet marketing strategy, SEO tactics and domain registrations. Once that is accomplished, however, you don’t have to keep buying up every conceivably similar domain that comes along, or to lose sleep over the possibility that someone out there might acquire a domain address that bears a similarity to your brand. Once IP rights are established, the better practice is simply to regularly scour the Web, through search queries and other methods, to see if anyone is trying to usurp the good will value of your business. In such cases, there are many effective steps that can be taken to protect your brand, ranging from direct communications, demands to cease activities or, if necessary, formal proceedings. Otherwise, don’t let the scammers scare you into spending money on something you don’t need.

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