Domain Names - A Thoroughly Underrated Resource

Maximizing The Potential Of A Brand Name

The majority of people are familiar with what a domain name is and most businesses currently own one, however, the real and actual importance of a domain name in a business’s ‘intellectual property portfolio’ is generally underrated and not fully appreciated.  A domain name is the doorway to a company’s website and the more doorways a company owns – the greater the potential of a “visitor”.

A domain name is relatively simple and cheap to register, especially when one considers the potential benefits and revenue which may be generated from it.  There are also limited rules governing domain names – which can either be seen as advantage or disadvantage depending on the particular circumstances. For example no proof of proprietorship is required in obtaining a domain name.  However, investing in a comprehensive IP portfolio will provide the necessary protection for any business interested in doing so and this protection is available through various forums.

A recent article, Domain Savvy – Making Domains Pay, Dominic Speller, Trade Mark World #194, February 2007, considers the importance of owning a domain name and, in particular, the importance of valuing it.  Speller highlights the fact that “without owning a domain supported technology, a business is fundamentally limited by geography and accessibility, such is the importance to modern commerce.”  A domain name registration ensures web-brand and web-trade mark protection, it prevents cybersquatting and assists in establishing brand and trade mark identity on the internet.

Speller conveys the significance of the link between the domain name and the product or service offered by the company.  In this regard, if one was looking for a specific company’s website, the first name that a consumer would be expected to enter would be “www.company’s name.com” or “.co.za”.  Procuring a domain name containing the company’s name, or a well know trade mark of the company, would thus be an ideal strategy for any business, as the consumer would not be forced to remember an additional name.  Owning a number of domain names, hence utilising a company’s trade marks or industry descriptive words (which all link to the company’s website) further eases the consumers’ path to the company.  Furthermore, a business which had taken such actions would also be minimising the risk of a consumer stumbling onto a competitor’s website.

In a situation where a consumer is unaware of a specific company’s name, but has discerned the general goods or services that they are interested in, generic names can be extremely valuable.  For example, if one was looking for a website concerning cars, the obvious solution would be “www.cars.com”.  A generic domain name could be one of the most beneficial forms of advertising, as one would now own the ‘doorway’ to the industry.  Speller presents the example of www.asthma.com, which is owned by GlaxoSmithKline (GSK).  Asthma is an $11 Billion dollar per annum industry.  Ownership of this domain name enables GSK, whose current single largest selling pharmaceutical is an asthma treatment product, to reach out to asthma sufferers, their families and advisers who wish to research the subject – by providing (and receiving market) information on the topic to and from those who access the www.asthma.com site, many of these individuals are likely to be potential consumers of the GSK product.  Hence, GSK has effectively made the path to their “doorway” that much easier to travel.

A domain name may also be registered, even if the registrant does not intend on using the name in the near future.  This is referred to as a defensive domain name, and it secures further links to the website and guards against cybersquatting (the practice of buying domain names of existing businesses or trade marks, with the intention of selling the names back to the relevant party for a substantially inflated price).  By preventing third parties from registering an existing company’s domain names, it not only secures an additional marketing medium for the company, but also prevents third parties from taking advantage of a company’s goodwill, by passing itself off as (or as being associated with) the company.

As mentioned above, no single body governs and regulates the registration and use of domain names, however, there are various methods which can be implemented in order to protect a party’s rights.  Domain names are obtained on a first come first serve basis and are therefore open to abuse.  Relief may be obtained by means of –

o   South African Legislation, including the Trade Marks Act, 194 of 1993 and the Electronic Communications and Transactions Act, 35 of 2002; or

o   through certain organisations, such as ICANN (the Internet Corporation of Assigned Names and Numbers), which formulated the Uniform Dispute Resolution Policy and which provides an arbitration procedure under which a domain name may be cancelled or transferred to an aggrieved party.

Usually the aggrieved party is a trade mark proprietor.

One needs to also ensure that when one is developing a domain name portfolio, that there is minimal frustration to the potential consumer.  In this regard, it may be inadvisable for a company to register numerous defensive domain names without linking them to their particular website.  This could possibly result in consumer frustration when they are repeatedly directed to a page that “is currently not available”, as this may have a negative influence on the brand marketing.

In conclusion, the domain name is currently a dramatically under-estimated resource as a part of a company’s IP portfolio.  In an industry where brand awareness is key, a strategy must be designed to ensure that the brand reaches the widest achievable market.  To not use every possible technology available is to slam the door in the face of the consumer and if you don’t open the door, your competitor surely will.