Domain names: the often overlooked IP asset

Statton Hammock, V.P. Global Policy & Industry Development, MarkMonitor, discusses the value of domain names among other types of intellectual property assets.

Last month I read an interesting article 1 about companies that own trademarks in a specific color (for example, think of the “Tiffany® blue” or “UPS® brown” or “Post-It Note® yellow”). The substance of the article was interesting, but what caught my eye was this simplistic graphic attempting to explain each of the different types of intellectual property assets:


Figure 1. Crockett, Zachary. (2020, January 12). Can a corporation “own” a color? Retrieved from https://thehustle.co/can-a-corporation-trademark-a-color/.

This reminded me of something that I have noticed far too often – that is the lack of reference or inclusion of domain names as an intellectual property asset. How can the chief navigational tool of the global internet, registering in numbers that exceed 340 million, and on which billions of dollars of e-commerce are conducted every day (think of how much commerce is transacted through Amazon.com alone) not be considered an intellectual property asset on par with trademarks, patents and copyrights? While there are definitely differences between domain names and the other types of intellectual property, these differences don’t diminish the value of domain names but rather add to them, making them just as valuable as other forms of intellectual property.

Domains: important differences

Without question, domain names are different from other forms of intellectual property, which makes their status as an IP ’outcast’ understandable.

One of the stark differences between domain names and the other forms of intellectual property is that domain names are created by commercial contract rather than by filing a registration with any national patent and trademark or copyright office. The right to use a domain name is a contractual right created by a series of multiple contracts between the domain user, the registrar (or domain name ’seller‘), the registry of the top-level domain (the manager for the database for the top level domain) and the Internet Corporation of Assigned Names and Numbers (ICANN), a non-profit organization entrusted with the security, stability and interoperability of the domain name system (DNS). Consequently, a domain name is more analogous to getting a phone number from your mobile phone carrier than it is to a statute created IP asset.

While a series of complex contracts govern the registration and use of a domain name, the actual act of registering a domain name is actually simple – much simpler than for other forms of IP. A domain user or ’registrant’ doesn’t need to submit ’proof of use’ to get a domain name or go through a multi-year examination process. Payment of a registration fee and an agreement to abide by the registrar’s terms of use is all that is required. The relative ease and speed in which to acquire a domain name means many domain names can be acquired at low cost, making it an immediately valuable asset for the registrant.

A third difference between domain names and the other forms of IP is that that they can only be registered to one entity. Patents can be co-owned by multiple inventors. The same is true with artists of a copyright. Generally, under trademark law, multiple parties can register and use the exact same, identical trademark so long as the trademark is not registered in the same class or used in the same channel of trade. Not so with domain names, for which there can only be one, single registrant. A fact that may, arguably, make the value of domain names greater than other forms of intellectual property.

In addition to these differences, domain names will never expire so long as a domain user pays its registrar the annual registration fee. Patents only last twenty years (with a few exceptions), after which the invention is in the public domain. Copyrights last seventy years before entering into the public domain. Trademarks may not expire but in the United States and some other jurisdictions, trademarks may be cancelled if they are not used in connection with the sale of good or services. Domains will last in perpetuity so long as the registration terms of use are not breached and payment is made – which creates a straight forward, maintenance program for valuable commercial assets.

Similarities to other forms of intellectual property

Despite these notable differences, there are actually more similarities between the four forms of intellectual property than differences.

First, trademarks, copyrights, patents and domain names all give the registered owner a bundle of rights, including the right to use the IP asset, assign it to others and protect and defend it against infringement in courts of law around the world. As commercial success takes hold, the importance of the global recognition of each IP asset adds to the growing value of these IP assets.

Second, each is also a commodity, meaning that each IP asset can be bought, sold or licensed, which adds to their value as they each create a market for buyers and sellers who can profit from the transfer of each asset.

Third, each intellectual property asset gives the owner a commercial advantage over competitors in the marketplace. Also, each asset allows its owner to preclude other parties from using the same asset to promote its business interest.

Finally, all forms of intellectual property have created their own industry, comprised of experts and practitioners that help the IP owner secure, manage, optimize, evaluate and protect these valuable assets. There are patent, trademark, copyright and domain name industry associations with corresponding events in cities around the world – each one an opportunity for experts to gather and discuss policies, issues, changes and innovation that impact each form of intellectual property.

Underestimating the value of domain names

Individuals and companies that fail to invest in their domain name portfolio as they do their trademark and patent portfolios could be taking on additional risk and or not capitalizing on the value of their domain portfolio. After all, a domain name is the core of an online presence and having several domain names is important for driving user traffic, boosting search engine visibility, and protecting a valuable brand 2.  Failure to have the same diligence for renewing and maintaining domain names as one has for patent or trademarks can mean inadvertent expiration and the loss of a valuable asset. In recent years, there have been several horror stories 3 of companies that have failed to renew their domain name, including the Dallas Cowboys and Foursquare4. Companies don’t leave patent, trademark and copyright registration and renewals to laymen, so why would a company trust the management of its domain name portfolio to a non-expert?

In this age of e-commerce, e-news, e-advertising, e-gaming, and e-whatever, managing a company’s Internet presence is critical and a domain name portfolio is the strongest intellectual property asset a business can leverage to promote and protect its online identity.

Learn more. Join author Statton Hammock for a webinar on March 17 with updates, expert insights and key takeaways following the ICANN67 Community Forum: ICANN67 Community Forum Recap.

 

  1. Can a corporation own a color?, Zachary Crockett, January, 2020
  2. Why Registering Multiple Domain Name Extensions is good for business?, Hosting Safety, July, 2017
  3. Losing a Domain: What it Means for Your Company and Users, Natalie Goguen, July, 2016
  4. 9 famous domain expirations, Goran Duskic, July, 2018

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