A Legitimate Question by Mr. Sten Lillieström

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A Legitimate Question

by Mr. Sten Lillieström (LinkedIn

No official effort to prohibit domain name investment has ever materialized in the 25 year history of the UDRP. That is a significant stamp of approval. So why does it still seem like buying and selling domain names is an illegitimate enterprise? Why are the most likely labels misnomers like “pirates”, “hi-jackers” and “squatters”?

Anand Sanwal, the CEO of business intelligence firm CB Insights, recently ”confessed” on Linkedin that he suffers from the “disease” to register domain names that he will never use. He allegedly has around 2000 of them. Dharmesh Shah, the owner and CEO of business management behemoth HubSpot, known to spend astounding amounts of money on “premium” domains, quickly chimed in and proudly proclaimed that he is also infected.

The ironic touch to these posts is a sign of the stigma related to the profession of trading in domains.

But when it comes to domain names, not even prominent and respected figures are protected by a cushion of self-irony.

As a consequence, sentiments all too familiar to domain investors inevitably surfaced in the discussion that ensued. ”Why do you buy domain names that you will not use? What about entrepreneurs that will not find their name available because you are ”squatting” on it?”

I will refrain from citing examples with more colorful language, even though they are numerous, but rest assured that professional domain investors get more than their fair share of toxicity, and in a much more sinister form.

It may simply the case that when covetous parties which normally hopefully grasp the dynamics and benefits of a market learn that the domain name they need is taken and that it costs money to acquire it, it is not unlikely that they will blow a fuse and go berserk.

But how can this be? What is it about domain names that make it so difficult to understand that they are rare and valuable artifacts and not a birthright?

I think the answer may lie in the way we inherently “own” and treasure our identities, and the psychology in the pride of who we are. Our relationship with names is private, personal, and the right to them are seen as inviolable. We identify with them. Everything that we are sorts under them. Quite the inveterate bias, in quite the limited market, since for domain name registrants and death-duelling immortals in the fantasy movie Highlander alike; “There can be only one”.

The internal “ownership” of the name you chose for your life’s work is in turn gamed and boosted by incoherent ideas often marketed by the brand protection sphere, and by the media at large whenever a domain story makes the headlines.

It may be OK for another entity to control a domain identity we covet – we may get that. But only as long as they use it. Not using it equates to “squatting”. Especially if the idea is to tap the opportunity of selling it.

This is why domain investing and cybersquatting is the same thing to the general public. This is obvious to a domain investor and unfortunately virtually invisible to anyone else.

Compare this to the way ownership tends to function at large. Nobody claims that someone’s property is in fact theirs using these kinds of arguments. Irrespective of whether the property is in use or not, or for sale or not.

It may be wrong to assume that arbitration professionals are automatically immune from contagion by these sentiments. They are after all human and certainly not domain investors themselves. In fact, if they have any experience of the circumstances of either party, it likely hails from the perspective of Complainants.

It may be worthwhile to remember that when the UDRP was still in pre-production, it’s ”founding fathers” (and mothers) tried to predict the future. One future they anticipated, besides the threat of cybersquatting, was that the procedure could be put in use to re-appropriate domain names unfairly.

To avoid this the UDRP was designed to be an alternative, cost-effective, fast-tracked route specifically for “for the relatively narrow class of cases of abusive registrations”. Perhaps the US congress, and WIPO, did not want an arbitration panel that often consists of a single panelist, and that have 14 days to render a decision, and only rudimentary notes from one party on hand, to launch into sensitive considerations that a court would be considerably more equipped for.

Generally, UDRP jurisprudence has adhered to this “narrow scope”, but not always.

One example is the “retroactive bad faith” doctrine that surfaced with the Octogen decision in 2009 (D2009-0786). The idea that a domain registrant can be held accountable for what happens after the registration rightfully withered away. But that it appeared at all is probably indicative of something.

Similar ideas subsequently lived on outside of explicit jurisprudence and in 2016 the American Bar Association published an imaginative article, still live, which argues that there is such a thing as “anticipatory cybersquatting”.

“Anticipatory cybersquatting is the practice of registering domain names with minimal present value in the hopes that these names will become desirable, and therefore increasingly valuable, in the future.”

It is of course permitted to believe that the domain name aftermarket is useless and consists of a bunch of no-good crooks. It may regretfully be your best theory that markets evolve for no reason. But to argue that a domain name investor can be retroactively considered “cybersquatting” by merely acquiring a domain name that they saw a future market for is beyond absurd. An idea like that can only survive in a vacuum.

Other more recent signs of a backdrop sentiment that diverges from the public stance on legitimacy include the tendency to grant a free pass for Complaints that were clearly pre-destined to fail. UDRP decisions where Reverse Domain Name Hi-Jacking could have been found may instead go to lengths to argue that it’s OK to ignore the requisites and scope of the procedure.

The most common expression of these sentiments are however more implicitly encoded in language.

From a domain investor perspective, borderline UDRP decisions regularly use many words to say ”it’s probably the case that this domain registration was intended to target the Complainant”. Sometimes that conclusion is substantiated and supports a transfer to the Complainant. But when the Panel can not bring itself to issue a transfer decision it often tends to be attributed to a poorly substantiated Complaint, and not to that the rights of the Respondent are self-evident.

Here is an example from a transfer decision.

”In the Panel’s view, whether the term “goodr” is a descriptive term is questionable. The term “goodr” does not appear in the dictionary, and the term “gooder”, which Respondent asserts “goodr” plays upon, is likewise not a dictionary term.” (D2018-1171)

Firstly, the Panel takes for granted that only ”descriptive terms” and ”dictionary words” (.1) are fair game for investment. This implies that names of the kind that may function as more distinctive business identities are inherently off limit, and that investment of this kind is consequently not legitimate in practice. (Even though nobody ever stated it explicitly.) It also takes it upon itself to pass verdict on whether the name carries potential for appeal outside of the use case of the Complainant. Something that the professional brandable domain investor that acquired this name for resale may arguably be more of an authority on.

However fervently we try to avoid looking at it, there is an inconsistency here, within UDRP jurisprudence.

On one hand, investment is fine as long as targeting can not be made likely. On the other hand – more often when slim evidence is present – deliberations sometimes tend to keep reaching for an excuse for transfer. Especially if the name is more of a name than a description. Rules of thumb without much basis in either science or domain name valuation instead become the arbiter; such as whether or not a name consists of “generic dictionary terms”.

If applied, such a rule would by extension mean that trade in domain names that could be used as trademarks, or that are used as trademarks, in practice would be banned. It would mean that all possible trademark registrations, even unregistered ones, are earmarked for the point in time when a trademark is registered. A blank slate priority rule based on name qualities. In essence a monopoly of expression as well as use.

It would gut the aftermarket and accordingly impair the ability for new ventures to acquire existing domain names and for existing ventures to rebrand. A complete catch 22. And a completely impossible regulatory situation to boot.

The inconsistency can be further illustrated by the fact that names outside of the realm of “standard language” in other cases may render the opposite decision, merely as a result of the residing Panelist’s idea of what constitutes a name that has viable investment prospects outside of targeting the Complainant. Here is an excerpt from the decision on the domain name Limble.com, where the name-like nature of the domain is comparable, but the conclusions drawn are entirely different:

”…businesses are in the market for memorable domain names and would be legitimately attracted to a name like the Disputed Domain Name for its intrinsic value as short and memorable for businesses… ..memorable terms may be very limited in availability in today’s market.” (D2022-4900)

Based on the way the UDRP is devised, it should always be a default fact that domain name investment is a legitimate enterprise. Not only in reluctant decision language, but in hearts, minds and coffee rooms. Not only officially, but also inofficially.

There should be no assumption that a domain investor is a bad actor per se. Bad faith can rear it’s ugly head in any circumstance, and whenever it does, it is thankfully an anomaly and not the norm. It is in no way inherent to the business practices of a domain investor to target TM rights.

For these reasons it may be prudent to strive to honor the idea of the “narrow scope” and to realize that jurisprudence is not supposed to exist in a vacuum. It is supposed to adjust to actual circumstance, of which domain investing is a significant part that does not seem to be going anywhere.

Last time I checked anyway.

-Sten Lillieström-

Next Venture acquires taken domains, or helps you find a new name identity with the domain available for immediate purchase.

(1.) There is no technical definition of “word”. Dictionary inclusion is a measure of whether a lexical item can be considered to be standardized through usage. But meaning is not a static phenomenon reserved for “dictionary words” and excluded from all other examples of natural language. It is simply not the way it works. If it was, language as we know it would not exist.

See here and here.

Previous Articles in this series: The Legacy Idea | The Brandable Idea | Domain work part 1 – Acquisition | Domain work part 2 – Sales

 About the Author: As the founder and CEO of Next Venture, a domain acquisition brokerage and naming firm, I help entrepreneurs and businesses find and secure their desired brand names on the internet. As a consequence I also operate a portfolio of domain names that serve as viable naming options in different niches and industries. 

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