The Perils of Domain-Name Branding
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The Internet's emergence as a medium for advertising and commerce has led to the development of new branding nomenclature. Not only are net- and web-formative words such as Netscape and WebTV popular, but Internet addresses, or domain names, have taken center stage as brands in many companies' marketing efforts.
Amazon.com is perhaps the best known of the new domain-name brands. Numerous others, however, have joined the ranks of dot-com brands: examples include priceline.com, florist.com, and home.com. Domain-name brands can have an important role in a company's marketing efforts, but they must be wisely managed to avoid a number of serious legal and practical perils.
The Allure of Domain-name Brands
Brands that are also domain names have an immediate allure for companies active on the Internet. They immediately signal that the Internet is the principal platform for the commercial activities related to the brand, and they specify the electronic address where the commercial activities occur. Thus, for example, "cnn.com" tells the viewer that CNN is active on the Web, and it directs the viewer to the Web site located at cnn.com. In addition, for many companies, a domain name brand (or a domain-name trade name) conveys a modern, Web-savvy impression especially popular with investors.
Despite the allure, domain name branding poses significant legal and business challenges. Companies are well advised to consider those challenges along with the benefits, and to pause before leaping headlong into the brand strategy.
Legal Considerations
Liability risks
Many companies, while making brand use of domain names, forget that the brands must be cleared by traditional trademark clearance methods. Obtaining the domain name isn't sufficient clearance! The domain name registration process doesn't involve checking for trademark law conflicts. Significant infringement and dilution liability can attach to use of any brand, including domain name brands.
In addition, domain name brands are subject to a peculiar type of liability under private dispute rules administered by Network Solutions. Under NSI's current rules, //2// a domain name may be suspended by it at the request of any party that holds a national registration — anywhere in the world — for a trademark identical to the second level domain, unless the domain name holder also holds a national trademark registration for the same second level domain. //3(