The value in a portfolio of domain names

24/03/2011

By Fiona Dott, Solicitor in Corporate & Commercial

This article weighs up the costs of registering a series of domain names against the risk to the business of failing to do so.

Rather than using commercially unattractive web addresses, such as 987.123.45.678, we have domain names, such as www.ts-p.co.uk. They can be valuable commodities, with the most sought-after names changing hands for large sums of money.

Whether you want a website to be your shop window, to act as your data collection portal or to create a direct sales channel, you will first need to consider the registration of at least one domain name. But the story should not end there. It is good practice to review your domain name policy as the business develops and factors external to the business change, in order to consider whether additional domain names should be obtained.

The benefit of creating additional domain names may be to protect the main web address and ultimately, the business behind it. Consider the fake web address www.sharpscissors.co.uk registered by a hairdressing business. The following week, whether by accident or by design, another business registers the address www.sharpscissors.com. The practical effect may well be to divert business from the original address. It is also possible that cybersquatters will approach the original business with an offer to transfer the conflicting web address for a price.

There are now many forms of domain name to consider, with more levels being added at regular intervals. Short domain names, such as ‘aa.co.uk’, are the latest of these. Bear in mind that whenever new domains are released, it inevitably opens the door to potential abuse by cybersquatters. Often cybersquatters will register a domain in the hope of selling it back to the brand owner who fears that the cybersquatter will cause commercial damage to the brand.

Although careful consideration will need to be given to which domain names to register, it is likely to be more cost-effective to register additional names rather than have to enforce rights against cybersquatters or others.