Hot Properties What's the one thing almost every entrepreneur needs these days? A domain name. Here's a closer look at the business of buying and selling domains.
Opinions expressed by Entrepreneur contributors are their own.
It"s the 21st century, and every business needs a place topark on the Net. "It's virtual real estate," saysMike Magolnick, co-founder of SolutionHome.com, a domain nameauction and appraisal site. Magolnick, 30, got into the domain namegame when he was offered $1,500 for ventureconsulting.com, a domainhe registered for his venture consulting business. Realizing hecould gain serious profits from registering names and selling themto the highest bidder, he founded SolutionHome.com with his brotherJoel, 37. Mike registered 400 names, planning to sell them-now mostof the names listed on his site are owned by his clients-to thetune of more than 1 million domains up for grabs.
Trafficking so many domain names can be perilous when skirtingcybersquatting issues, and Mike is very aware of the risks."We don't touch anything that would be remotely related toa trademark," he says. "The last thing you want to do isplay around with something like that-there are fines up to $100,000for taking someone else's name and attempting to sell it. Thereis definitely no room to play in this industry."
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Especially not with watchdogs like the Internet Corporation forAssigned Names and Numbers' (ICANN) dispute reso-lution policyand the Anti-Cybersquatting Consumer Protection Act (ACPA), both ofwhich offer avenues for exploring a domain dispute. For asuccessful cyber-squatting case to be won, the plaintiff has toprove the domain name was registered in bad faith. "Bad faithand similarity [to the trademarked name] are the key," saysJohn L. Hines Jr., an attorney with Sachnoff & Weaver Ltd. inChicago. "These factors relate to whether the defendent ismaking fair use and/or had bad motives."
Cybersquatting aside, there are many entrepreneurs who simplydon't want to pay hundreds, thousands or even millions ofdollars for a domain name. Says Duane Harris, 35, co-founder andpresident of Web design firm ScreamDesign.com in Draper, Utah,"On the one hand, they're entrepreneurs, and it's awonderful money-making opportunity. On the other, they'replaying around with the bricks and foundations of the Web, itbecomes difficult to get a domain name, and it raises the pricesbeyond the means of a lot of small companies."
According to Mike, though, the value of a domain name can bedetermined by related factors like the number of hits on the siteand recognizability of the name. Matt Coffin, 32, founder and CEOof LowerMyBills.com in Hollywood, California, bought acomplementary site, LowerYourBills.com, to help direct people tohis site-and he says it was more than worth the $5,000 he shelledout. Says Coffin: "It brought peace of mind to myinvestors."
My Name Is...
Navigating the ever-changing world of cyberlaw is seriousbusiness, as even the most famous people in the world arediscovering. Case in point: Last October, singer/performer Madonnawon Madonna.com from a cybersquatter who had used the site forpornography. A World Intellectual Property Organization (WIPO)arbitration committee found that the domain was registered in badfaith.
In the Anti-cybersquatting Consumer Protection Act (ACPA),Congress named the following factors in determining bad faith: thedefendant's intellectual property rights in the domain name,whether the domain name is the defendant's name, thedefendant's prior use of the name, the intent to divertbusiness from the plaintiff, the offer to sell for profit, thehistory of acquiring names that the defendant knows are confusinglysimilar to others, and the fame of the plaintiff's mark.
Yet staking claim on a dotcom bearing your name isn't alwayseasy. Performer Sting petitioned for Sting.com, but WIPO ruled"sting" was a common word and wasn't his name, so hecouldn't claim ownership.
However, the most difficult aspect of the whole domain issue,according to John L. Hines Jr., an attorney with Sachnoff &Weaver Ltd. in Chicago, "is to remember we coexist in a worldcommunity that is becoming more interconnected. The real effort isgoing to be to reconcile policies worldwide."
