Buyer Beware: Buying domain names from unknown sources is risky

Monte: Yes, it does, it does. Now you have some really good tips on how to protect yourself if going into the domain industry – some things that people should look to, or if you’re already in the industry that maybe people aren’t covering. I’ve seen a couple in here that I didn’t even know about and I’ve been in the industry for quite some time so.

Stephen: I consider you the old man of the industry.

Monte: Well, not the oldest but not webfather old but pretty, I don’t know since 1996.

Stephen: You’ve been around.

Monte: Been around for awhile. These are some pretty good point that I think everybody will get some value out of. So why don’t you go over each one and explain some of the benefits around each one.

Stephen: Okay. Some of them are pretty obvious. Be careful. Don’t buy non-generic domains of big companies. If you turn around and buy nike.com, if Nike is stupid enough which I doubt they’ll ever be to let their domain drop, don’t buy it or if you do buy it immediately transfer it back to them because one they have lots of money and two, they’re already a famous company that has registered trademarks in I think every single country in the world. If they don’t, I’d be really surprised. If everyone knows these things, you’re just asking for it. I saw up on one of the websites, I was perusing them, that martindale-hubble.com was for sale and obviously, nobody should ever buy that because Martindale-Hubble   is famous in certainly all over Europe and certainly the United States that there’s no way they’d ever lose a lawsuit pertaining to that. Makes perfect sense. Two, everyone in the industry turns around and they’re selling domain names and they’re using domains for lots of different purposes. What I’ve noticed enormously is that many of them don’t have contracts whatsoever. Oh, here’s the domain. Here we’re gonna do this and it’s maybe a two length contract that they’re gonna pay them something. Something like that. Or they just go ahead and they turn around and say alright, I’ll transfer it to you and maybe they’ll use extra.com to transfer it rather than that, just not gonna be any contract. That’s pretty foolish. You should actually get somebody to say, you know I haven’t done anything wrong. I haven’t stolen this domain, let’s say if you’re selling domains.

Monte: Now when you’re referring to clients, you’re saying that, when you’re saying have good contracts to protect you from your clients, are you talking about, let’s say your company and also you want to protect your affiliates? Protect yourself from your affiliates?

Stephen: Right. If you have affiliates, obviously you don’t want your affiliates getting into lawsuits because that’s going to hurt you. Protect them. Get an attorney. Write up a good contract for them to use. You want to have a good contract with your affiliates. You want to have a limitation of damages across the board that if somebody, you know if there’s, the problem here is I can’t say what business someone’s in because obviously it’s every source of business that’s possible. There’s people with content on their web pages and there’s people that don’t have content. There’s people that are doing PPC and there’s people that have affiliates. There’s people, like good example, CEDO which they do a resale of domains. From every single direction, whenever something is done and money is transferred, you really want to have a contract that’s gonna protect you and that’s gonna be molded for that particular situation. It just makes perfect sense. You always want to have a limitation on damages no matter what. You always want to put in what jurisdiction and venue that you think can be done. I always like to turn in, unless your client or you have unlimited money and you don’t mind going to court, put in arbitration clauses in there so that you’re not going to get dragged to court and lose ten times the amount that you could possible have made. What else? Obviously, and I put this down on the list, along the way different countries have very different laws.

Monte: Right. A lot of people ask questions about world trademark law, if there’s such a thing. We talked a little bit about that. We briefly covered, you know how you’re protected in state boundaries and federal boundaries but what happens when you cross the pond?

Stephen: Well there is world trademark law from the point of view in that every single federal, or country has their own trademark law. There is a book called Trademark’s around the World which actually lists them out to a great degree. A lot of the country’s trademark laws are very similar and some of them are not very similar. However, when it comes right down to it, your rights usually start with your use. If you’re the first one that was using the name, then you have particular rights to it. On the other hand, if it’s a big company in that country that’s been using it for many, many years, then you should probably think twice about getting the domain. Again, this is a case by case basis. There is, I was talking to a guy earlier today and he said that he’s been in the domain industry for 9 years and that he’s never been in a lawsuit of any sort because he researches every single domain. Well that’s just basic intelligence.