Domain Tasting At Your Trademark's Expense

As a trademark owner, you have spent a considerable amount of time and money in promoting and creating value in your trademark. The value a trademark develops over time, commonly referred to as "goodwill," is difficult to quantify. However, as a trademark owner you are certain that the years of sweat equity have resulted in a trademark that stands for quality and which distinctly identify your company as the source of those goods or services.

However, the popularity of the Internet over the past decade has proven to be the most challenging for trademark owners. Most recently, the biggest challenge has come from the practice of Domain Tasting. Domain Tasting is a practice conducted by some which, although legal, allows domain registrars to profit from pay-per-click advertising. It works like this: Domain Tasters purchase thousands of Internet domain names and fill them with advertisements which are provided by Google and Yahoo! An unwitting Internet surfer will find one of these domain names and once on that particular website they will click on a particular advertisement. Each time the Internet surfer clicks on one of these advertisements, the Domain Taster earns revenue. What is the problem with this? Sounds like a great way to make money, right?

There are essentially two problems for a legitimate trademark owner. For instance, let's say that you own the trademark "XEROX". You have for the past several decades spent millions of dollars developing that trademark. As such, it stands to reason that you should benefit financially from creating and maintaining that trademark's goodwill. A Domain Taster may purchase www.zerox.com or www.xeroxx.com and fill it with advertisements. An Internet surfer legitimately searching for copiers may mistakenly misspell XEROX and in fact reach the www.xeroxx.com website. Once there, the web surfer will find many advertisements for a host of copiers and printers from various manufacturers. The web surfer may then decide to click on an advertisement for MINOLTA or even CANON. Each click will in turn result in the Domain Taster receiving revenues from the search engines that provide the advertisements to be displayed. While each click may not result in a lot of revenue, the clicks are multiplied by the thousands. Okay, by now you should begin to start feeling that this practice, while legal, is a little unsavory. Well guess what? It gets worse.

Due to loopholes in the policies that govern the registration of domain names. About six years ago, the main organization that oversees and regulates domain names, ICANN, created a policy of allowing domain registrars to return registered domain names for a full refund within a five day grace period. This essentially opened the door for Domain Tasters to purchase thousands of domain names at about $8.00 each, "taste" the domain's traffic capabilities (click through to advertisements), and then return the domain names for a full refund. The Domain Tasters make 100% profit. Their sole business model is to exploit the goodwill of legitimate trademark owners.

There is a handful of opponents of this practice that are currently attempting to do away with the grace period and to attack companies that solely operate as Domain Tasters. How the practice will change in the future remains to be seen.

Frank Herrera
Trademark Headquarters