“Are Geodomains Worth Less in Light of UDRP Decision?”

Shortly after Mike Berkens posted his article about the Hayward.com UDRP decision going against the domain owner, I received an email asking me, “are Geodomains Worth Less in Light of the Hayward.com UDRP Decision“? In my opinion, the quick answer is that city .com names are almost certainly not worth less and some general (non-legal) feedback is below.

Just like almost every other dictionary word/term has a corresponding trademark owned by a company, geographic locations also share their meaning with companies that have marks. For instance, an apple is a fruit and a generic term, but Apple is also a trademarked brand owned by a computer company. In the case of Hayward.com, Hayward is a city in the state of California, but it is also a term used by a pool company.

If I owned Apple.com, I could certainly sell apple juice, apple pies, and apples. However, if I started selling computer parts, cell phones, or even music, Apple Computer would probably sue me or file a UDRP. Unfortunately for the owner of Hayward.com, when he parked it, the name allegedly had “links offering or leading to pages with links offering goods or services that are competitive with the goods and services offered by Complainant under its HAYWARD Trademark.”

In light of this alone, I really don’t think city .com domain name values are impacted. I can only think of a few that are parked right now, and for the most part, the parked domain names are only parked while awaiting development. I don’t think a lack of development should be construed as bad faith, although a number of UDRP cases have determined that non development and non use can be a strike against the domain owner.

In my opinion, this decision is poor since PPC pages can accidentally show advertising that may infringe on another company’s mark, but I don’t think that necessarily means it was done in bad faith. I know the owner owns other geodomain names, and I don’t believe he intended to monetize it based on another company’s trademark. I do think this case should make geodomain owners cognizant of the fact that parking can put their domain names at greater risk, but I don’t believe it impacts the value (just try buying some city .com names and see the responses you get if you send a low ball offer).

I would be remiss if I didn’t mention one thing that really bothers me in this decision. According to the discussion from the panelists:

Respondent purchased the domain name <hayward.com> for USD$20,000 and was attempting to sell it for at least USD$100,000.   These figures would seem to indicate that Respondent saw some value in this domain name for reasons other than its existence as the name of the city of Hayward, California – with a population of only about 150,000 people, according to the city’s website at http://user.govoutreach.com/hayward/faq.php?cid=10774 – and for purposes other than as a PPC parking page (which, in the normal course, would not be expected to earn a return to justify such a rich investment).

I paid a lot more than $20,000 for a smaller city .com domain name. In fact, I bought and/or sold 4 geodomain names for over $50,000 (two of them for significantly more) in the last 18 months. There is considerable value in geodomain names, especially when they are developed. My primary concern is that these UDRP panelists made an opinion that does not appear to be based on facts or public comparables.

Would I have paid $20,000 for Hayward.com for a city website? Probably. In fact, I sold a comparable California city .com domain name (just under 150,000 residents) for over $65,000. Similarly, my company owns Burbank.com and I previously turned down a cash offer of over $110,000 for it, and Burbank, California is a city with just over 100,000 residents.

I don’t see how UDRP panelists can say that the owner could not expect to return the rich investment of $20,000 for Hayward.com, and more importantly, I don’t think it’s appropriate for panelists to make valuation estimations. In this case, it seems to me that their valuation of city .com domain names is flawed.