One of the considerations domain investors need to make when buying a domain name is the legal risk. For some domain names such as clear trademark typos, the risk is obvious and great. For others such as keyword and short acronym domain names, the risk is lower.
Regardless of the type of domain name that is owned, I think there is always some level of legal risk, and domain investors need to consider the legal risk before making a domain name purchase. They also need to consider the legal risk before making use of their domain name, as the usage could be cause problems.
Even if the chance of success is low, companies can file a UDRP pretty easily and at a relativelylow cost. A domain investor would likely have to spend quite a bit of money to defend their asset. Even if the domain owner wins, he still has to pay the legal defense fees. In addition to the UDRP risk, there is also the risk of litigation. Some companies would rather not waste time with a UDRP and will file a lawsuit instead. A lost cybersquatting lawsuit can be very expensive and defending the lawsuit is also expensive.
Even though the likelihood of legal issues is relatively slim for most domain names, the risk should still be taken into consideration when buying a domain name.
I think it is important to know of a good attorney in case one is needed. Last week at The Domain Conference, I had the opportunity to chat with two domain name industry lawyers with stellar reputations in the field – John Berryhill and Stevan Lieberman. There are other well respected domain name lawyers as well. Knowing a good attorney is important in the event of a UDRP, lawsuit, or even the receipt of a cease and desist or demand letter. Legal fees aren’t cheap, but using a good attorney at the outset of an issue can lower overall costs and help resolve a situation with as little damage as possible.
No matter what business you are in, there is some legal risk. I think domain investors need to be mindful of this risk, even if their domain names are generic.