February 13, 2007; 01:36 AM
DomainMart, a leading provider of quantitative and analytical domain
name services, released today a study recommending that IP owners adopt
a cooperative strategy with regard to domain name owners who are
potentially infringing on their brand names.
The study points out that companies have adopted two diametrically
opposite approaches to dealing with domain name owners infringing on
their IP, namely, to either take aggressive legal action or do nothing.
It argues that both these approaches destroy shareholder value.
"Due to inefficiencies in the initial domain name allocation mechanism,
companies cannot and should not try to acquire all the relevant domain
names," says Alex Tajirian, DomainMart CEO.
Instead, the study recommends that companies "open them up" for
development. This will create shareholder value through better
utilization of scarce resources and improvement of the domain name
The sited sources of shareholder value destruction under the current legal regime are as follows:
(1) The intrinsic value of a domain name can be broken down into two
components: captured value and wasted value. The latter occurs when it
is not put to its best use, i.e., when visitors' intent is not
congruent with the site's content. Thus, decreasing waste increases
(2) Legal action is expensive to enforce.
(3) Companies that are not taking any action to enforce their IP are
also losing value by relinquishing the revenues that their IP is
generating to the owners and by being exposed to brand value dilution
through the content of the associated website.
(4) A protectionist strategy by a hub creates an unhealthy ecosystem
by reducing diversity, limiting consumer choices, and stifling
innovation. On the other hand, a healthy ecosystem benefits the hub.
The study makes the following concluding remarks: no matter what a
company's IP enforcement strategy formulation process is, it should be
coordinated among the marketing, IP management, and legal departments;
and instead of adopting a legal protectionist strategy, IP owners
should adopt a cooperative strategy that increases shareholder value
and improves the domain name ecosystem.
DomainMart is an industry leader in providing ecommerce products and
consulting services, including appraisal, escrow, private investment
management funds, protection, valuation and parking traffic
monetization management since 1996.
For more information, please visit http://www.domainmart.com/news/Don't_Litigate_Open_Them_Up.htm or
contact: Tom Saitori, Marketing Specialist, DomainMart, Tel: +1 (415) 905-4234