When the risk isn’t worth the return.
Being successful in the domaining industry requires you to take advantage of all sorts of opportunities. Whether you profit from trending news stories, or purchase a valuable domain at a low price in auction, there are plenty of chances for you to capitalize on the right opportunity when it presents itself. While each domain purchase can be considered an investment, given the amount of risk that comes with any purchase, there are some investments that are more risky than others.
When it comes to cybersquatting, or domain squatting, where an individual purchases a domain with the ill intent to profit from another’s trademark, the opportunity isn’t worth the potential consequences.
If you’re infringing on a business’ trademark, there’s always the possibility that a lawsuit can ensue. Whether you’ve purchased a typo version of the trademark, also known as typo squatting, or rushed to register a new product name before the business had the opportunity, you run the risk of entering into a long and unfortunate lawsuit. Not only does this frustrate the company, but it wastes your time because chances are regardless of how many days, weeks, or months you held the name, your return on investment wasn’t nearly enough to cover your time in a legal battle.
When pursuing a new opportunity, your end goal is to earn a profit, but what happens when the domain costs you your investment and then millions of dollars on top of that? Chances are that the revenue you earn on owning the domain will not come close to covering legal fees and any potential fines issued by the court, should it get that far. Many companies that win their UDRP filing often win large sums of money, which can turn into a disastrous payout.
Loss of Domain Assets
Not only do you run the risk of losing hundreds, thousands, or even millions of dollars, but you will also likely lose the domain you have been using in bad faith. So in the end you will have lost much more than your original investment, making what you thought was a genius opportunity a huge flop.