In theory, choosing a domain name is simple. If it is memorable, pronounceable, short, clever, easily spelled and suggests the nature of the commerce on your website, you've got yourself a winner. But even if your choice is brilliant from a marketing standpoint, it may be worse than foolish from a legal perspective. Your name is at risk if it legally conflicts with any one of the millions of commercial names that already exist. It's a big risk. If you put money and sweat into your website under one domain name and then are forced to give the name up, your Web-based business is likely to suffer a damaging, if not fatal, blow.

Conflicts Under Trademark Law

The rules for understanding whether a legal conflict exists comes from trademark law. Here are the basics you need to understand:

• Names that identify products or services in the marketplace are trademarks.
• Distinctive (clever, memorable) trademarks are protected under federal and state law.
• Distinctive business and domain names usually qualify as trademarks.
• The first commercial user of a trademark owns it in case of a legal conflict with a later user.
• One trademark legally conflicts with another when the use of both is likely to confuse customers about the products or services, or their origin.
• If a legal conflict -- called an infringement -- is found to exist, the later user will have to stop using the mark and may even be held liable to the trademark owner for damages.

Likelihood of Customer Confusion

Applying these principles to your domain name selection, you are at risk of losing your chosen domain name if the owner of an existing trademark convinces a judge or arbitrator that your use of the domain name creates a likelihood of customer confusion. Confusion in this context can mean two different things.

Most commonly, it means that the goods or services a customer buys are different than what the customer intended to buy. For instance, suppose, on the recommendation of a friend, you decide to purchase Lee's famous Flamebrain barbecue sauce, which is sold only on the Web. You intend to type "flamebrain.com" into your browser but accidentally enter "flamerbrain.com" instead. You get a website run by Henry, who has both copied Lee's idea to offer a barbecue sauce for sale on the Web and, with a very minor variation, the name of Lee's sauce. You order two bottles, completely unaware that you ordered the wrong product from the wrong website.