Owning a Domain name

Hands up who thinks that they or their company own one or more domain names?  OK, unless you work for nominet, ICANN or one of the other registrars, put your hands down.  When you ‘purchase’ a domain name, what you are purchasing is a registration that entitles you to use the domain name for a certain period of time.  You are not purchasing the domain name itself which remains owned by the registrar with whom you take out the contract.  This is why domain names are not formally intellectual property (IP), but are instead governed primarily by contract law – you own a contract to use the domain.

This does not mean that domain name registrations do not have many of the properties that you would expect of a piece of intellectual property.  As a prime example, like IP, the registration rights can be bought / sold and they can accrue significant value beyond the face value of the registration especially if it is used to host a website with a significant number of visitors or who has developed a strong brand and reputation in the market place.  Domain registrations are also often transferred as part of the bundle of intangible asset rights along recognized IP (e.g. with a trade mark, a database of users and software code) when an online business is sold.

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Another reason you may have been mistaken in putting up your hand, is because the registration may not be in the entity you expect.  When conducting IP audits, I routinely check the Whois records for the domain names used by the companies that I am auditing and I amazed at the number of times the registered owner is not the company being assessed.  It is very common for the domain registration to be in the name of one of the directors of the company, the web developer who created the website or the webhosting company.  This can cause all sorts of issues. If the registration is not in the name of the company, it cannot be transferred as part of a sale of associated IP and in times of dispute there is a risk that the business will lose control of the domain.  I have supported two clients in the past where this has caused a major disruption and a loss of profits and reputation.  On one occasion, the business fell out with the web-developer who was the registrant of the domain name when an upgrade to the website was quoted for.  In another case, the domain was registered to one of two directors of a company.  The director to whom the domain was registered had a disagreement with the other director and wanted to leave the business.  In both cases, the registered domain owner took the website down or, worse still, hosted content that was detrimental to the business and only the threat of legal of action solved the issues.  I would urge everyone reading this to quickly check the WHOIS records for the domains that they use and update the registration information if required.  

It is also important to understand the relationship that domain name registrations have to trade marks.  For those who do not know, trade marks, are government granted rights to use a specific mark (usually a name or a logo) for particular goods and services.  To be clear, owing a domain registration doesn’t entitle you to use the name contained in the domain name and you may, in fact, be committing trade mark infringement and / or fraud if you use a domain that is similar to a registered trade mark of another company.  A quick search for available domain names shows that I can register microsoftsoftware.org.uk but that doesn’t mean that by registering and using it I am not infringing Microsoft’s trade marks.  In fact, I almost certainly would be and if I used the site to either sell competing software or to earn add revenue before forwarding users to one of Microsoft’s genuine sites, Microsoft could take me to court suing for damages and requesting that the domain name registration be transferred to their company.  This has happened many times in the past, with UK judges declaring that cybersquatting is illegal and that the registered domains are ‘instruments of fraud’.  With this in mind, when selecting a name for a business, you should not just rely on what domain’s are available but instead also check the trade mark database among other things (see my other article on choosing a business name for more detail).

Owning a trade mark, does not, however guarantee that you have rights to the registration of the corresponding domains.  If someone else owns the domain that you require and are not acting fraudulently, you will have to accept that you cannot use that domain or negotiate with the current registrant a fair price to have the domain registration transferred to your company.  In some circumstances it is possible to use a trade mark to prevent the registration of domain names similar to your existing trade mark and those interested in exploring this should examine the ICANN run service, the Trademark clearing house.  

Owners of domain names should however be watchful for fraudulent emails from companies who offer to register obscure domains containing their domain or trade mark wording for excessive prices.  The emails will often claim that the company writing to you have received a request to register these other domains and they are writing to you to check whether this is OK or whether you want to register them yourselves.  This is a scam.  No one is trying register these domains and it is an attempt to persuade you to register domains you neither want nor need for an inflated price. Just because you own, for example, www.abc.com and www.abc.co.uk, it doesn’t mean that you want to spend hundreds of dollars registering www.abc.org.tw or www.abc.cn.   Having said that, it is often a good idea to register domains similar to your brand to prevent others registering them when you grow, but you should do this at your own choice and through a reputable domain name provider, such as 123Reg for normal market prices.

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