© 2000, Deeth Williams Wall LLP. All Rights Reserved. By: Amy-Lynne Williams and Ailbe Flynn (June 21, 2000)
Domain names are now an important part of acquisitions, product launches, trade-mark policing and new businesses. Although domain names are registered for as little as $70.00 (or free in some cases), they are routinely sold for much more. Recent high profile sales include: 1
A domain name purchase generally involves two components:
One issue to consider with a domain name purchase is the relevant transfer rules for the registry which administers the registration of the domain name.
".ca" Domain Name Registry
In Canada, CDNet operated the ".ca" domain name registry since 1987, but responsibility for ".ca" domain names was transferred to the Canadian Internet Registration Authority (CIRA) on December 1, 2000.
".com", ".net" and ".org" Domain Name Registry
Since deregulation, numerous registrars around the world now administer the ".com", ".net" and ".org" domain names. The original registrar, Network Solutions Inc. ("NSI"), continues to administer the transfer of registered domain names. To transfer the domain name, the Registrant must fill out a "Registrant Name Change Agreement Version 3.0 Transfers" and return it to Network Solutions. For fast, 2 day service, $199 must be included with the applicant's Agreement. Regular service is free and takes between 3 to 6 weeks.
Trade-mark searching is recommended before a Purchaser uses a domain name. If the domain name to be acquired is similar or identical to the Purchaser's existing trade-mark, trade-mark searching may not be necessary. However, the Purchaser should, at the very least, canvas the other similar domain names that exist. For example, ABC Manufacturing Inc., a Canadian manufacturer of widgets, may be interested in buying the registered domain name, "abcwidgets.com". Value may be subtracted from "abcwidgets.com" if someone else is using "abc.com", "abcwidgets.net", "abcwidget.com", "abcmanufacturing.org", or a misspelling such as "abbcwidgets.com" or "abcwidjets.com". Where possible, the Purchaser should considering registering misspellings and variations on the domain name to prevent confusion or unscrupulous "copycat" websites. Domain names and registrant records can be found at:
Like any other asset, domain names may be pledged as collateral. Given the often high price tag for some domain name sales, the Purchaser should consider the advisability of conducting security searches, such as under the Personal Property Security Act (PPSA) or the Executions Act, or under the equivalent statutes of the Vendor's jurisdiction.
Acting for the Purchaser
When acting for the Purchaser in a domain name purchase, legal counsel should consider the following issues:
Vendor hereby sells, assigns and transfers to Purchaser all Vendor's rights, title and interest in and to the Domain Name, including any trademarks, service marks, copyrights and other intellectual property rights, whether or not registered, which the Vendor has in the Domain Name and including any goodwill associated with the Domain Name (the "Rights").
- the Vendor is a corporation duly organized and validly existing under the laws of [jurisdiction] and has the corporate power to own and sell the Domain Name in accordance with the terms of this Agreement;
- this Agreement has been duly executed and delivered by the Vendor and constitutes a legal, valid and binding obligation of the Vendor;
- the Vendor is the registrant and sole legal and beneficial owner of the Domain Name and the Domain Name is free and clear from all liens, charges, claims and encumbrances;
- the Vendor is transferring the Domain Name to the Purchaser free and clear from all liens, charges, claims and encumbrances whatsoever, with the intention that henceforth the Purchaser shall be the sole legal and beneficial owner of same;
- the Vendor does not owe any amount to NSI, or any other domain name registration authority, on account of the registration of the Domain Name; and
- the Vendor is not aware of any pending or threatened actions, suits, claims, litigation or proceedings relating to the Domain Name.
The Vendor has not used the Domain Name as a domain name for a website.
The Vendor has operated a website identified as "http ://www.[Domain Name]" ("Website"). The Vendor has operated the Website in compliance with all applicable domestic and foreign laws, rules and regulations. The Vendor has not received any notice that it is, or has at any time been in violation of any law or order applicable to the Website. [Also, an indemnity for claims which arise from the Vendor's operation of the Website may be appropriate].
Vendor will promptly prepare and deliver to the appropriate parties, all forms and other documents necessary or advisable to transfer the Rights and the Domain Name to the Purchaser and any other documents reasonably requested by Purchaser, including without limitation all forms required to be filled out by [Domain Name registrar] in order to transfer the Rights to the Purchaser and any other documents reasonably requested by Purchaser for such purpose.
Acting for the Vendor
Specific issues relating to release of claims and limits on liability may be appropriate.
Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.
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