Domain Names in the context of a business sale
Websites are a keystone of many modern businesses. While some websites are simple ‘brochures’ that just describe goods or services, in other cases a website may be the essential element of the business itself.
The clean and appealing look of modern websites often bely their legal complexity. They embody a number of legal concepts, rights and assets, including:
- Domain Names: what is the basis of a business’ right to use a particular internet address?
- Web Hosting: does the business use a webhosting company to store its website on its servers?
- Software: does the website include software owned or licensed by third parties?
- Copyright: who owns the copyright to videos, images and other material posted to the website?
- Privacy: does the website collect personal or sensitive information?
Domain Names
Although you may think that your business “owns” its domain name, in reality a domain name is a licence.
In other words, your rights to that domain name are not absolute. They are set out in a contract with the relevant registrar, with that contract including standards terms regarding issues such as transfers, eligibility and dispute resolution.
Eligibility
The question of eligibility is significant. An entity – whether that’s the current owner of the business, or even a prospective purchaser – must be eligible before it can license a domain name.
Under the licensing rules maintained by .au Domain Administration, which is the regulatory body for the .au domain, a person must meet various criteria in order to apply for a “com.au” or “net.au” domain name.
In summary:
- the applicant must have an Australian presence. Typically, this means a person that is an Australian citizen or permanent resident, or a company registered under the Corporations Act (although various other entities and bodies will qualify);
- the applicant must be a commercial entity, which usually means an Australian company or an entity with an Australian Business Number;
- the domain name must be:
- a match, or an acronym, for the applicant’s company, business or personal name;
- a match for an Australian trade mark;
- a match or acronym for a related company;
- a match or acronym for a partnership; or
- a match or synonym for services, goods, events or premises sold or operated by the applicant.
At first blush, these criteria may seem straightforward, however it should not be assumed that a business will always be eligible to register the domain names that it wants.
For instance, where a party is transferee to a domain name that is based on a registered trade mark, it may be ineligible for that domain name unless the relevant trade mark is also transferred to that party.
As such, care should be taken any time a party applies for, or seeks to transfer, a domain name. This is particularly so in the context of a business sale.
Aintree Group Legal will be happy to discuss all of your commercial law needs. Contact us today.
