In these booming Internet days, domain names are becoming increasingly important. Recent domain name auctions have seen bids in the hundreds of thousands of dollars for key generic domains. A current domain name dispute provides an important lesson for all domain name holders about ensuring that they retain what they have paid for.
This particular dispute involves a company which was established a few years ago. Before the company was established, a future shareholder who was closely involved in establishing the company registered the proposed company name as a domain name. This was a sensible course to take to prevent any opportunistic domain name registrations by those who monitor new company registrations and snap up the corresponding domain with a view to offering it to the new company, for a fee of course.
The company was established and commenced operations. It used the domain name for both its website and its email purposes. The company spent a significant amount of money establishing its website and conducted a substantial amount of its business through its website.
Subsequently, the shareholder and the company/other shareholders had a falling out. The end result was that the key employee/shareholder left the company. Not surprisingly, there were various matters in dispute between the employee and the company/other shareholders. No one remembered (or possibly was even aware) that the now ex-employee was the registered holder of the company’s domain name.
After leaving the company, the ex-employee tried without success to resolve the various disputes which had arisen. After a time, the parties reached a stalemate with neither side willing to make any concessions. When it became apparent to the ex-employee that recourse through legal channels was likely to be expensive and time consuming, he set up a new website and directed the domain hoster to repoint the domain to his website. Because he was registered as the owner of the domain, this was a simple matter to organise. As a result, all enquiries aimed at the company’s website were redirected to his website instead. The company’s email system was also affected.
The company is now in a major dispute with the ex-employee over ownership and rights to the domain name. In the meantime, the company’s business continues to be affected as the ex-employee continues to be listed as the holder of the domain and all web traffic is diverted to the ex-employee’s site. A simple oversight by the company has resulted in considerable business disruption and the need to incur expenses in seeking to obtain a transfer of the domain name from the ex-employee.
What Are The Lessons From The Dispute?
The lessons from the dispute are fairly simple but are worth setting out:
- Ensure all domain names are registered in the name of the company rather than individuals who are associated with the company. Sometimes, it can be easier for the domain names to be in the name of an individual because this avoids the need to provide the necessary proof of authority. However, it can lead to the kind of problems which the above scenario demonstrates.
You can find out whether a particular domain name has already been registered and the identity of the registrant by using search tools of domain registrars accredited by the Internet Corporation for Assigned Names and Numbers (ICANN). Some of these accredited domain registrars may be found at http://www.melbourneit.com.au/, http://www.namescout.com/, http://www.enom.com/.
- Review existing domain names to ensure that they are all registered in the name of the company and not in the name of any employee or, even worse, a consultant or ex-consultant who may have assisted with obtaining the domain names.
- When personnel are leaving the company, particularly personnel involved in the establishment of the company or personnel with responsibility for IT matters, ensure that they sign any necessary transfer forms or attend to any matters required to transfer domain names belonging to the company which have inadvertently (or deliberately) been registered in their name.
These are all reasonably simple measures to take but failing to take them can result in very significant expense and considerable inconvenience.
And while on the subject of domain names, in the course of settling a trade mark dispute recently, a client was required to transfer various domain names to the other party to the dispute. Imagine the client’s surprise when it found a domain name on the list that it had not registered but which was listed as owned by it. A company in the US, Sipence, Inc has apparently been busily registering domain names in the .info space but in the name of the correct owner. Its reasons for doing so are unclear. Dealing with the issue has proved quite difficult. There is not much to be done about this issue apart from being aware that it is happening.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.