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:

1. 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);
2. The applicant must be a commercial entity, which usually means anAustralian company or an entity with an Australian Business Number;
3. 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.

This is general advice only and has not been prepared with your individual situation or needs in mind. For personalised advice, we highly recommend that you seek professional guidance from a qualified adviser.