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Domain Name Legal Issues
  Welcome to our new Domain Name Legal Resources page!

The business of domain names is inextricably linked to the field of trademark law. To help bridge the gap between the two, we've provided this page as an introduction to the legal issues surrounding domain name ownership rights and domain name buying and selling. In addition, you can find resources to meet a variety of domain name legal challenges, such as links to the domain name organizations, domain name dispute arbitrators, domain sales and lease contracts, a domain escrow service, and trademark research.

Please note that this page does not constitute professional legal advice, and is intended for informational purposes only!

 

 
 
The Legalities of Buying and Selling Domain Names
 

The public conception still contains many misunderstandings regarding the legalities of buying and selling domain names. Many people have heard stories of malicious "cybersquatters" who deliberately register company names and then demand outrageous sums as a ransom for their return. Regrettably, these few bad eggs have sufficed to give the entire industry a lingering bad reputation, even though their activities have since been brought under control by more up-to-date legislation. One thing is clear, and that's that domain name disputes are never as simple as they may appear.

The important thing is to know that buying and selling domain names is perfectly legal, as long as the domain being sold does not infringe on the trademark rights of a third party. Today, the vast majority of domain investors operate within this legally-acceptable territory. However, in some cases a domain owner is unaware of, or chooses to ignore, the legal constraints. Fortunately, in these cases, a trademark holder has numerous channels for addressing their ownership dispute. These resources are described below.

Domain name sellers should be aware that it is their responsibility to ensure that their domain name is free from possible trademark infringements before listing it for sale. Ignorance of the law is no excuse! Use the links and information provided here to inform yourself about your rights and the legalities governing domain name ownership to reduce the risk that you will lose your domain.

Trademark holders should be aware that possessing a trademark for a given term does not automatically mean that you have a legitimate legal claim to a domain name. Possession of a valid trademark is only one of three requirements that you need to meet to win ownership of a domain name via ICANN's Uniform Dispute Resolution Policy (UDRP), the policy governing ownership disputes for the generic TLDs (.com, .net, .org, .biz, and .info) or the U.S. Anticybersquatting Consumer Protection Act (15 U.S.C. sec. 1125).

Just as important are the requirements that (1) the domain registrant have no legitimate interests in the domain and that (2) they evidenced bad faith in registering the domain. Both elements require evidence beyond the mere registration of a domain. Please take the time to inform yourself about the UDRP and other legalities governing domain names using the resources provided below.

Before you make a complaint, make sure that you have consulted a qualified trademark attorney with experience in domain names. Legal disputes should generally be considered a last option: the cost for a UDRP case is $1,500 plus legal expenses, and there is no guarantee that you will win (for a complete schedule of UDRP fees, click here).

If you sue and lose, your chances of then being able to purchase the domain from the current owner is greatly reduced. In addition, frivolous UDRP claims against domain owners can result in a finding of reverse domain hijacking - a practice in which trademark holders engage in a bad-faith attempt to use the UDRP to wrongfully strip the legitimate registrant and user of a desired domain name simply because the complainant holds a trademark in that name or one similar to it.

Domain Name Legal Resources

Uniform Domain Name Dispute Resolution Policy

(the entire UDRP can be found here)

4. Mandatory Administrative Proceeding.

  1. Applicable Disputes. You are required to submit to a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of Procedure, that
    1. your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
    2. you have no rights or legitimate interests in respect of the domain name; and
    3. your domain name has been registered and is being used in bad faith.

    In the administrative proceeding, the complainant must prove that each of these three elements are present.

  2. Evidence of Registration and Use in Bad Faith. For the purposes of Paragraph 4(a)(iii), the following circumstances, in particular but without limitation, if found by the Panel to be present, shall be evidence of the registration and use of a domain name in bad faith:
    1. circumstances indicating that you have registered or you have acquired the domain name primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of your documented out-of-pocket costs directly related to the domain name; or
    2. you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct; or
    3. you have registered the domain name primarily for the purpose of disrupting the business of a competitor; or
    4. by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant's mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location.
  3. How to Demonstrate Your Rights to and Legitimate Interests in the Domain Name in Responding to a Complaint. When you receive a complaint, you should refer to Paragraph 5 of the Rules of Procedure in determining how your response should be prepared. Any of the following circumstances, in particular but without limitation, if found by the Panel to be proved based on its evaluation of all evidence presented, shall demonstrate your rights or legitimate interests to the domain name for purposes of Paragraph 4(a)(ii):
    1. before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or
    2. you (as an inpidual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or
    3. you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly pert consumers or to tarnish the trademark or service mark at issue.

Uniform Domain Name Dispute Resolution Policy

Internet Corporation for Assigned Names and Numbers (ICANN)

UDRP ArbitratorsDomain Name News

Sample UDRP decisions:

Reverse Hijacking Cases:

Sample Decisions Finding Reverse Domain Hijacking

  • KIWI.com
  • SMARTDESIGN.com
    • Smart Design LLC v. Hughes, WIPO Case No. D2000-0993 (Oct. 18, 2000).
      • "Allegations of bad faith are serious allegations. They should not be made lightly. That Complaints under the Policy can only succeed in cases of bad faith registration and use demonstrates the narrow ambitof the Policy. Doubtful disputes have to be resolved elsewhere. The Panel is well aware that there is a tendency for some trade mark owners to hold extravagant views as to their legitimate rights and to hold excessive views as to the motives of those whom they believe to be infringers, but that is no excuse for making wild allegations of bad faith."
  • GOLDLINE.com
    • Goldline International, Inc. v. Gold Line, WIPO Case No. D2000-1151 (Jan. 4, 2001).
      • "Taking account of the complainant's delay in bringing its claim and apparent initial acknowledgement that the respondent was the bona fide owner of the domain name, the Panel ruled that it was unreasonable for the complainant to have brought the complaint given the objective unlikelihood of success. In other words, bad faith was found to encompass both malicious intent and recklessness or knowing disregard of the likelihood that the respondent possessed legitimate interests."

More Information on Reverse Domain Hijacking



 
  Domain Name Escrow
Domain Sale or Lease Contracts
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Help guard against fraud or accidental loss by securing your domain name transfer with Domibay's Domain Name Escrow/ Transfer Service.

Escrow service includes sales contracts and Domibay's personal assistance with the domain name's technical transfer.

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To assist with your domain transactions, ICDomains offers the following contracts, prepared by legal professionals with expertise in domain name law.

(Note that all transactions using Domibay's Domain Escrow Service include a domain sales contract free of charge).

Sales and Escrow Agreement



 

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