Key Points:
Businesses should act now to protect themselves from changes which will make cybersquatting easier.
From 1 June 2008, you will be able to transfer .au domain names (such as .com.au, .net.au and .org.au) "for any reason".
Although this change will rid the .au transfer process of red tape, it will invariably make it easier for cybersquatters and domain name traders to ply their trade with Australian domain names, but there are ways to protect yourself now.
Who owns a domain name?
Domain names are not property assets. A domain name holder does not "own" their domain name. Instead, holders have a licence to use the domain name for a specified period subject to the domain name administrator's policies and the policies of the ‘registrar’ through which the domain name was registered.
Under the current (soon to be changed) policies of the Australian domain name administrator (auDA), licences for .au domain names can only be transferred in limited circumstances; for example, where the transfer is to the purchaser of a business, the assignee of related intellectual property (such as a registered trade mark), or to a related company.
What are the new rules?
Although the wording of the new .au domain name transfer policy has not been released, auDA has revealed some of the features of the proposed policy:
- Domain names cannot be registered for the sole purpose of resale or transfer.
- Domain names cannot be transferred for six months after the initial registration (although domain names can be transferred at any time if they were previously renewed or transferred).
- After the initial six-month period, domain name licences can be freely offered for sale/transfer by any means (including in public advertisements, on domain name brokerage websites or by contacting a potential buyer directly).
- The relevant registrar may charge a transfer fee.
- Parties to a transfer will be encouraged to disclose the sale method and price, on a voluntary and confidential basis.
Why is this good news for cybersquatters and domain name traders?
A cybersquatter registers and uses (and often offers to sell/transfer) a domain name licence with the intention of profiting from the goodwill in the name or trade mark of a successful business. They select domain names that are the same as, or similar to, well-known names or trade marks.
A domain name trader looks to acquire and dispose of domain name licences for profit. A trader may choose domain names that are not initially well known, but which will become more valuable over time. These are largely generic names relating to a popular industry or field (such as gambling or business), so not all domain name traders are true cybersquatters.
Although it is not the intention of the new rules, any change that makes it easier to advertise and transfer domain names will be welcomed by cybersquatters and domain name traders.
While the .au transfer process will have mechanisms post 1 June 2008 that discourage the free use of the process by cybersquatters and traders, the reality is that a moderately sophisticated and dishonest player will probably be able to largely subvert those mechanisms. For example:
- Although the eligibility criteria to obtain a .au domain name licence will not change (for example, to obtain a .com.au domain, you must hold a relevantly associated trade mark or name or otherwise be sufficiently connected with the domain name), they have never been an effective barrier to cybersquatters and domain traders: to obtain a .com.au domain licence for "internetdating.com.au", all you have to do is register a Victorian business name for "Internet Dating", which is fairly easy.
- We doubt whether any cybersquatters and domain name traders will admit to registering a domain name "for the sole purpose of resale or transfer" (or leave any evidence which suggests that is their intention). Anyway, it's fairly easy to avoid the "sole purpose" hurdle by registering a domain for multiple purposes, even if the main purpose is to sell or transfer the domain.
- The six-month transfer ban will at best slow down the activities of cybersquatters and domain name traders. In addition, given this restriction will not apply to pre-existing domains, don't be surprised if there is a flurry of new "dodgy" domain name registrations before 1 June 2008.
What should ‘real’ businesses do now?
- Build your outer defences. It is generally easier (and less expensive) to keep cybersquatters and domain name traders off your turf, rather than fight them when they intrude. Accordingly, make sure your domain name portfolio is up to date (including by registering any domain names that feature your key trade marks and names) and reflects the risk of attack. Your most valuable trade marks and names should have the broadest domain name portfolio, including the most likely abbreviations.
- Build up your inner defences. The more successful your business (particularly if it is focused on end consumers), the more likely a cybersquatter will attempt to obtain a domain name of concern (no matter how broad your defensive domain name portfolio). The broader the trade mark registrations you have (at least in Australia) for relevant names and brands, the more likely it is you can defeat the cybersquatter (either in court or via the .au Dispute Resolution Policy) without paying their requested transfer price.
- Post 1 June 2008, monitor publications such as newspapers and online trading sites for .au domain names that are relevant to your business and which are being publicly offered for sale/transfer. If the price is low enough, you may want to secure the name and take it no further. If the price is too high, consider if you have legal rights to secure the domain in another way.
- Consider your other domain name portfolios outside the Australian domain. Do your .com or .net portfolios need updating? The eligibility criteria and transfer rules relating to .com and .net (and other generic domains) are generally less strict than those relating to the .au domain, so if your business has an international scope you should consider bolstering those portfolios.
For further information, please contact Chris McLeod and
Daryl Cox.
