Registering domain names seems quick and easy - but there are some potential pitfalls which can later cause considerable inconvenience and expense.
A cautionary tale...
A client company orally instructed an agent to set up its website, including registration of domain names and hosting arrangements. The agent registered a key domain name with one registrar, paying a two-year registration fee; this registrar also hosted the website. The registration was initially in the name of the agent, using its contact details, but the registration was subsequently transferred to the company - but without changing the contact details. The hosting arrangements were separately transferred to another internet service provider (ISP) - but the domain name was left with the original registrar.
The client company did not realise when the two-year period expired as it did not receive any of the registrar's reminders. Consequently the £60 domain name renewal fee was not paid, the registration lapsed and the domain name was promptly re-registered by an individual based in the Far East. The client company had not registered a trade mark incorporating the domain name and in the particular circumstances a passing off claim could not be brought. The client was forced to pay the new registrant a sum for recovering its domain name.
Luckily in this case, the figure involved was not enormous, but the sums demanded can be extremely high, particularly if the potential case against the new registrant is not that strong and he is well informed about the costs for the old registrant of resorting to litigation.
Lessons to be learned
- Ownership of the domain name
It is important that the domain name is registered in the correct name of the intended owner. Difficulties may arise if domain names are registered in the name of the employee who is responsible for the website. If the employee subsequently leaves with a grievance, the company may face significant costs to recover the domain name. A well informed ex-employee may realise that the cost of bringing proceedings or activating dispute resolution procedures could be significant, out-weighing a well-pitched offer. The company may have no commercial choice but reluctantly to pay the price offered rather than incurring potentially irrecoverable legal costs. Even if the employee leaves on good terms, there may be logistical difficulties in arranging a transfer to the company eg on a sale of the company or its business.
Similar problems may arise if the domain name is registered in the name of the website designer or another agent engaged by the company. All intellectual property created by the designer should be owned by the company - the domain name should be registered in the company's name and other intellectual property should be transferred to the company by a short written assignment signed by the designer.
The full name of any corporate owner (including Limited or Plc) should be used, to avoid confusion with other group companies or divisions.
- Ensure administrative, technical and billing contacts are correct and updated regularly
The administrative contact is the person to whom issues regarding any modifications to the domain name should be addressed. The billing contact is the person to whom invoices and any reminder notices are sent.
The technical contact is the entity hosting the website using the domain name.
A registrar (also called the registration agent by Nominet) is the organisation with which a domain name is registered, which may be an ISP, a domain name reseller or just a company that specialises in registering domain names. The registrar will usually send reminder notice(s) to registrants (owners of domain names for the period of registration) warning that a particular domain name is nearing the end of its registration period. These reminders are usually sent by email to the billing contact; the registrar may also send a letter to any address specified.
Consider whether it is better to specify a named individual or a title/general email address. If sent to an individual who has left or is otherwise not there to check emails, the company may not be aware when the domain name needs renewal. If sent to a title/general email address, ensure that this inbox is checked regularly.
If you have a number of domain names, it is probably sensible to have the same contacts responsible for all domain names.
You can check contact details for your domain names with your registrars or by carrying out a ‘WHOIS’ search on one of the many websites which provide this search facility eg: http://www.idr.co.uk/ (covering all top level domains (TLDs) and country level domain names eg .co.uk); or http://www.internic.net/whois.html (for information on TLDs only ie aero, .arpa, .biz, .com, .coop, .edu, .info, .int, .museum, .net, and .org)
- Make a diary note of renewal dates
Although the registrar will usually send reminder notices to the registrant about renewal dates, it is unlikely to be obliged to do so under its terms and conditions. Some registrars may seek to exclude liability for non-renewal by the registrant. Some registrars also cap their liability, at a figure which may be insufficient to cover the costs of recovering a domain name even if the owner can establish liability.
- Consider whether to register the domain name for periods longer than the minimum
If the domain name is important to your business, paying a fee for say 6 years or more may be sensible and your registrar may also offer a discount for registering names for longer periods. Some registrars offer initial periods of registration of up to 10 years.
- Consider paying renewal notices by direct debit to ensure automatic payment
- Ensure arrangements with agents are clear and in writing
In our cautionary tale, there was no written record of the arrangements between the company and its agent. The company assumed that the new registrar which took over the hosting arrangements would also deal with the domain name but did not make this clear to the agent, and it was not clear whether the agent or the company was responsible for ensuring that the renewal fees were paid. When the domain name lapsed, a dispute arose as to the scope of the agent's obligations and its liability to reimburse the company for costs incurred in recovering the domain name.
- Changing registrars
It is probably simplest to have all domain names in your portfolio registered with one ISP registrar. When an existing domain name is transferred from one owner to another, it may also be appropriate to change the registrar. The procedure for doing this varies according to the registrar(s) involved. The terms and conditions of many registrars prohibit any change of registrar within a certain period following registration or transfer to them, in which case the new owner needs to make a diary note to ensure that the registrar is changed as soon as this is possible.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.