Are you sitting on a hoard of potentially valuable .au domain names that you no longer use? Do you secretly covet a .au domain name held by someone else? You may be able to benefit from an upcoming change in the policies governing the transfer of .au domain names.
Changes to the transfer policy
The Australian domain name administrator, auDA has approved a policy change to relax the Transfers (Change of Registrant) Policy (the "Transfer Policy"). This will allow a registrant to transfer their domain name licence to another eligible entity, for any reason. The new policy will come into effect on 1 June 2008.
A registrant of a domain name is not the owner of the domain name itself but the owner of an exclusive licence to use that domain name for so long as the registration fees are paid by the registrant.
As a means of controlling the sale and use of .au domain names, auDA has imposed restrictions on the circumstances upon which a registrant may transfer its licence to a third party. Currently, a domain name licence may only be transferred to a new registrant in limited circumstances, including the sale of a business, the assignment of intellectual property rights, a transfer to another group entity, a transfer as part of a deed of settlement, or upon a Court order.
The Transfer Policy, therefore, precludes the simple sale or transfer of a domain name licence to an arm's length third party.
The new policy will relax the current Transfer Policy. The following key features of the new policy have been announced:
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domain names may not be registered for the sole purpose of resale or transfer to a third party;
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domain names may not be simply sold and transferred (otherwise than, one assumes, in connection with the sale of a business etc) for the first six months after their initial registration;
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after the initial six month period, domain names may be offered for sale or transfer by any means;
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transfers will be processed by the registrar of record using a standard transfer form – the registrar may charge a transfer fee; and
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the parties will be asked to disclose the sale method and price, so auDA may collect data to improve access to market information for buyers and sellers. This disclosure will be on a voluntary and confidential basis.
In other jurisdictions, notably the US and the UK, the sale and transfer of domain names is largely unrestricted. This has led to both problems with cyber squatters, and domain name licences being transferred for large sums by those registering domain names solely for the purpose of resale.
It is anticipated that the new transfer policy being introduced by auDA will not lead to an increase in cyber squatting as the policy will remain that a domain name must at all times (i.e. at the time of registration, and as an ongoing condition of the licence) either:
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exactly match, be an acronym or abbreviation of, the registrant’s company or trading name, organisation or association name, or trade mark; or
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be otherwise closely and substantially connected to the registrant
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If the eligibility criteria are not met, then the initial registration of the domain name will not be permitted.
These criteria will likely also limit the ability of registrants to speculatively acquire domain name licences for the sole purpose of reselling them for a high price. Registration for the sole purpose of resale or transfer will not be permitted.
What does this means for current .au domain name registrants
If you have a domain name that you wish to sell or transfer for any reason, you maybe able to advertise it for sale. Care should be taken, however, if targeting particular potential buyers as, depending upon any amendments that are made to auDA’s Dispute Resolution Policy, this could potentially be seen as registration or use in bad faith, particularly if the domain name has a close or substantial connection with the party you hope to sell it to.
Under the current Dispute Resolution Policy, evidence of bad faith includes:
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circumstances indicating that you have acquired the domain name primarily for the purpose of selling it for a profit; or
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registration of the domain name to prevent a trade mark owner from being able to obtain it, or to disrupt another's business.
It remains to be seen how the Dispute Resolution Policy will be interpreted in light of the new Transfer Policy.
The relaxation of the Transfer Policy could, however, enable the easy sale of domain name licences for generic domain names.
What does this mean for potential purchasers of .au domain names that are already registered?
The new policy will make it easier to approach the current registrant of a .au domain name and effect a transfer of that domain name licence. The sale will not need to fit within one of the permitted circumstances of transfer that are set out in the current Transfer Policy.
What does this mean for the on-sale of purchased domain names?
Whilst the new policy does not permit the registration of domain names for the sole purpose of resale or transfer, it may make it easier to buy domain name licences for onsale, provided legitimate use, or intention to use could be demonstrated prior to offering it for sale.
The licence conditions will, in any event, likely limit the domain name licences that a purchaser can buy. Unless the purchaser can show a close or substantial connection to the domain name, the licence acquired will be vulnerable to attack. This would appear to limit the scope for purchasers to run businesses wholly based upon the resale of domain names, particularly on the scale seen for .com domain names.
In any event, .au domain names are generally less valuable than their .com equivalents and are unlikely, any time soon, to sell at price levels seen for some .com domain names. In March 2008, Fund.com Inc purchased the domain name licence for fund.com for almost US$10 million. The author is not aware of any .au domain names being valued at anywhere near this figure.
Final thoughts
The exact wording and implementation of the new transfer policy remains to be seen. It appears, however, that the proposed changes will ease the current restrictions on the sale and transfer of .au domain names. The changes should certainly assist consenting parties to deal more freely in domain names but this author would be surprised to see the resale of .au domain names become big business.
If you have any questions regarding the proposed changes and the sale or transfer of domain names, please contact Michael Sutton at michael.sutton@dibbsbarker.com.au.
Michael Sutton, Senior Associate
IP & Technology Group
E: michael.sutton@dibbsbarker.com
