THE DOMAIN NAME TRANSFER AGREEMENT

IVAN HOFFMAN, B.A., J.D.



        Here is the scenario:  one party, the Registrant, has reserved a domain name that arguably is an infringement on the trademark rights of another party, the Claimant.  These rights are either rights derived from the federal registration of a mark or rights in trademark (see “Julia, Jimi and Cybersquatting: An Update”).  The Claimant has a number of choices in terms of its course of conduct: it can either file a claim under the Uniform Domain Dispute Resolution Policy (“UDRP”), a federal litigation under the Anticybersquatting Consumer Protection Act (“ACPA”) or the Lanham Act, or it can make a deal with the Registrant to acquire the domain to avoid the costs and uncertainties of any claim or litigation and to obtain the benefits a deal can offer that a civil action cannot.

        If the Claimant and Registrant choose a deal, then these are among the issues that should be addressed in any such agreement.

        1. The domain name registrar should be identified.  Since there are now a number of companies authorized to register domains, this is important since there will have to be follow on paperwork filed with the registrar transferring the actual domain to the Claimant’s server.

        2. The price paid must be set forth.   While this seems self-evident, the actual mechanics of payment are often not so self-evident and should be negotiated.  There are several choices.

a. Once the domain is actually transferred on the records of the registrar, the Registrant loses all leverage if the Claimant elects not to pay the Registrant.  All the Registrant is left with is a lawsuit to collect the money and/or rescission or other similar claims.  And since contracts are supposed to solve more problems than they create, if this very important provision is not covered with precision, the Registrant may be out of luck.

b. The Claimant can be required to pay all the money before the transfer is made on the records of the Registrant.  Obviously, this would be unsatisfactory from the Claimant’s standpoint since one the Claimant pays the money, the Claimant has little leverage to compel the Registrant to transfer the domain, save a lawsuit as above.

c. An escrow can be established whereby the Claimant deposits the money and the Registrant deposits a fully executed transfer agreement as required by the registrar and then both are exchanged simultaneously.

d. As an alternative to the procedure in c, the Claimant can pay a portion of the purchase price to the Registrant as a good faith deposit and the balance can be paid when the actual transfer agreement is fully signed.  This requires some trust on both sides of the deal in truth, every contract requires this element since a contract is only a piece of paper and not self-executing.

        3. Duties on the Part of the Registrant.  It should be stated that within a finite and short period of time (say 24 hours) from the signing of the agreement between the parties, the Registrant will fill out and submit to the registrar the appropriate documentation for the transfer of the domain to the Claimant’s server.  In this regard, the agreement ought to state what the DNS numbers are and who the administrative, technical and billing contacts are to be so that there is no misunderstandings.  It should be further stated that the Registrant will cooperate with the Claimant in effectuating the transfer including that the Registrant will execute all papers etc.

        4. Grant of Rights.  The Registrant should make an express grant of all rights of every kind, nature and description in and to the domain and all rights related to the domain.

a. There is a line of cases that say that in order to transfer rights of copyright, the agreement must expressly mention the word “copyright.”  Thus, while domain names are probably not copyrightable, this should be included as well.

b. There should be an express transfer of all rights of trademark including an express statement that all “goodwill” is also being transferred since a transfer of a trademark without a concurrent transfer of the goodwill associated with the mark, is generally not valid.  If the Registrant has used the domain in other areas of the Registrant’s business, the grant of rights should specifically mention that the transfer includes a transfer of all these other rights and uses as well.

c. One of the more contentious issues is the basis for the grant or transfer.  If indeed the agreement uses the word “grant,” then it may be that the Registrant is making an implied (or if the agreement specifically deals with the topic of warranties, an express) grant of rights.  This would mean that if the Registrant does not in fact own any rights to the mark, including the domain, the Registrant may be held to have warranted that it did and in the event some third party makes a claim against the mark and/or domain, the Registrant may be liable to the Claimant.  Thus, from a Registrant’s standpoint, the transfer should be on a “quitclaim basis only.”  This term means that the Registrant is not claiming that it in fact owns any rights to the mark and/or domain but is simply transferring the domain and any rights it may own, whatever those rights may be.  This would then protect the Registrant from the Claimant coming back to the Registrant in the event of any third party claims.

d. The Registrant should agree not to adopt any similar or related names to the domain and/or mark in the future and should agree not to contest the validity of the Claimant’s mark at any time.  This is one of the significant advantages of making a deal rather than filing a claim under the UDRP or a litigation under ACPA or the Lanham Act.

e. The Registrant should warrant that it does not know of any third party claims made against the domain.  This is important especially in the case of a quitclaim transfer since the Claimant should not be “sandbagged” with a claim of which it was not aware but which the Registrant knew, since the Registrant would have been the recipient of such third party claim

        5. Miscellaneous Provisions. The parties should mutually agree to confidentiality. The Claimant should agree to release the Registrant from any and all past claims related to the domain, the mark and the like.  There should also be a choice of law and a venue provision regarding disputes related to this agreement.

Conclusion

        There generally are other provisions that should be included but I have merely covered the highlights.

        I have been at both the litigation table and the negotiation table and the latter is almost always preferable.  Not only because making a deal saves money but because the parties can bring a full resolution to the matter.

        At least if the transfer agreement is thorough enough!

© 2001 Ivan Hoffman

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This article is not intended as a substitute for legal advice.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  You should consult with an attorney familiar with the issues and the laws.
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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.

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