Registering Domain Names and Avoiding Common Pitfalls

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.

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