In 1999, eCompanies, Inc. purchased the domain name ‘business.com’ for 7.5 million dollars. At the time, it was the most ever spent on purchasing a domain name. If eCompanies had spent that money on a new office building or hot air balloon rides for all its employees, everyone would have a pretty clear picture on what the company got for its money. It didn’t, and everyone doesn’t.
This article provides some brief discussion of what it means to own a domain name, and why most people (even many experts) get confused when they talk about domain name ownership.
When you purchase a Domain Name from Dyn or another registrar you obtain certain rights in relationship to that Domain Name. These rights are created by the contract that you enter into when purchasing the domain name and are restricted by common (or court made) law and statutory (or government made) law.
Many people get confused when they purchase a Domain Name because they think the rights they have in relationship to that Domain Name are the same ones they have when they purchase a product or a good (like a cell phone or a computer).
This is not the case. When you purchase a Domain Name, you are not purchasing a product or good. Rather, you are purchasing the right to receive particular service over a particular period. In many senses, the service you purchase when you register (a more accurate term than purchase) a Domain Name is similar to hiring a temp secretary to answer your phone set amount of time.
This distinction is important because it means that: (a) the ability to control the registrar that is providing the service (i.e., the secretary), and not a Domain Name, is really the sum total of what you own and (b) that once you stop paying for the service, what you owned ceases to exist.
In the most basic terms, when you purchase a domain name registration from a registrar, you purchase the right to tell that registrar (who will tell the rest of the Internet) what computer to send people to when they type the domain name you registered into their Internet browser. In technical terms, you are hiring DNS Inc. to be the registrar that will receive Internet queries for your Domain Name and route the requesting computer to the IP address designated by the Domain Name registrant. In less technical terms, and by way of analogy, it is like you are hiring DNS Inc. to be the secretary that will receive your phone calls and forward the caller to the phone number you told us you could be reached at.
Before discussing more specifically the contract, common law, and statutory law that bear upon this service relationship, it is important to highlight the vital role of authentication in this context. Given that what you are purchasing is a service, it is easy to understand why it is so important for a registrar (e.g., DNS Inc.) to be so careful about whom it takes orders from regarding the service. If you hired DNS Inc. to answer your phone and one day someone walked into our offices and told us that we should forward calls coming into your line to his phone number instead of yours and we did so without asking any questions, would you get angry? We are pretty sure you would (and we would too if it happened to us). This is why DNS Inc. is such a stickler for making sure that anyone who contacts DNS Inc. is properly authenticated and has the proper authorizations to make any changes to any account. Also important on this point is that if you hire a third party to register your Domain Name for you with DNS Inc. or another registrar, you may not be on record with DNS Inc. or that registrar as controlling the Domain Name, and thus may not be able to exercise any of your rights that arise from your “ownership” of the Domain Name.
Having explained a little about the nature of the what you are actually purchasing when you register a Domain Name and having talked a little about the importance of authentication, we can now get down to the nitty-gritty. In the vast majority of circumstances, the service contract you enter into when you purchase the registration of a Domain Name will create and shape the rights you have in relationship to the Domain Name that you register. As discussed above, the primary right you obtain by registering a Domain Name with a registrar is the right to control where computers making Internet requests for the Domain Name being registered are pointed. The length of your right to this control is dictated by the service contract. In the case of many registration contracts, including DNS Inc.’s, the default period is one (1) year. In addition to this primary right, many registration service contracts may, as DNS Inc.’s does, entitle you to, among other things, the right to: (a) receive notice when the service contract period is about to expire, (b) transfer the responsibility for directing Internet traffic to the Domain Name you registered to another registrar, and under certain circumstances, proceeds from the sale of an expired Domain Name that you registered, but on which your service contract has expired. Lastly, all registration service contracts will give you the right to participate in the applicable Uniform Dispute Resolution Process or “UDRP” if someone challenges your right to control over the Domain Name you registered.
As mentioned above, the rights that you have in the relationship to the Domain Name that you registered are not just shaped by the registration service contract. Your rights will also be shaped and restricted in certain ways by common law and statutory law. However, while it is certain that the common law and statutory law of some nation will restrict your rights, which nation that is depends on where you live and where the registrar is located. In the context of Domain Names that are registered with DNS Inc., the laws of the United States (DNS Inc. is a United States corporation, organized under Delaware law and resident in New Hampshire), Canada (DNS Inc. currently contracts with Tucows, Inc., a Canadian company, for services relating to Domain Name registration), and the jurisdiction in which you are a resident (e.g., Germany, California) all may apply, depending on the circumstances.
Across jurisdictions, trademark, copyright, and privacy laws are the laws that are most frequently in play in connection with disputes regarding control over and use of Domain Names. For example: (a) in Germany, trademark law may force you to give up control over a Domain Name if it is confusingly similar to an existing trademark (e.g., BMW.com and BMWcars.com); (b) in the United States, copyright law limits your right to, without authorization, post material to the website associated with your Domain Name that someone else owns the copyright for; and in Canada, privacy law limits the amount of information you need to keep on record in connection with your Domain Name registrar to maintain control over a Domain Name. However, these represent just a few examples of the many ways in which your rights are restricted and shaped.
In sum, while it is clear from the world around us that the power of the Internet can make the rights associated with owning, or more accurately, registering, a domain name very valuable, these rights are narrow and are limited and shaped in many ways by the laws one, if not more than one, jurisdiction.