By Zak Muscovitch.

The  “Leasing Domain Names” workshop at Namescon is almost full. I am looking forward to spending 45 minutes taking everyone through a domain name lease agreement, line by line, and explaining the issues and considerations, so that you become familiar with the basics of domain name leasing transactions. After the workshop, I will also be giving attendees an Annotated Domain Name Lease Agreement, which I prepared specifically for Namescon, and which can be used as a template and reference guide for domain name lease transactions.

Domain Name Leasing occurs with more and more frequency as it can allow a lessee to get use of a valuable premium domain name without having to lay out the entire purchase price at the outset. That, combined with an option to purchase, has the potential to make a successful transaction for both parties. Nevertheless, there are potential pitfalls, and also benefits to structuring the transaction in certain ways. Come learn about it, as I love discussing domain name leasing transactions.

The Domain Name Leasing workshop will be held on Sunday, January 11, 2015, at 2:15 pm in “The Mojo Room”, at Namescon 2015, in Las Vegas, at the Tropicana Hotel.


By Zak Muscovitch.

Try just ordering “a coffee” at Starbucks. You will be met with a litany of questions; Do you want mild, medium, or dark? Brewed or custom made? Fat or non-fat? Wet or dry? Tall or short? Flavor shot or not?

The same goes for domain name lease agreements. There are many possible variations and considerations, and therefore like ordering “a coffee” at Starbucks, ordering up a domain name lease agreement calls for knowing what options are available. Often, this comes from experience.

Some of the basic variations and considerations are as follows:

1. What is the value of the domain name?

This is a key preliminary question for a number of reasons. First of all, the amount of effort you put into a lease agreement will often depend on the value of the domain name. A relatively cheap domain name will not usually call for a lengthy agreement full of complex protections for the domain name owner (the lessor) or the lessee.

Also, a lessee of an inexpensive domain name will often be scared off by a 10 page legal document. Accordingly, the starting point for determining what kind of domain name lease agreement you need, is determining the value and importance of the domain name to both the domain name owner and the lessee.

2. Will this be a “rental” or a “lease to own” arrangement?

Just like there are different kinds of car leases, such as a “walk away lease”, a “balloon payment lease”, and a “lease to own” or “finance” arrangement, so to are there different basic forms of a domain name lease agreement.

The most common kind of domain name lease agreement is where the lessee pays monthly “rent” for the use of a domain name over a period of time, and at the end of this term, either will own the domain name or have a right to “buy it out” with a final payment. The reason that this type of “lease to own” arrangement is the most common, is that leasing a domain name generally allows a lessee to obtain the use of a domain name that it would otherwise be unable to afford.

3. Will the domain name be held by the domain name owner, or be held in escrow by a third party?

When a lessee is considering making substantial monthly lease payments for the use and potentially the ownership of a domain name, the lessee will often want some security that the domain name will not be rented, sold, or even lost, to someone else, while he or she is making the lease payments to the domain name owner.

The lessee may therefore request that once the lease agreement is signed, and the first payment is made, that the domain name be transferred to an escrow agent for the duration of the payment term, so that once all payments are complete, the domain name may be transferred to the lessee, who by then has become the owner of the domain name. Alternatively, the lessee might be concerned that through negligence or malfeasance, the domain name owner might terminate the lessee’s use of the domain name while it is being paid for by the lessee, and the lessee therefore wants the security of knowing that it is in the hands of a neutral third party.

From the domain name owner’s perspective, it is always preferable of course to maintain the ownership and control of the domain name while a lease agreement is pending. Accordingly, this important aspect is often a key part of the domain name lease negotiation, and will often depend on the value and the importance of the domain name to both parties.

4. Are there any restrictions on the lessee’s use of the domain name?

Once you sell a domain name, you won’t really care what the new owner does with it. But just like when you are renting an apartment to someone, you will care what they use it for while they are renting it from you. For example, you won’t want the tenant to damage the property, try to sell it from under you, have the police called to late night parties or for illegal activities, or use it as a store when it is supposed to be a residential unit.

The same kind of considerations apply when leasing out a domain name. If you are the domain name owner, you will want to have provisions included in your domain name lease agreement that restrict the kinds of things that the lessee is permitted to use the domain name for. Examples of these kind of restrictions might include not using the domain name for any kind of unlawful purpose, such as spamming or child pornography. Furthermore, a domain name owner may sometimes insist that the lessee disclose exactly what kind of good or service will be provided in association with the domain name, and have the lessee agree to not stray from that agreed use at all.

5. Are there any potential trademark issues?

When negotiating and entering into a domain name lease agreement, is is important to determine whether the domain name is being leased “free of any potential trademark issues”, or whether it is up to the lessee to satisfy himself that the domain name can be lawfully used without attracting allegations of infringement which can greatly affect the domain name owner as well as the lessee.

Generally, a domain name owner will make it so that it is up to the lessee to be responsible for ensuring that his use of the domain name during the lease term, will not infringe any third party’s trademark rights. Nevertheless, the domain name owner will want to keep an eye on this as well, since as long as the domain name is owned by the domain name owner, the domain name owner will need to ensure for itself, that its valuable property is not being risked through trademark infringing activity. Furthermore, if any claim arises, the domain name owner, and the lessee for that matter, will both have an important interest in being notified so as to deal with any such claim. Accordingly, notice provisions and indemnification provisions are key components of any domain name lease agreement.

6. What happens if there is a breach?

When negotiating a domain name lease agreement, it is crucial to include provisions that deal with unintended situations, such as when the lessee stops paying the rent, or if the lessee misuses the domain name. Normally there will be a “curative period”, where the breaching party is able to cure its default, but sometimes the breach may be so serious, such as when a domain name is being used for illegal activities which threaten the domain name owner’s ownership of the domain name, that there will not be an opportunity to provide a curative period before the domain name owner has to change the DNS settings so as to “lock out” the lessee.

Nevertheless, often it is possible to negotiate and arrange a way for the lessee to buy out the domain name in such circumstances, even when there is a serious breach, since the lessee may want to just take over the domain name, and the domain name owner will be just as happy to sell it for an agreed price at that point.

7. Where do disputes get resolved?

When there is a dispute over a term or condition of a domain name lease agreement, a good domain name lease agreement will include a “governing law” and “jurisdiction” clause. This kind of provision will ensure that it is clear that the parties have agreed to have any dispute decided by either a judge or an arbitrator, but will also often specify where the dispute is supposed to be resolved, e.g. where either the domain name owner or the lessee is located, and also deal with what language and what state or country’s law will apply.

The degree of attention and concern that gets paid to this particular aspect will generally depend on the value of the domain name and the importance of the domain name to the parties. If it is a very valuable domain name, then it will be very important for both the domain name owner and the lessee to have the dispute decided close to home. But since that is often impossible since the parties are located far apart, then a middle ground can often be negotiated. On the other hand, sometimes a domain name owner will choose to accommodate the lessee’s choice for jurisdiction, particularly if the domain name is being held throughout the term of the lease by the domain name owner, and not in escrow.

Conclusions

As you can see, there is no “one size fits all” domain name lease agreement, just like there is no “simple coffee” at Starbucks. An experienced domain name lawyer will be able to guide you through the considerations and options for a domain name lease agreement. Also, after negotiating and completing a few domain name lease agreements, you will have some experience in knowing which variables and options should be considered for your particular situation.

And by the way, I usually order a doppio, long, espresso, machiatto, non-fat, dry, one Splenda.


Perhaps the greatest domain name dispute related skill that I am able to offer my clients, is to properly counsel them on their chances for winning a domain name dispute.

After having helped thousands of clients with domain name dispute issues since 1999, I have developed a pretty good nose for gauging the chances of winning or losing a domain name dispute. Once in while a “curve-ball” is thrown, and once in a while the case falls within a small “grey area”, but for the most part, I feel comfortable telling a client, in advance, whether they will win or lose a case.

I am able to do this because I am very familiar with cases that have come before and have already been decided, and have a good feel for what facts are insurmountable and will nearly inevitably lead to the decision that will be made.

For example, when I am contacted by a brand or trade-mark owner, I research the domain name that they are targeting, and determine whether they have “no chance”, absent a careless UDRP panelist, because simply, the targeted domain name was registered prior to the brand even being a twinkle in the eye of the trademark owner. It is the domain name attorneys who do not do this important service for their clients, that end up getting “Reverse Domain Name Hijacking” decisions made against them.

Similarly, when a domain name owner contacts me about a pending domain name dispute notice that he or she received notice of, I research the trademark rights belonging to the complainant, and am usually able to tell the client right away, whether this is a “winnable” case, or whether there is “no hope”. If for example, a domain name owner registered a domain name years after a famous brand was registered as a trademark, and was using the domain name in an infringing manner, and admits to being aware (or was obviously aware) of the pre-existing trademark, then there is no hope of winning the case, absent an errant decision.

There are some cases that fall into a grey area, but I am usually able to also give the client good advice on these cases too. Not every “potentially” winnable case deserves to be defended. One must take into account the costs, the importance or value of the domain name in dispute, and the risk of having a decision go against you.

Accordingly, when a client comes to me with a domain name dispute, I will simply not accept the case unless it is a winnable case, and if it is in the client’s best interest to defend. I hope that this also helps my clients because Panelists will realize that I do not bring frivolous complaints or responses.

So, if I take your case, it means that you have an excellent chance of winning your domain name dispute.

Zak Muscovitch


About once a month or more, I get a phone call that goes like this:

Caller: I am a domain name investor. I just got into “the business”. I registered about 300 great and valuable domain names, and need some help in selling them and some legal advice.

Domain Name Lawyer: Thanks for calling me. Tell me about the names.

Caller: Well, I found this company called Godaddy that allows you to register domain names. I couldn’t believe it, but there were a ton of wicked names available, like YourCocaCola.com, DriveAPorsche.me, and ReebokShoesFit.co.

Domain Name Lawyer: I see. Do you have a question.

Caller: Not really, but I was thinking that one day I might need some legal advice, because I just got a letter from Coca-Cola demanding that I transfer my domain name to them. Would you be able to help me sell YourCoca-Cola to them since you specialize in domain names?

Domain Name Lawyer: Sorry, I cannot help.

Caller: Why not? I thought that you specialize in domain names and even help people sell domain names?

Domain Name Lawyer: Not that kind of domain name, I am afraid.

Caller: Why the hell not?

Domain Name Lawyer: Because registering a domain name like that is unlawful, and offering to sell it to the trademark owner is even worse.

Caller: I don’t mean to be rude, but the domain name was available and I paid $10 for it, so it is mine. How can that be illegal?

Domain Name Lawyer: Why did you register the domain name?

Caller: To sell it to Coca-Cola. I came up with this awesome idea of a website all about how people love Coca-Cola, and YourCocaCola.com would be just the perfect domain name for them to launch this site. I can’t believe their marketing company didn’t come up with this themselves….Anyhow, Coca-Cola earned about 2 Billion dollars last year based upon my research, and I think that 1% of that would be a fair price and I would share what we get with you if you will help me sell it to them.

Domain Name Lawyer: I do not mean to be the bearer of bad news, but registering a famous trademark like that to sell to the trademark owner is unlawful, and you best just hand over the domain name before you get into any more trouble. Sorry I can’t help.

Caller: You mean to tell me that Godaddy lets people register illegal names? Are you sure that you are really an expert in domain names? Because I spoke to a couple people before calling you, and they all told me stories of companies paying millions of dollars to get their domain names back after they inadvertently lapsed, or because someone got to them first. So I find it really hard to believe that a big company like Godaddy would allow someone to register a domain name that was illegal.

Domain Name Lawyer: Look, I have been practising domain name law for like 12 years, and there is something called the Anti-Cybersquatting Consumer Protection Act that makes this kind of thing illegal.

Caller: Did you say “legal” or “illegal”?

Domain Name Lawyer: Illegal.

Caller: Are you sure?

Domain Name Lawyer: 100%.

Caller: Well, I better talk to someone else I think, because I am out like $3500 from registering all these wicked names, and the fact that Coca-Cola wrote me a letter immediately after I registered the domain, shows just how interested they are in the name!

Domain Name Lawyer: OK, but here is some free advice: Stop registering trademarked domain names like that, as you are just wasting your money and potentially exposing yourself to massive fines and legal fees. The Internet grew organically, more or less, and there was no system put in place to prevent infringing domain name registrations; it is up to trademark owners to police their trademarks, not domain name registrars like Godaddy. Just because a domain name is “available”, doesn’t mean that you are legally allowed to register it. Go check out the thousands of ICANN UDRP cases where names were transferred away from cybersquatters.

Caller: But they can’t just allow people to register any available domain name and then say that it is illegal! Like, you aren’t allowed to just rob a bank!

Domain Name Lawyer: Nothing prevents you from physically walking into a bank and attempting a robbery…It is the law that forbids it and the bank security and/or the police that will catch you, and the judge that will sentence you….With domain names, it is kind of the same thing; you are not physically prevented from registering a trademark infringing domain name, but it is indeed illegal and there will likely be ramification if you get caught.

Caller: But they ALLOWED me!

Domain Name Lawyer: Look, I can add some brown sugar to soda water and call it Coca-cola and sell it off my front porch….But it is trademark infringing to do it, and if I get caught, I will be susceptible to legal proceedings, damages, and costs.

Caller: I dunno, I thought I was calling a Domain Name Lawyer, and you said right on your website that you defend against people accused of cybersquatting. How can you defend people accused of cybersquatting when you are telling me registering names like this is illegal?

Domain Name Lawyer: First of all, some cases are defensible, for example where a domain name is generic or descriptive, such as cars.com for a car website. Some cases, like the one that you will be facing from Coca-Cola, are not defensible at all since it is blatant cybersquatting.

Caller: My brother in law heard of a guy who sold the domain name, Ferrari.com to Ferarri, for a half a billion dollars.

Domain Name: Never heard of that and doubt it ever happened. But even if that were true, that is a one in a million chance, and with those odds, why be in the domain name business at all; just buy a lottery ticket instead.

Caller: Gees. Thanks. I am going to look into this further I guess.

Domain Name Lawyer: Good idea. I am glad that I may have helped you stop wasting your time and money before you got into any more trouble.


The State of Kentucky is still apparently vigourously pursuing its attempt to seize the domain names of various out of state internet casino operators. I was stunned to see that the Governor had actually retained private attorneys on a contingency fee basis to pursue the claim, thereby avoiding paying legal fees out of government coffers. This type of manoeuvre inserts a rare dynamic into government cases, as the private lawyers will have a degree of zeal that one normally wouldnt encounter because the case does not involve state-employed attorneys who are merely attempting to represent the government’s interests. Now law firm’s interests are paramount. That means money is driving this case. Scary stuff in domain name law…


If you think your domain name was registered a long time ago, check out SYMBOLICS.COM….
According to this story, this domain name was first registered in 1985 (!) and was the first domain name to be registered – EVER – and is celebrating its 25th anniversary. Since then, over 200 million domain names have been registered, according to this Times UK story.

I remember the first time I ever became acquainted with the Internet and domain names…Actually, it was on numerous different occassion, which collectively, led to my interest in the Internet and becoming a domain name lawyer.

1. Using Compuserve on my friend Matthew Sherman’s computer. This was about the time the first Space Shuttle took off, so it was in or around 1981. Actually, it must have been 1982, since I think we must have been using his Commmodore 64. I recall we tried using the Flight Simulator game on it…It was pathetic in hindsight, but we took it very seriously. Remember what the interface looked like“?  Matthew Sherman also introduced me to CB radios. That was fun…and kind of like the Internet in a certain way….

2. But that was probably a little after the Folman family had been participating in a test market of another “pre-internet” device, that was called something like “teledon” (that wasnt it I dont think though). If I recall it was a terminal that was set up in a number of homes in Toronto, Canada, that allowed users to access some basic directories of various businesses. It was something like a yellow pages directory if I recall. Anyhow, this was space age technology as far as I was concerned. Simply magic. Must have been in the late 1970’s. Maybe Ronit Folman will Google herself and find this post and answer the question of what this device/service was called….

3. One day I was sitting on a run-down patio of a cafe in Toronto, Canada. It wasn’t the Jet Fuel cafe in Cabbagetown, because that was across the street…unless Jet Fuel used to be on the West side of Parliament, which is possible….Anyhow, I was having a super strong Latte, trying to wake up from a late night shift of waiting tables, and a somewhat scruffy looking guy sat down like he owned the place and lit up a hash pipe. He said, if I recall correctly, and this was maybe 15 years ago, perhaps in 1995, that he did in fact own part of the place. He said he was a “Technology Evangalist” and even had a card which I wish I still had. He said his job was to get people excited about technology. Apparently he was involved in some pioneering projects at the time. That was the first time I had ever heard of this term or anything similar to it. I forget exactly what he was talking about, but he was talking about some wild conceptual things about technology and the Internet, perhaps about ISP’s and networking. Anyhow, it blew me away that there was a new frontier of exploration and this guy was apparently at the forefront of it; discovering and exploring things that people had not even heard of. Sent tingles up the spine. Look, at that time, this was true evangelism; showing and convinving people about the truth and the future of the Internet; leading people out of the woods, talking about amazing new applications and abilities; talking crazy like about how everybody is one day going to be connected via “the Internet”.

4. I was working at Movenpick in Yorkville, in Toronto, as a waiter, while taking a hiatus from law school. A German pastry chef, Peter, asked me, being the resident scholar, if I had ever used the Internet. I had not…but I had just heard of it from that guy on the patio…So, I resolved to try it. It was a eureka moment. Think IRC, newsgroups, Pow Wow, Tucows (when it was just a great freeware and shareware site), Command and Conquer played via a program called KALI which enabled multiplayer games before there was any such thing commercially available ($20 for a lifetime subscription…had to send cash in the mail to a guy in New York I think). this must have been around 1995 or 1996. Which reminds me of my first VOIP experience. There was a guy who had a web site that you could use to leave him a recording on his answering machine tape (yes; tape) in New York City. That was wild!

5. I was at Osgood Hall Law School in 1995, and I took a course entitled “International Taxation”. I wrote a paper called “Taxation of Internet Commerce”. I “self-published” on the web back in 1996 and then First Monday, a peer-reviewed journal on the Internet (one of the first, if not first, of its kind) graciously contacted me and asked to publish it in their journal. This was a widely cited paper, and was the first paper on this subject of its kind. This is what got me interested in Internet law scholarship.

6. Then finally there was my first domain name dispute, Toronto.com v. Toronto2.com. I got my first taste of domain name litigation, trademark law, and the value of domain names. This was in 1999. It was a Federal court proceeding brought by the Toronto Star and Bell. I won the case in my first year of law, months after passing the bar. That was the start of my becoming a domain name lawyer. There I learned about and pioneered the “descriptive domain name” defense. I spoke about this domain name case briefly when I was interviewed for DomainBits.

Once in a while a meet someone who was involved with the Internet in the mid-1990’s. Once in a very long while, I meet someone who was involved before that. Those were heady days. A few of us domain name lawyers from the late 1990’s and early 2000’s are still around and practising today and still in touch. Domain name law has exposed me to every facet of the Internet, as domain names are the cornerstones of all Internet businesses.


The Montreal Gazette is reporting an interesting and serious domain name dispute over SPCA.COM. Apparently, the former director of Montreal’s local SPCA registered SPCA.COM back in 1996, and the Washington D.C. HQ of the international SPCA has been using the domain name since. Now, according to the story, the local Montreal SPCA is apparently arguing in court within the context of seeking an injunction, that the former director registered the domain name on its behalf, or at least that it rightfuly belongs to the Montreal SPCA. What makes this serious is that the domain apparently gets something like 30 million hits a year. I will be following this story.

As a domain name lawyer, I hear similiar stories about this kind of domain name dispute all the time. Usually its a web site owner having a problem with their former web designer who registered the domain name on its behalf, or a former employee or former partner having done the same. Usually its a huge problem for the site owner because of the expense of going to court. Obviously in this situation the value of the domain name, its importance, and the huge traffic, are more than enough to get the parties to go to court. Sometimes however, the registrant may acvually have good rights to the domain name as he or she registered it and “licensed” its use to the site owner, or didnt receive the promised or agreed compensation. We shall see how this case turns out. Either way, this case represents an important milestone in Canadian domain name law, as it is one of the first cases of parties going to court over a domain name ownership dispute.