Business Sales and Domain Rights

March 27, 2017

Business Sales and Domain Rights

Buying and selling a business can be a complex matter and engaging a professional to make sure that deals are watertight and all the necessary actions are taken is a sound investment. In one case where that did not happen, a costly dispute developed between former colleagues in respect of a corporate website.

The case concerned a company that hired out photo booths for weddings and other events. One of the directors had registered an Internet domain name in the company's trading style. She eventually sold her shareholding to another director but remained the registered owner of the domain name. The share transfer was not professionally drafted and paid no attention to rights in the domain name.

Shortly after her departure, the director who owned the domain name established a rival business and redirected the domain name's traffic to her new venture. The company's response was to complain to Nominet, the independent body that oversees the registration of domain names in the UK. In upholding the complaint, a Nominet expert found that the domain name was an abusive registration in her hands and directed its transfer to the company.

The expert found that on selling her shares to the other director she had agreed to terminate her commercial relationship with the company and to divest herself of any rights to its name or trading style. Her continued use of the domain name was likely to confuse Internet users and was intended to draw customers away from the company. It disrupted the company's business and took unfair advantage of its goodwill.