Domain name purchase due diligence
Domain News recently posted an article on domain name purchase due diligence, entitled “Once in Bad Faith, Always in Bad Faith: Getting to Know the Domain Name You Purchase”.
The author of that article, Brian Hall, makes a good point: a domain name purchase requires due diligence, just like any other asset purchase. Just because a domain name is virtual property does not mean the risks required with that purchase are virtual – those risks can be very real.
Some issues to address and steps to take when purchasing a domain name include:
1. Is there a potential trade-mark infringement issue?
2. Who is the registrant? Could the registrant’s activities associated with the domain name be considered bad faith under the Uniform Domain Name Dispute Resolution Procedure (UDRP) if the domain name is a top level domain name, such as a .com, or the Canadian equivalent of the UDRP if a .ca domain name?
3. Conduct liens, encumbrances and judgment searches like you would for any asset. Judgment searches should include searches to determine whether the domain name is involved in a UDRP proceeding or the applicable equivalent. Even if the liens, encumbrances and judgment searches come back clean, the domain name purchase agreement should contain a representation from the vendor that the domain name is not subject to any liens, encumbrances, judgments or any legal or administrative proceedings, such as the UDRP.
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