The Internet provides an important marketing and sales tool for many businesses. Companies large and small contract out to vendors various services relating to their lnternet presence, including Web site design and hosting and domain-name registration. It’s not unusual for these vendors to register, in their own names, domain names containing business trademarks.
In most cases, the vendors’ ownership of the domain names poses no problems, for the parties have a good working relationship. But when the relationship sours or ends, the vendor’s ownership and control of valuable domain names, associated e-mail addresses, and possibly even Web site content become an important issue, frequently leading to costly litigation.
The typical dispute arises with a vendor refusing to return a domain name. For example, in Dawson v. Brandsberg, Dawson, a real estate broker, hired a vendor to register the “robertedawson. com” domain name and host the corresponding Web site. Dawson paid the registration and renewal fees for the domain name and supplied the vendor with the Web site content. The parties later had a falling out, and when Dawson requested transfer of the domain name to another Web-hosting company, the vendor refused.
In most cases, vendors refusing to transfer domain names do not disrupt the customer’s Web site or email. But that was not the case in The Christensen Firm v. Chameleon Data. Christensen, a law firm, hired a vendor to provide e-mail and Web-hosting services. The vendor also registered various domain names, including “christensenfirm.com,” on the firm’s behalf. The firm later disputed certain charges on the vendor’s invoices. The vendor transferred ownership of the firm’s domain names to itself to gain leverage in the dispute and advised the firm it would return the domain names only when its invoices were paid in full. The vendor further pressured the firm by shutting down its e-mail services.
The vendors in such cases are typically Web-hosting companies, but in Eagle Hospital Physicians v. SRG Consulting, the vendor was a marketing consultant. A medical practice operating under the marks “Eagle Hospital Physicians” and “EH Hospitalists” contracted with the consultant to generate sales leads. The consultant registered the domain name “eaglehospitalphysicians.com” and set up a Web site. Following a dispute over the site’s content, the practice asked the consultant to transfer the domain name. The consultant refused, and the practice registered the domain name “ehphospitalists.com” and set up its own Web site. The consultant retaliated by registering about 150 domain names containing the practice’s marks. The consultant offered to transfer the domain names in exchange for a salary or equity in the company.
Large, sophisticated companies are not immune from these disputes. In Hewlett-Packard v. Midwest Information Technology, a vendor operated Web sites and a telephone call center for HP that accepted orders for HP’s products. During this relationship, the vendor registered several domain names using variations of HP’s marks. After HP terminated the agreement, HP asked the vendor to stop using the domain names and transfer them to HP, but the vendor refused.
What can you do to prevent vendors from holding your domain names and Web sites hostage? Enter into an appropriate contract with the vendor. To protect your domain names and trademarks, the contract should include several provisions:
- State that the business, not the vendor, owns the domain name and associated Web site and e-mail addresses, and all related IP rights.
- Require the vendor to identify the business as the owner of the domain name when registering it with a domain name registrar.
- Require the vendor to disclose the name and URL of the registrar and any associated user name and password for the registrar account.
- Prohibit the vendor from registering in its own name any domain names containing the business’s trademarks or trade names or confusingly similar marks or names.
From a copyright perspective, the contract should also include provisions detailing ownership of the Web site’s content. When you develop and provide the content (and the vendor simply uploads it onto the site), your contract should state that the vendor agrees that your business is the author of the Web site and owns all copyright rights in any content, including text, graphics, video and so forth. If the vendor also develops content, the contract should specify that the Web site or content was commissioned by your business and that the Web site content is a work made for hire and the copyright to the content belong to your business.
These contract provisions should clarify the relationship between the parties, protect your assets and help mitigate the business risks associated with vendor disputes.