Legality on lease to buy help please.

[MmmmDonuts]

Hello all,

A complete newbie here with a question that's probably been asked a million times and I do intend to do my own research reading all the threads on here, but I need an immediate answer and any help would be greatly appreciated.

I and my partners are launching a business and the brand name we want to build upon has been registered as a domain. It's been innactive for 6 years or so and I contacted the owner to see if he would like to sell it. He offered a figure that was more than I anticipated even though I know it is a premium name and expected a large price tag. I considered launching using a similar name, thinking that it would possible devalue his domain and the only realistic potential purchaser would be somebody wanting to offer a similar product and service and would be put off by having a similarly named competitor.

But I do really want that name and the owner commented that he would consider a lease to buy agreement whereby we make a lump sum payment of $10k say, and pay $1k a month minimum for x number of months until it's paid for.

Now what I am asking is: is this a common agreement that if dealt with by a professional body will ensure a smooth transfer of ownership or is it fraught with dangers?

I would look for an escrow type service which will hold the ownership of the domain and ensure it is transferred to us once we have paid up fully at the end of the agreed term. I would also ensure we have 2 or 3 months 'rent' lodged with the 3rd party holder so that the original owner cannot claim we didn't pay one month and then claim we are in breach of contract and reclaim rights to the domain once we have spent a significant sum building a brand.

I have one other question please:

I have a trademark approved for a product which I am sourcing a manufacturer for. The TM name has already been registered in the usual formats .com, .co.uk etc. Do we have the right to force a purchase of these domains or is there another way we can obtain ownership?

Many thanks

 

[GreyWing]

A lot of things come into it like which country law applies? us, English, Scotish?

You say you have a tm for a product you are sourcing, not seen that before as usually the company doing the manufacturing will hold the tm. Plus I get the feeling from what you are saying that this is going to be very generic, and if so then you are going to struggle.

But without knowing the name etc you are going to struggle to get good advice from anyone on TM issues.

As for domain leasing then that will be down to the country (usually the seller) operates in and their laws on the issue, no doubt will get expensive if goes down that route.

So that one depends who draws the agreement up and who holds the funds and registration until thefinal payment and hand over is completed, a trusted third party would be best. a trusted third party would be best and many do use that option, some kind of escrow?

 

[MmmmDonuts]

The TM is for a product that I have designed - trademarked and not patented as it can easilly be copied and released under another name, but by being first to market the trademark should establish its presence as the market leader and make it harder for anyone to steal too much of the market.

With regards to the lease to buy of the domain, the owner is based in the States and we are based in the UK. What I need to do is find a trustworthy 3rd party who can draw up the agreement and act as an intermediary and ensure both parties stick to it. Any suggestions...?

Thank you

 

[crabfoot]

I'm not sure if we are talking about one domain here, or several. So I'm going to talk about the business name and the product name.

I presume that the business name you want is a .com - given that it is unused for 6 years, there will be no useful links, and it will not compete if you can get the .net cheaper, and use that for your site. For search and SEO purposes the .net will serve just as well.

Since the product name is trademarked, you can try using lawyers to crowbar the relevant domains away from their owners. Since the lawyers you need are the £600 per hour variety, offering money to buy can be a lot cheaper.

Frankly, people paying lawyers to use the "cease and desist" tactics are not popular around here, especially if the use of the domains pre-dates the TM registration. In the US, doing things "that way round" would be grounds for a legal battle - but anything involving lawyers is expensive and takes time.

Considering the price of a TM against that of a domain registration, I think you might see why using a TM to bludgeon a domain from someone trying to make an honest shilling is seen as unfair. From where I sit, it don't think that the mark should have been awarded, if it is so unoriginal that the domains are already registered.

Mind you, anyone trying it on my TM will get the "cease and desist" treatment molto rapido.

 

[MmmmDonuts]

Heh heh! I totally understand where you are coming from and wouldn't want to crowbar anything away from anyone, but also wouldn't want to be held to ransom. So a sensible offer may well do the trick. The problem is, some domain owners can also be as greedy as the lawyers!

The business name is indeed a .com and we would also like the .net and have pondered whether acquiring one first would have an effect on the price of the other - whether it drives it up or down if the owner becomes aware of your intentions. I have already registered a similar domain and have spent money on design work for this brand name and wondered if we were to launch like that, would we devalue the premium .com version?

The TM - well, to be honest, I was also surprised we didn't face any objections, so am extremely happy there. Again, I am wondering if owning the trademark can actually drive the price up.

 

[GreyWing]

The TM - well, to be honest, I was also surprised we didn't face any objections, so am extremely happy there. Again, I am wondering if owning the trademark can actually drive the price up.

Thing is mate that people don't sit round watching for applied for TM's, so when you go to enforce it, it may be challeneged then and be just as weak.

Most judges will allow leave to appeal a TM, meaning no decision until the tm team has looked at it. It only costs 3200 to challenege it.

No don't get a smaller .net or any other ext with the hope of driving down the price. you will just create traffic and drive the price up.

At the end of the day, they got the name first and have a right to charge what they want.

IOmagine someone trying to buy your house and saying your asking too mjuch so I'm taking you to court, even though you didn't want to sell? Would be silly wouldn't it. That's not too disimiliar to domains.

Best best is to be nice to these people and get the name for as cheap as possible and do it that way. Hard as it is, that is the best way.

 

[crabfoot]

Well, there you have it - GreyWing thinks the price of your desired .com will actually go up if you start trading on the .net, and drive traffic to it. He's been doing this for a lot longer than I have, so I will defer to his judgement.

But, considering the cost of the .com, you have to think about what you are doing. If this is a name you want for "kudos", is it worth the outlay right now?

It might be a key factor if you intend to sell from the site - but you don't have your product on the market yet. I would be inclined to use another, cheap site for sales, and spend that cash on conventional advertising - GoCompare and MoreThan are currently demonstrating how effective that can be in driving traffic to a site.

 

[MmmmDonuts]

I absolutely agree with what you are saying about being fair and wouldn't come onto a forum making an enemy of the 'domainers', but as much as the owner wants a high a return as possible, similarly, I also want to purchase at a reasonable price.

I know we all dream about making a quick buck or finding a golden nugget somewhere, but sitting on a $9.99 domain for 6 years and asking $40k for it (turning down offers of $25k in the past) just seems a little too greedy and as a result the buyers market will react, surely? By react, I mean resort to using alternatives which will end up devaluing his premium name....no...?

 

[rob]

I know we all dream about making a quick buck or finding a golden nugget somewhere, but sitting on a $9.99 domain for 6 years and asking $40k for it (turning down offers of $25k in the past) just seems a little too greedy and as a result the buyers market will react, surely? By react, I mean resort to using alternatives which will end up devaluing his premium name....no...?

I would not allow the registration costs affect your thinking, I mean the numberplate F1 is half a million quid and the fact retaining it on paper would be under a 100 notes means nothing in context.

 

[crabfoot]

A domain is worth what someone pays for it - that is the value of the domain to a purchaser. If you are fortunate enough to register it first, what you get for it depends on if you need to sell it - whether you need the money or not.

It is hard to engage in activity that will de-value a name, but there have been occasions when people have built up a thriving business on the .net, while the .com is still parked up and waiting for offers.

 

[namealot]

Difficult to tell if an a agreement would be smooth and uncomplicated without seeing it...

The other parties may not be interested in one you have had drawn up? Its much more common for the seller to do this then you have your legal team look over the T & C add or amend as is seen fit and advise you accordingly.

ATrademark in one country is not necessarily enforceable in a another it may have been registered in many other countries.. If the name is very generic in the usa they may not even grant you one ?
A recent case of osho they had over 40 country trademarks and USA say stuff em they don’t mean fiddly...
What class is your trademark?

To take an item/product to market without a patent is odd especially as applying for a UK patent is very cheap? and your talking of spending £££££ on a domain ?

 

[crabfoot]

To take an item/product to market without a patent is odd especially as applying for a UK patent is very cheap? and your talking of spending £££££ on a domain ?

That's a good point. If you don't want to patent the idea (lack of originality,whatever), why not register the design? That's another precaution available ...

 

[Andrew WUK]

BUT... I have some sympathy...

As another complete newbie to this - and an old one at that - I must say that I have some sympathy with the original concerns... has there been an outcome yet?

Historically - and I am talking about 8 - 10 years (.com boom and bust etc.)- I got bitten by this same problem when I business I had, and had been in operation for some years previously, wished to get the full set of domain extensions at that time... .co.uk, .com, .net etc... These three were the ones of obvious value, but we found that they - and the .co.uk derivative in particular, had been registered by a US firm and had remained dormant for the period of its registration. Never used and no investment. The asking price was astronomical and the owner had no intention of using the domain for anything other than 'to hold us to ransom' we felt.

I realise that all of this has moved on somewhat in recent years... but at that time we were fortunate enough to establish that 'domain sitting' was thought of in the same vein as commercial kidnapping... no reason for the ownership, merely an opportunity to extort money... We purchased the domains for a reasonable and fair price (ironically now sadly no longer in use again, but now 'sat on' again by an opportunist?)

Admittedly the market has moved on, and the trading of domain names is much the same as another other commodity I guess... I have it, you want it... what's it worth...? etc... The fact that some chap (or chapess) had the forethought the think of an interesting name has value in itself... and I assume that there are no guidelines...

HOWEVER, I do have sympathy as the sums suggested seem to smack of extortion to a certain extent - way beyond any value derived from the original purchase of a item of electronic registration. It is not as though there is any added value attached to it, it has not been improved or embellished. It is not a piece of art and has not benefited from any effort apart the original brain storming to think of as many domain names as possible, register them and then command a small fortune for their release into the productive wider world.

I do not quibble with the concept of trading Domain Names - I am learning about this myself - but I would take issue with the level of fortune hunting and extortionate values being demanded. It seems in most cases that a URL only has value to a very small number of people - it is not trading a commodity in the true sense of the word, there are no inhumane mines or exploited workers digging gold or extracting blood diamonds - and there does need to be sense of reasonableness and fair play... the only exploitation is by those who got there first (fair enough) but if they demand too high a price, surely they will only eventually kill the goose that laid this particular golden egg?

Its only a thought from someone trying to find a way to exploit the internet as well... I think this needs to be put into context in a reasonable way.

 

[rob]

Will you sell me your house for the first price it was sold at?

I mean what has anyone else ever done apart from just live in it and pay the council tax....

 

[crabfoot]

Well, that is the commonest analogy, but the one I prefer is "fine wine".

In the 80s a friend of mine started learning about wine, and bought a few cases to "lay down and avoid". He bought well, and has been doing so ever since.

So when times have been hard, he has been able to get back up to 10 times the purchase price, selling a couple of cases when he has been strapped for cash.

But if he had bought poor wine that did not improve with age, he would be lucky to get his money back.

That is what happens with domains - right up to the analogy of what you are left with if you drop the bottle ...

 

[denchomsky]

Is it really necessary to have that domain? I am sure that you have thought about this but the name does not have to be that of the product or service you are selling/promoting, look at spotify for instance, if you don't know or live under a rock it's a music streaming website which all the major label's have signed up to, free music streaming with ad's every few songs.

Now the name does not suggest the content or service of the site one little bit, but now it's massive, a name on everyone's lip's, the name becomes the product, other examples are skype or ocado.

Why not find a catchy cheaper name and spend the money on a good original marketing campaign and advertising instead.