Domain Name Lease

Websites like Sedo and GoDaddy allow domain name owners to sell their domains to interested buyers through auction, fixed price, and open offer services.  However, not every domain name owner likes the idea of selling their name permanently, and would rather have clients paying a regular fee to use the name.  The solution in this case is often a domain name lease agreement.

A domain name lease agreement is an arrangement wherein the rightful owner of a domain name allows a person who wants to use that name to pay a rental fee for its use, rather than simply selling it outright.  By doing this, owners of domains ensure that they aren't permanently giving up the rights to a name which may become more valuable in the future.

Here are some potential clauses that domain name lease agreements might include:

• Sales clause.  People who rent the domains probably don't want to pay permanently.  A sales clause can require the owner to sell the domain name on a certain date after the leasing period, but the sale price of the domain might be indexed by the contract to the income of the business which uses the domain name, so that the seller gets an amount proportionate to the value of the domain name when the domain is finally sold.
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• Intellectual property rights clause.  In the event that an agreement does not provide for the sale of the domain name, owners will want to be sure that they are not losing any rights to that name.  The fact that another business uses the name and promotes it in relation to their business might give them certain trademark rights over the name, enabling them to sue or launch an ICANN dispute against the rightful owner if the name continues to be used by the owner after a lease agreement expires.  A clause which ensures that the owner retains an absolute right to the domain name is therefore ideal.
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• Choice of law clause.  If the domain name owner lives in New York and the person renting it lives in Germany, the owner will probably find it preferable to ensure that the contract contains a clause making it subject only to New York law.  That way, the owner is less confused about their legal obligations.
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• Forum for disputes clause.  In the event that the contract is broken, that owner will not want to travel all the way to Germany for litigation due to time and expense.  A clause which states that any disputes may only be resolved in a New York court would be favorable to the domain name owner.

These are just a few of the potential clauses that may be contained in a domain name lease agreement, but they give an idea of some of the complications involved.  For more information on domain name leasing, contact a lawyer qualified in Internet law.