The Legal Status of Domain Names : A Business Context

Abstract: Domain names are still a relatively unknown occurrence and despite being a natural part in most people’s every-day life, there are few who reflect over their importance. The original function of domain names was merely to serve as technical addresses and to facilitate the locating of websites on the Internet. Today domain names are much more than this. In addition to the address function, domain names may also serve as indications of goods, services, businesses or information. The domain name is usually the first contact one gets with a website and it has become crucial for businesses to have their company name or trade marks registered as domain names. The issue of the legal status of domain names has mainly been discussed from an American point of view and in Sweden this discussion has almost entirely fallen under the radar. If the legal status of a domain name were clear, it would be easier for businesses to avail themselves of the value of that domain name. It would possibly even contribute to strengthening the legal protection for the domain name holder, in for example insolvency or bankruptcy procedures. Intellectual property exists in many different forms, the main being patents, trade marks, copyright and design rights. Although there are many differences between them, they all have in common that they establish property protection over intangibles such as ideas, inventions, signs and information. As a domain name is not a physical object, there can be no doubt that it is an intangible. The question is whether it is property. Intellectual property is not a static area and it can, in line with societal and technological development, be expanded to include new types. The legal status of domain names is generally discussed in the light of the close connection they have with trade marks. Except from their original function, the trade mark function of domain names can probably be considered as one of the most commonly accepted. It is indicated in this thesis that that function contributes to that a domain name can be considered as a distinctive sign and thereby obtain protection, in the same way as an unregistered trade mark. According to current accounting rules, businesses may, to some extent, avail themselves of the value of a domain name. Domain names are under certain circumstances identified as intangible assets and even as ‘similar rights’ to for example trade marks and patents in accounting and taxation situations. At this time it is not possible to legislate on the area of the legal status of a domain name on a Community level, as this most likely would have to include a consideration of the existence of property rights and consequently fall outside the legislative powers of the Community. Both the legal development and the legal discussions on the topic of the legal status of domain names in Sweden have been relatively sparse. Nonetheless, there have been some interesting opinions. By investigating what positions the different authorities, academics and practitioners have taken on the legal status of domain names it can be concluded that the prevailing opinion in Sweden is that domain names are not considered as property. The reason for this seems to be that domain names as such, are in fact no more than technical constructions and that by registering a domain name the registrant only becomes the holder of a contractual right. However, there are some diverging opinions which could suggest that the legal status of domain names in Sweden is not yet settled. The aspects which are then taken into consideration include that domain names have developed to become important and valuable assets for an increasing number of businesses. A domain name is a precondition for the creation of a website and therefore of crucial importance for, in particular, online based businesses. However, they are of increasing importance for all businesses to reach out to and compete over the same customers. It is advocated that the fact that domain names are freely traded with indicates that domain names are property. It has also been questioned whether an asset with a true economic value, such as a domain name, can exist without being considered as an item of property. The steps taken in other jurisdictions have shown that the legal status of domain names is not even clear in some of the countries with the greatest experience of domain names. Nonetheless, the legal status is given attention in those countries and the discussion has been initiated. In general, it can be concluded that the development seems to go toward higher awareness of the value of domain names.