Significant changes are coming to Australia’s internet domain name usage rules this year and the new rules could result in a loss of domain names for some traders.
The changes will significantly affect sole traders who have restructured their business and businesses which sub licence domain names to other users.
Despite the changes being publicised many traders are still unaware of the upcoming changes and the changes may come as an unwelcome shock as traders lose their valuable domain names.
Australia’s internet domain name authority – .auDA, which governs domain name space, is bringing in changes to the domain name licensing rules on 12 April.auDA’s main role is to protect .au domains so that they are available for Australians, or traders with a true Australian presence.
Businesses and commercial operators need to appreciate a .au domain name is not purchased. It is licensed from auDA. That licence can be revoked if a trader does not use the domain name in accordance with the rules set down by auDA or it is not entitled to retain the domain name.
auDA is introducing major changes to the rules governing .au domain names in April and is changing the rules about who is entitled to register a .au and how a trader is permitted to use a .au domain name.
A major change, among several, is that a trader will not be able to sub-licence a com.au domain name to another entity unless that entity is a “related body corporate” with an Australian presence. This is known as the “third party” rule.
If traders are in breach of the third party rule, the licence it holds to the .au domain name can be terminated and the domain name deleted – this is known as a “Policy Delete”.
auDA’s policies and rule changes are likely to fuel a raft of protests and appeals after the new rule changes are implemented as confusion in the business community occurs.
It is common for people to start business as sole traders with ABNs. But if the sole trader then restructures into a company and lets the company control the domain name, they would fall foul of the “third party” rule because the company is not a “related body corporate” to the sole trader individual under the new rules. The domain name may be taken off the sole trader under a Policy Delete with only 30 days notice.
The change of rules affect others as well and Franchisors may be adversely affected. Franchisors that allow franchisees to control a domain name may lose the domain name because it is being used against the auDA policies where the Franchisee is not a “related body corporate” to the Franchisor.
All it takes for an investigation into a domain name to take place is a straightforward and cost-free complaint to auDA. Any person can make a complaint as to the entitlement of a competitor’s domain name, so the rule changes will make it easier to take domain names off competitors.
There is a way forward for traders. The new rules only apply on renewal of a domain name or registration of a domain name after 12 April 2021. Australian traders have some time to transfer the domain name to the correct entity. Also, a Policy Delete and auDA Complaint can be challenged.
To avoid losing a domain name, traders should also ensure:
1. Sole Traders: When restructuring, transfer the domain name to the new entity, rather than merely letting the new entity use the domain name
2. Companies: Do not give control of the domain name to another entity unless that entity has an Australian presence and is “related” to the company who holds the domain name;
3. Foreign Companies/Traders: maintain an Australian presence such as through a trade mark corresponding exactly to the .au domain name; and
4. Upon restructure or purchase of a business, make sure the domain name is transferred to the correct legal entity prior to other business or company shutting down.
Business operators confused over the rule changes should seek legal advice from an experienced technology and cyber law advisor.
