Why corporate domain portfolios may need an eligibility review
Among the largest country-code domain name extensions, Australia’s .AU is one of the few that places restrictions not only on who can register domains, but also which domains they are allowed to register.
Registration is open to commercial entities with an Australian presence, subject to specific eligibility and allocation criteria. The domain itself may, among other possibilities, match or be an acronym of the registrant’s name, match an Australian trademark, or match or be a synonym of the name of a service, goods, event, activity or premises associated with the registrant. This last category corresponds broadly to what was historically known as the “close and substantial connection” test.
Concerned that the subjective “close and substantial connection test” was being overused for speculative domain name registration, the board of the Australian registry (auDA) has approved in principle a recommendation to eliminate it. The recommendation does not, however, determine how the change would apply to existing registrations. auDA has stated that its implementation planning will consider the number and types of existing registrations that may be affected, as well as appropriate transition arrangements.
The owner of a company involved in domain investing in monetization puts the number of domains at risk above one million.
This rule change would be felt most strongly among Australian domain name investors, who may hold hundreds or thousands of these domains. These individuals and companies are posting everywhere they can to decry the change. While investors stand to lose the most, corporate domain name portfolios will also be affected. There are several scenarios to consider, but the primary one is as follows:
A company has a registered office in Australia, which is the listed owner of the company’s .COM.AU portfolio. Within the company there are many brands, not all of which are registered Australian trademarks. In this scenario, brand-matching domain names may have been registered based on a “close and substantial” claim, instead of “exact match.”
The situation described above is the most troublesome for a corporate domain manager, as the decision could come down to establishing another valid basis of eligibility (for example, by registering an affected brand as an Australian trademark or business name) or potentially giving up the domain name.
The rule change would also create “solvable” issues. For example, say a company registered a domain 10 years ago for a brand they were in the process of launching. Strategically, the domain needed to be registered before the trademark, so the “close and substantial” category was used to secure the registration to an Australian subsidiary. Even if the trademark for the brand were registered as a trademark years later, it is entirely plausible that the domain parameters would have been left in their current state, in which case the domain could potentially fall into an ineligible status under the proposed rules. Fortunately, changes to eligibility data are possible for existing domain names, so the eligibility information associated with an existing licence may be capable of being updated where another valid eligibility basis is available.
At this point, the recommendations have been reviewed and approved in principle by the auDA Board, which in turn states its intention to develop a plan for implementation and draft new Licensing Rules for public consultation. Timeline is not known and any request for public comment will surely bring out spirited arguments against proceeding with the change. That being said, the foreknowledge of what may be to come affords an opportunity to conduct a proactive audit of the brand’s .COM.AU domain names.
Whether the portfolio is under IP Twins management or not, readers that know they are managing .COM.AU domains are encouraged to reach out for a portfolio audit. We can provide a report listing the domain names, under which eligibility criteria they sit and flag any domains requiring action. Just drop us a quick message on our Contact Form if interested in this offer.
Of course, should this rule change be translated into official policy, we will update affected clients accordingly with ample time to rectify domains that become ineligible.