A lawyer has flagged a number of forthcoming changes to Australia’s internet domain name usage rules, warning that the new requirements could “spell disaster” for some business owners.
EAGLEGATE Lawyers’ Nicole Murdoch said the changes will especially be a game changer for business franchisors.
According to Ms Murdoch, an intellectual property and cyber law specialist, Australia’s internet domain name authority, auDA, which governs the domain name space, will be bringing in changes to the domain name licensing rules on 12 April 2021.
As a former director of auDA herself, the lawyer said the organisation’s main role is to protect domains so that they are available for Australians or traders holding a true Australian presence.
“Businesses and commercial operators especially need to appreciate a domain name is not purchased. It is licensed from auDA,” she explained.
Licences can be revoked where traders do not use the domain name in accordance with auDA rules, or it is not entitled to retain the domain name.
The new rules will alter who is entitled to register .au domain names and change how traders are permitted to use them.
Ms Murdoch flagged one major change as likely to have a massive impact on the business community, one which will prevent businesses from sub-licensing a .com.au domain name to another entity unless that entity is a “related body corporate” with an Australian presence — known as the “third party” rule.
Acknowledging it as common for people to start a business as sole traders with ABNs, Ms Murdoch said where a 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 under the new rules.
For sole traders, this means a domain name may be taken off them with just 30 days of notice.
The lawyer said that the rules will likely also have an adverse impact on franchisors: “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,” she stated.
“The issue is also that it is straightforward and cost-free for traders to make a complaint to auDA as to the entitlement of a competitor’s domain name.”
This can make it easier for businesses to take domain names off of competitors.
Despite all this, Ms Murdoch highlighted a way forward.
“The new rules only apply on renewal of a domain name or registration of a domain name after 12 April 2021,” she outlined, meaning Australian traders have some time to transfer domain names to the correct entities.
She’s also offered up some advice for traders looking to ensure they do not lose their domain name:
When restructuring, Ms Murdoch has advised transferring the domain name to the new entity, rather than merely letting the new entity use the domain name.
“Do not give control of the domain name to another entity,” the lawyer flagged, unless that entity has an Australian presence and is “related” to the company holding the domain name.
Foreign companies and traders
Ms Murdoch said such businesses must maintain an Australian presence. This can be done through a trademark that corresponds exactly to the .au domain name.
Restructuring or purchasing a business?
Ms Murdoch said new owners or traders must make sure the domain name is transferred to the correct legal entity prior to the other business or company shutting down.