Domain Names at Risk for Both Franchisors and Offshore Entities

By Devin Elliott, Law Graduate

1 – The New Rules Impacting Offshore Entities

Under the old rules, offshore entities with no Australian connection could register any domain name in the .com.au and .net.au name spaces, provided they held or applied for an Australian trade mark registration. For example, the owner of the registered trade mark ‘ExampleAU’ could register the domain name ‘xyz.com.au’, even though that domain name is entirely unrelated to the registered trade mark.

Under the new rules, the domain name must be exactly the same as the trade mark excluding punctuation marks, definite/indefinite articles (‘a’, ‘the’, ‘and’, ‘of’, etc.) and ampersands (&). Thus, the owner of the ‘ExampleAU’ trade mark could register ‘Example&AU.com.au’ or ‘ExampleofAU.com.au’ but not ‘xyz.com.au’.

Furthermore, the domain name must include all the trade mark words in the same order that they appear in the trade mark. For instance, the owner of the trade mark ‘John Smith Appleby Brothers’ could not register or renew the domain name ‘johnsmithbros.com.au’ (missing words) or ‘johnapplebysmithbrothers.com.au’ (wrong order).

To be eligible to apply for or renew a domain name that is not an exact match of the trade mark, a foreign registrant will need to satisfy the Australian presence requirement on another basis, for example by being a registrable Australian body (company, trust or partnership) or a foreign company under the Corporations Act 2001 (Cth) which has an Australian Registered Body Number.

Offshore entities could retain their domain names which do not match their Australian trade marks by transferring the domain name registration to an entity that satisfies the Australian presence requirement. However, any such transfer must take place before 12 April 2021.  After that date, the offshore entity which does not meet the requirements will not be eligible to transfer the domain name.

2 – The New Rules Impacting Franchisors

Rule 2.11.9 of the new licensing rules prohibits domain name holders from selling or leasing sub-domains and requires that anyone using the sub-domain has an Australian presence. A sub-domain is a domain which is part of a larger domain under the Domain Name System hierarchy, e.g. ‘bags.xyz.com.au’ is a sub-domain of the ‘xyz.com.au’ domain, whereas ‘xyz.com.au/bags’ is not a sub-domain but merely a web-page on the ‘xyz.com.au’ domain.

Rule 2.11.11 states that domain name holders must not rent, lease, sub-licence or permit the use of their licence by others, unless they are a related body corporate with an Australian presence.  We understand this to mean that related bodies corporate with an Australian presence may be permitted to use a sub-domain (but the sub-domain cannot be sold or leased to them by the domain name holder due to Rule 2.11.9).  A ‘related body corporate’ is the same as section 50 of the Corporations Act 2001 (Cth) and refers to subsidiaries, holding companies and sibling companies.  

Despite the above rules, the auDA Compliance Team has confirmed to us in writing that a domain name licence holder may, without breaching the new rules, permit other unrelated entities to use its domain name provided that those unrelated entities use the domain name for the licence holder’s purposes and not for their own purposes (which have not been approved or authorised by the domain name licence holder). This is the case even if the unrelated entity is given complete access and control over the domain name.

For example, if a plumber has a domain name licence but is not tech savvy, he may give complete access or control of the domain name to an unrelated entity in order for that entity to run the domain or sub-domain. This is not in breach of the new rules, provided that the unrelated entity is using the domain or sub-domain for the plumber’s purposes.

Thus, franchisors who hold a domain name licence and permit franchisees to use (or give franchisees complete or partial access or control of) their domain or a sub-domain thereof will not be in breach of the new rules, provided that the franchisees use the domain or sub-domain for the franchisor’s purposes, i.e. the running of the franchised business.

Nevertheless, all domain name holders should be aware that they will be responsible for any activity occurring on their sub-domains and they may have their licence suspended or cancelled by auDA if the domain or sub-domain activity breaches other auDA rules, e.g. if the sub-domain is used for illegal, unlawful or fraudulent conduct.

If you have any questions or need assistance registering your domain name as a trade mark or transferring it to an Australian subsidiary, please contact John Sier on (03) 8540 0270 or john.sier@mst.com.au or Louise Wolf on (03) 8540 0273 or louise.wolf@mst.com.au.