Domain name leasing

Is this some new, unnecessary, dodgy activity? That was my first thought when a client asked me for my advice the other day. How do you lease something so nebulous as a domain name? The very idea of it brought out the grumpy old man in me.

Domain names have enough of the attributes of property to stop me, now, from complaining when people treat them as a type of it - though lawyers need to think carefully about how they treat them, especially when they lump them in an omnibus definition of IP and give covenants about ownership. So what about leasing them?

A lease is an agreement governing the use, for a fixed period, by the lessee - so says my oracle in these matters, the late Stanley Berwin (in case you are too young to recognise the reference, it's to The Economist Pocket Lawyer, published in 1987 and never matched as a source of pithy definitions of legal terms - which reminds me of a friend at university, cramming on the morning of one of his final exams from a copy of Law Made Simple. He got a 2:2, but that was a different age, one in which a 2:2 was worth having and before my university ever gave out a third, let alone a pass degree. I wonder whether a new edition of this work - the Berwin, I mean, not the Made Simple - has ever been considered?)  Mr Berwin talks of the agreement being about the use of goods, equipment or land, and about the tax and cashflow advantages of leasing as opposed to outright purchase. My recollection of property law is that a lease of land creates a legal estate in it, so it's rather more than a mere agreement to permit use - which, he confirms, is what a licence is.

Well, domain name leases are also called licences, sometimes, but calling them leases resonates with those who like to think in terms of internet real estate. If it sounds better, and provided terms are properly defined so we know what we are talking about, what's the difference? Whatever - I'll use the word "licence" so I don't get tied up in conceptual problems in my own mind. Which brings to mind one of the most satisfying of the definitions in my Dictionary of Intellectual Property Law - of "bare licence" - but you'll have to wait to get hold of a copy to read it. And just as in the market for real property there is a place for arrangements which separate ownership and use, so too in the market for Internet property.

Developers can invest in domain names - perhaps have the good fortune to grab one nice and early, create some Google juice and make it an attractive proposition for a start-up business. The real estate that people want to occupy on the Net is very different from where they want to be in the real world of business (I should say, where they ought to want to be) - the valuable property on the Internet is in generic domain names, s*x.com and so on (I bowdlerised the domain name because Google just informed me that they have rated this as an adult-only post, which just shows how clever AI is). In the real world there's nothing to stop you using a name like "S*x" for your business, and of course Malcolm McLaren and Vivienne Westwood did it years ago - and I think I might have just disproved what I was about to say, namely that you can use it but you'll have a hard time stopping anyone else doing so - so let me refine that proposition a little ... it's unusual, and counter-productive, to see words used in that sort of fanciful way on the Internet - a generic domain name works when it is used for the goods or services that it identifies, whereas a generic business name or trade mark is as much use as a sheet metal handkerchief - as we used to say. And a non-generic domain name will either be unattractive or a trade mark infringement.

So, there are good reasons why people might have domain names to let, and fairly good reasons why people like the client who asked me in the first place might want to rent them. There are some model leases available on the Net - though they look a bit American to me. But the drawbacks of taking a licence to use someone else's domain name are manifold.

If I were to open a shop, which I could quite enjoy doing, selling books or records - but I digress - though better than selling myself by the 6 minute unit - I might rent premises for it. Unlikely that I'd be able either to come up with the wherewithal to buy somewhere, though I suppose for some it would be possible to borrow the money and buy freehold. Anyway, the point is that renting shop premises is likely to be the way to go. I put up my sign over the door, advertise in the appropriate places, and the world beats a path to my door (in my dreams). Soon I need bigger premises - one of those situations in which size matters - so when there's a convenient break point in the lease I up sticks and move somewhere bigger. Perhaps I leave a notice in the window telling customers where they can find me, and in any case if they see someone else's business name above the window, or just notice that it's now a butcher's shop or something, they will guess what's happened.

What has happened in that situation is, of course, that I have moved my business, with the goodwill, to a new location. Which I couldn't easily do if I were occupying someone else's domain name rather than their commercial freehold investment. So, dear client, if you're reading this, it seems to me that you need:

• A long-term agreement, perhaps even perpetual, though the lessor is going to need some way of getting you out.
• A rent that isn't based on your turnover or profit, or footfall, or anything else - a fixed sum, with a formula for increasing it year-on-year.
• An option to purchase the domain name.
• A transitional period at the end of the "lease" during which the lessor will put up a notice directing visitors to your new website, and not let anyone else (and least of all a competitor, though who else is going to want to use the same generic domain name?) have the domain name for a certain period.

Whether any of that is palatable to the lessor is another matter. I imagine it pretty well trashes the business model they are working from. If (dear client) you're thinking of a business that will flourish for a couple of years and they disappear for ever (as, now I think about it, most online businesses do) then it might work, otherwise all you are doing is creating capital value for the owner who is going to get your hard-earned goodwill, or most of it, however hard you try to prevent that happening.

Copyright trolls

In a world in which everything has to be counted, measured, sold and bought, there will be trolls. The patent species is well-known, though distinguishing them from genuine operators might be difficult sometimes. Attempts at trade mark trollery are generally doomed to failure, foundering on the rocks of non-use or lack of bona fide intention. Copyright is another matter.

Reports that trolls are buying up copyright and then searching the Internet for infringing uses have become more and more common recently, but there are other ways to become a copyright troll, or something rather like one. Inheritance is one, and a friend told me recently of how she'd used some photos in a presentation that she'd already used with permission in a book, and now faced a substantial claim for royalties. The sum involved seemed to have been plucked out of the air, and certainly bore no relation to the (charitable) use to which the works were put. The troll had, of course, inherited the copyright from an ancestor.

Of course the first thing about this is that my friend hasn't done very well here. The original permission was limited, and if it were foreseeable that the photos might be needed in a presentation (and with the ubiquity of what people are pleased to call PowerPoint, though they should be using Open Office Impress and calling the result by a generic name, which means that reproduction is taking place) that should have been included at the time. Limiting that to use for promoting the book might well help close any gap between the parties. What's really depressing is the avaricious attitude of the copyright owner - which is why I am using the "troll" epithet - though I have only heard one side of the story. That's why my retelling of it is short on details, of course.

My suggestion? Take out the photos and replace them with the legend "photo removed because [name of troll] wanted £[outrageous demand]". Clearly copyright allows the owner to demand a royalty, though whether the demand has any market-based validity I don't know. It sounds like a lot, though if the photos were rare it might be justified. If they are reproduced in a book, though, it's not as if they can't easily be seen.

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No summary judgment in peer-to-peer filesharing cases

Eight filesharing cases could not be dealt with by summary judgment, the very active Judge Birss ruled on 1 December in the Patents County Court. In Media C.A.T. Ltd. v A and others [2010] EWPCC 17 (01 December 2010) the claimant, saying it represented the owners of copyright in several movies of a type that you won't find on sale in your local DVD shop, asked for summary judgment against eight defendants. they had either failed to acknowledge service or failed to file a defence, so the requests for judgment said, but the judge found that two of the defendants had filed defences. In four other cases there was no evidence of proceedings having been served on the defendants, save that one who instructed solicitors and filed a defence, which rather indicated that service had taken place. In two cases judgment in default was possible, but in all eight of the cases the claimant had asked for an injunction and hadn't done enough to satisfy the judge that the remedy sought had subsequently been limited to damages, so that in itself precluded summary judgment under CPR Part 12.

The judge left no-one in any doubt that he was glad not to have to dispose of the cases summarily. The claims raised controversial issues about the application of copyright law, and he also pointed out defects in the way the law had been pleaded - this is not a simple matter. It was not apparent how the claimant was entitled to bring the actions, as there was no evidence to show that it was either owner of the copyright or exclusive licensee.

Many will be pleased to see the claimant's solicitor, whose handling of industrial volumes of filesharing litigation has itself been highly controversial, fail in these requests, but that's not really the point. There seem to be an inordinate number of requests for summary judgment coming before the courts at present: in Virgin Atlantic Airways Ltd v Delta Airways Inc [2010] EWHC 3094 (Pat) (30 November 2010) the defendants got summary judgment, but it's clear that this is a rare event in the patent world (and, perhaps, by extension the IP world). I seem to have read several judgments recently which go into the rules about summary judgment in great depth. The costs of IP litigation being what they are, even in the new regime in the PCC, shortcuts to a decision (like interlocutory injunctions in the good old days) will be taken wherever possible.

Protecting products by patents: a great way to spend a Saturday afternoon

To St Catherine's College, Oxford, to attend a seminar on patent law. Daniel Alexander QC, giving the opening scene-setting presentation, talked of his wife's scepticism about the wisdom of turning out to speak at such an event, at which surely the audience could be counted on the fingers, if not the thumbs, of one hand: but the room was full, with 40 or 50 enthusiasts (I think it's fair to assume that the description fits) present.

I thought protecting products was what patent law was largely about, except when it is about protecting processes. We heard a great deal about that interesting area where the two cross over - product-by-process patents - and the hook on which it was hung was the recent Monsanto case (Case C-428/08, Monsanto Technology LLC v Cefetra BV and Others, featured in my July podcast) in the Court of Justice (which speakers still called the ECJ).

Daniel Alexander's presentation, my notes on which filled seven pages of my notebook, was a formiddable tour d'horizon, considering the nature of the tribunal (no notable IP specialisation being apparent among the judges or advocates general). The court is asked to do relatively little in the patent field, few cases and no choice about which to entertain. The four big areas of patent law which are within the purview of the court are biotechnology patents, SPCs, remedies (by virtue of the enforcement directive) and controls on exploitation such as competition law.

References come, of course, from national courts, and are of uneven quality. The UK courts do a good job of presenting references, though often at the expense of length. the Court of Justice must work with one round of written observations from the parties and 20 minutes of submissions (compared with only 15 minutes in SCOTUS). The Advocate General has great influence over the outcome of a case, and AG Mengozzi in Monsanto was no exception. He is a distinguished professor of administrative and public law from teh University of Bologna - but no patent man.

Mr Alexander also mentioned the role of the juge rapporteur to whom the drafting of the opinion is entrusted, no dissents being allowed under a French law doctrine that considers the court as the depersonalised mouthpiece of the law. Whoever thought that up, said the speaker, had never met - hmm, perhaps I won't mention any judges by name in this blog.