Purchase and Sale of a Website
The veritable explosion in electronic commerce has brought with it a myriad of issues for the commercial lawyer. Now more than ever, there is tremendous value associated with the exchange of intangibles. If you have not already encountered a transaction involving a Web site, it is almost certain that you will in the very near future. The issues associated with such a transaction are characterized not so much by their complexity, but rather the fluid state of the rules and the technology itself. Firstly, it is necessary to understand what is being acquired or sold.
Web Site
The Web site itself may be hosted on a computer belonging to the business itself. In small applications though, it is more common that a third party service provider will provide the hosting. As a matter of due diligence, it will be necessary to ascertain what agreement is in place with the Internet provider. Conversely, if the business is hosting its own Web site, the vendor should undertake to train the purchaser on accessing and modifying the site as part of the purchase transaction. The business may also have registered similar names, which should also be transferred (e.g. Closely examine any representation regarding “hits” (or visits) to the Site. Such information is notoriously unreliable.
In addition, the content of the Web site should be closely examined. Most Web sites provide links to other sites. This is commonly known as hyper-links. A hyper-link to the first page of another Web site does not normally present any issues. The laissez-faire rules of Internet have come to accept such links. In contrast, “deep links” to pages within the Web site, without the permission of the site being linked to, are potentially problematic. Deep links without permission have been the subject of successful litigation.
Intellectual Property
There will be a variety of intellectual property rights associated with the Web site. Although most sites refer to copyright, it is rare for the copyright to have actually been registered. Registration of copyright appears only to arise in circumstances where an arm’s length lender has been provided with an assignment of the copyright as part of its security.
It will also be important to understand the nature of the rights associated with the domain name. Some domain names are trademarks, while others may be simply a portion of the corporate name of the business. It will be important to ensure in the latter circumstance that the vendor changes its name immediately after closing. The involvement of an intellectual property lawyer may be necessary to assist in the transfer of the intellectual property rights.
Transfer
In Canada, there are essentially two suffixes associated with business Web sites; namely, “dot.com” and “dot.ca.” The dot.com registration is administered by an American entity known as Network Solutions. For a fee, it will attend to the transfer of the domain name. You can do this online ( or download the transfer form from the Network Solutions Web site. The normal turnaround time is 3 to 6 weeks; however, for an additional fee, the transfer can be expedited. The dot.ca. registration system is administered by the Canadian Name Domain Name Consultative Committee ( Remarkably, the Committee does not facilitate transfers. Rather, it will be necessary to withdraw the registration and re-register the domain name under the name of the purchaser. It is usually best to obtain the assistance of the Internet provider who can deal directly with the Committee. A traditional Bill of Sale is probably still a good idea though.
Conclusion
Be prepared to be humble. Many clients will possess a significantly better appreciation of the issues associated with the transfer. Lastly, use the Internet as a resource itself to assist you in resolving issues. Douglas H. Hancock is a corporate commercial lawyer practicing with the law firm of Hancock and Rogers in Mississauga. He is presently studying part-time for his LL.M. in Information Technology Law at the University of Strathclyde.
