What happens if another site already owns the domain name you lust for, or if you've registered a domain name someone else wants to use? In some cases, the two of you could end up in court, particularly when the name was registered deceptively. In the vast majority of cases, though, the domain-owner will sell the name based on a negotiated purchase price.

On the surface, these transactions are fairly simple and the amounts involved typically modest -- anywhere from $500 to $10,000, plus expenses. (One of the most expensive domain purchases came from publisher Mecklermedia, which is reported to have paid over $100,000 to purchase the coveted Internet.com registration from a Massachusetts technology company.)

Selling a domain name isn't entirely free of complications, though, because it involves not only the purchaser and seller, but Network Solutions, the manager of the InterNIC domain name registry, which has final control over Internet naming. For the sale to be successful, InterNIC must change its records and broadcast to the world that the domain name in question now points to a new computer. To accomplish this, InterNIC's newly revised transfer policy (found online at http://www.internic.net/reg-change/instructions.html#transferring) must be followed precisely.

The basic elements of the domain-name sale process, including InterNIC's current procedures, are these:

1) The original owner of the domain name agrees to sell it to the purchaser, and the purchase price (or some portion) is paid.

2) The buyer applies for the domain name, using the E-mail version of the form, and receives a rejection notice and a NIC tracking number.

3) The seller gets a hard copy of InterNICs domain-name transfer form, fills out certain sections, signs and notarizes it, and sends the original form to the buyer. The buyer completes the form's remaining sections (including the NIC tracking number), signs and notarizes it, and sends the original form to InterNIC.

4) After receiving and verifying the form, InterNIC will make the necessary database changes, which in a few days will be reflected across the Internet. The new registrant will then be invoiced for InterNICs registration fees.

5) Following the changeover, the seller must cease using the domain name, including removing it from any letterhead or business cards.

What can happen if the procedure is not followed? For one thing, it is conceivable that InterNIC could delete the old registration without establishing the new one, allowing the name to slip into the public and potentially be registered by some third party. Not a pretty thought, when you consider how likely it is that such a scenario will result in a lawsuit. More commonly, InterNIC will refuse to act on any request, stalling the transfer process and any related publicity or business arrangements for which the buyer originally acquired the domain name.

If you get involved with a domain name sale, make sure you follow these steps to a "T". It's also wise to stay up to date on current InterNIC policies, and make sure that both buyer and seller prepare the necessary information well in advance of the target-transfer date. Once the transfer occurs, remember to file updated information with the various search engines. It is also a good idea to place a notice on the buyer's home page with a temporary link to the seller's new address (if any).

Given the relative ease of transferring a domain name, it might make sense to register many more domain names than you actually need, in hopes selling them off to desperate Web sites. Many companies and individuals have indeed tried "banking" domain names, or even setting up exchanges, and a handful have succeeded.

Is this a good small-business strategy? Not likely. Most of the valuable names are already trademarks of large companies, which may not appreciate being held hostage in order to buy their own marks back, and which may choose to sue rather than negotiate. There are also varying costs to register and maintain multiple domain names, which may be more than most small businesses choose to throw away. Ultimately, most small companies will be best off registering only those domain names they may or will use themselves, keeping in mind that they can buy or sell a name later if the deal is right.

By Jonathan I. Ezor in New York
Ezor (jonathan.ezor@poppe.com) is the director of legal affairs for Poppe Tyson Inc., a multinational strategic interactive services company based in New York City. The opinions expressed here do not necessarily reflect those of Poppe Tyson or its affiliates.

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