Why Issue of “Claw Back” Domain Names is Scary
Domain Incite and TheDomains have reported on the retrieval of some new gTLD domain names that were sold by registrars and in the accounts of domain owners. This is something that all of us should keep in the back of our minds when investing in and/or developing gTLD domain names, as I assume this is covered in the terms and conditions we agree to when registering domain names.
As someone who frequently buys domain names in private and who prefers to quickly re-sell domain acquisitions, the primary issue I thought about when I read this news is the implication of what could potentially happen if the original buyer had already flipped one of the domain names, and a domain name was retrieved from the account of an aftermarket buyer. Unless the seller refunded the buyer because of this issue, the buyer would be out of luck. In a situation like this, I would hope the seller would give a refund – I know I would without question, even though the claw back was not my fault.
Another issue is what happens in the event someone develops a website on a domain name that was taken away. Someone commented about that on Mike Berkens’ article, and as time goes on, I could see that becoming a greater issue. If there is a risk that the registry could take back domain names, it’s something to consider. My bet would be that this is a one time occurrence, but if the potential is there, it’s another risk that needs to be considered.
I am not a lawyer and won’t speculate on legal responsibility or liability in a case where a re-sold and/or developed domain name was taken back, but that is another consideration that needs to be made by domain sellers and developers.
One thing I plan to do with the 3 new gTLD domain names I have listed for sale is take them down from third party aftermarket websites, and if I do end up selling them privately, I will have my counsel draft something to protect my interests in case of a clawback. I’ve owned the names for a few weeks, so I assume I am in the clear and have no worries, but you know what they say about people who assume things.
Hopefully, this is a one time issue based on a glitch, but domain investors who intend to sell their domain names and developers who intend to build their domain names need to be aware of the potential trouble this could cause.
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