What You Need to Know About Website Purchase Agreements

traverselegal - July 12, 2012 - Internet Law, Website Purchase Agreement Tips

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Do you want to sell your website and your domain name or potentially just your website or just your domain name. What do you need to do as the seller, and what do you need to do as the buyer in your website purchase agreement or your website sales agreement?

My name is Internet Law Attorney, Enrico Schaefer, and today we’re talking a little bit about how to sell your website, which can mean several different things. When people talk about selling their website, often they’re talking about selling their domain name and the website that goes with the domain name.

In more limited circumstances, someone might really be looking to buy just the website, which would be the HTML and other code that sits on the web hosting server and that would get exported, and then the buyer would take that code and simply roll out that website on their own domain name. But more often than not, a website purchase agreement is going to sell both a domain name and a website, and that is what we typically see as web law attorneys. We either have someone who wants to sell their website to a buyer or someone who wants to purchase a website from someone who may or may not have been a seller, but is being approached because there’s a willing buyer who wants to buy them out of their position.

What many people may be surprised to learn is that the buying and selling of websites is relatively common. It happens all the time. People can buy and sell domain names, right? Why can’t they buy and sell, not only the domain name, but the website that goes with it? There are many advantages to buying a domain name plus the website because then you get all the web pages and the SEO that’s wrapped up in the website, in addition to the domain name. So, theoretically, you could go out and grab a page rank six website or a page rank four website and domain name, and you’re starting with baked-in SEO right out of the gate, so this is fairly common. There is a market out there for both the buying and selling of domain names and websites.

As an Internet Law Attorney, this is what you need to be thinking about with your website purchase agreement. The first thing is you need to identify all the assets that are going to go along with the sale. It could be the domain name. It could be trademarks that are related to the domain name. It could be trademarks that are related to any brands that are identified on the website itself. There could be images that are going to certainly be captured by any terms that deal with copyright. And, of course, if you are the buyer of a domain name and website, then in the website purchase agreement you are going to want to spell out whether or not the seller is indemnifying and holding you harmless for any problems there might be with trademarks or copyrights as a result of purchasing the site. In a way, you’re stepping in the shoes of the website owner in taking on any liability that might be already baked into that website, that domain name, trademarks and copyrights associated therewith.

A website purchase agreement needs to spell out what assets are included and who’s responsible if there are any problems with the website thereafter. What typically is going to happen is, someone buys a website. The website purchase agreement fails to spell out issues related to copyrights and trademarks. Sometime thereafter, the new owner gets a threat letter from a trademark owner that says, “You need to give me your domain name because it violates my trademark rights.”

Well, I have news for you. If you buy a website and it includes the domain name, and then you end up having to turn over the domain name to a third party based on a trademark infringement threat letter, you basically bought nothing. You will end up having lost your entire investment in that website, in that domain name.

Who’s responsible for that? Very important. Now, what we always advise our clients to do when they come up against a website sale possibility is to do their own due diligence. A good internet law attorney will always tell you that God helps those who help themselves, especially on the Wild, Wild West of the World Wide Web. Even if you’re going to get indemnity and hold harmless from the seller, if that seller ends up disappearing or they don’t have any money left to deal with it, they spent all the money you paid them, you’re going to end up holding the bag on trademark and copyright issues. So, you need to be very careful about protecting yourself.

An audit, which would be internal, you wouldn’t necessarily disclose it to the person who’s selling the website; an audit would include such things as a review of copyrights included on the site, a review of trademarks included on the site. You want to see if there are any third party trademarks being used, especially if it’s an e-commerce website. And you’re going to want to do certainly a trademark assessment to make sure that the domain name you’re buying doesn’t appear to infringe any third party marks. Because certainly if you buy the website and domain name, the first question someone’s going to ask you if it turns out there is a problem is, “Well, what kind of due diligence did you do on the trademark issue before stepping in as the owner of that domain name?”

The very first thing that we tell clients who are looking at either being the seller or the purchaser on a website purchase agreement transaction is they need to get a good, competent website attorney involved so that they can handle the transaction. If it’s more than a couple thousand dollars, then certainly there’s going to be a good return on investment making sure that website purchase agreement gets drafted properly.

My name is Internet Law and Website Lawyer Attorney, Enrico Schaefer. We’ll see you next time.

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