Sedo Boilerplate Blows A Sale

onlinetv · Nov 11, 2011

I recently had a six-figure sale on just a domain name fall through because of the contract supplied by Sedo. While the contract said I had 6 days to look it over and suggested lawyers also look it over I was told to sign it and return it next day. I carefully read the contract and was dumbfounded to find a sentence that said I had to turn over all intellectual property with the domain name, even though it was a strict domain (no website, art, programming at all) sale.

The domain name is a top level generic and I own several other domains of the same name with other than .com. There was no request for the web site, the logos, the contracts and other sundries that the company, whose name is the same, and other intellectual property held by the company under that name during the negotiations. This was strictly about the domain name.

Here is the 2-sentence paragraph:
"Seller shall deliver under this agreement complete, free, and clear right, title, and interest to the Domain Name. Upon completion of the transaction, Seller also thereby sells, assigns, and transfers all of its right, title, and interest to the related intellectual property rights associated with said domain, including, without limitation, affiliated trademark rights (if applicable), all associated good will and other intellectual property rights associated with said domain and the word(s) which makes up the domain in association with any goods and services to which good will or other rights have inured."

I changed it to:
"Seller shall deliver under this agreement complete, free, and clear right, title, and interest to the Domain Name."

The sales rep then started to wail about how 10,000's of people have signed this without a bother and I was being an idiot. I read the line again. Clearly stating that after the money is transacted I would turn over all intellectual property related to the domain as well as the domain name. I can't do that and was just selling the name. Not the logos, not the contracts it has, not the phone lists and contacts, just a name. There are over 7000 signed performance contracts that were signed to under this name and they are mine.

I read the contract again. It is a boilerplate where you check a box for "domain name" or "website and domain" and mine was checked for domain only. But the contract still carries the sentence where all intellectual property must be handed over and clearly it is not optional, arbitrary, or deferred by the check box. It is part of the seller responsibilities.

Shockingly the buyer wanted out once I said I am not giving the associated contracts, logos, sites, or any other intellectual property with the domain name sale - just the domain name. So I think my fears to sign assuming it was not really part of the contract were justified and that something was amiss. The buyer was looking for more than a domain name.

Anyway, my question is why Sedoâs contract would contain such all-encompassing language concerning intellectual property when it is domain name only sale? Was the buyer/agent trying to get a lot more than they were paying for? Shouldnât Sedo make sure that language was for just when the "website and domain name" was checked? This language certainly makes it difficult for sellers of just domain names.

I am a little irritated as this would have been one of the top 10 domain sales for the year so far. :sigh2:

Gerry · Nov 11, 2011

Honestly, I think you may have done the right thing if those performance contracts forbade any third party disclosure or the selling of their information.

For the sake of one top ten sale, there may have been 10, 100, 1000, 7000 judgements against you if YOU violated the TOS you had them abide by.

Clearly the potential buyer wanted that list of 7000 equally (or more) than the name itself. If it was generating a steady stream of passive income, that is always figured into the asking price and the end-negotiating point.

On the other hand, without that list, is there any inherent value to the domain name? Was it a generic term? Or was the value totally built upon a name and an accompanied website? Were there any negotiations or pre-contractual discussions/letters/documents mentioning the sale of the name AND the website? Did you, in essence, breach the agreement between you, sedo, and the buyer?

Perhaps it would have been best for an attorney to have handled this and re-negotiate the terms of this contract.

onlinetv · Nov 11, 2011

The sale was just a domain name. There were two check boxes, one for a website, one for domain only, the domain only was checked. But the later verbiage was for more, as I showed above.

The domain had a single page that forwarded to Sedo parking since 2003. Prior to that it was the most prolific online video site from 1996 to 2003. All the rights and intellectual property of the company was assigned to me when it broke up.

I use those rights to earn money today. They do not have much to do with the domain name other than they were aquired when it was active.

The domain now has a site on it to preserve and grow the value through its PR and SERP. It is somewhat generic in that you cannot trademark the name. However it is a highly desireable name and 15 years of depth that gets 6 figure euro offers.

There were no discussions at all with client or Sedo other than this was a deal for the domain name. That is why the surprise with all the IP tossed in. There is no way I would sign such a contract unless it was corrected as I pointed out. I do have many years in IP law and won't get caught out with my pants down.

I would like to know do ALL Sedo domain only sales contracts contain that line?

Rick

chipmeade · Nov 11, 2011

You have the right to change the contract, Sedo and the buyer have a right to bail. Because you raised red flags with the change, you de facto indicated that you still will retains some rights in the domain even after selling. Remember that rights in a domain can be broader than strictly the TLD. Might have been better served to open a discussion on your concerns rather than changing the contract. It is your prerogative though. Good luck.

onlinetv · Nov 11, 2011

chipmeade said:
You have the right to change the contract, Sedo and the buyer have a right to bail. Because you raised red flags with the change, you de facto indicated that you still will retains some rights in the domain even after selling. Remember that rights in a domain can be broader than strictly the TLD. Might have been better served to open a discussion on your concerns rather than changing the contract. It is your prerogative though. Good luck.

Any domain name you buy does not come with any right except the right to own and use it unless THAT subject is discussed. Just like a website is not sold with it unless it is understood and negotiated. That is why there were two boxes one for website and one for domain name only. There is nothing more clear in selling a mere domain name than ""Seller shall deliver under this agreement complete, free, and clear right, title, and interest to the Domain Name." That was all that was supposed to happen and this covers everything even the red flags you seem to see. I mean really, free, clear right, title, and interest is all there is in a domain name. EVERYTHING else is additional and that is not where we went.

Adding that "Upon completion of the transaction, Seller also thereby sells, assigns, and transfers all of its right, title, and interest to the related intellectual property rights associated with said domain, including, without limitation, affiliated trademark rights (if applicable), all associated good will and other intellectual property rights associated with said domain and the word(s) which makes up the domain in association with any goods and services to which good will or other rights have inured" takes it beyond a domain name sale and into a sale that includes, logos, trademarks, business associations, phone lists, contracts, and it also includes the words "without limitation" which means ANYTHING can be included.

In the most wide interpretation it really means you can be tied up in courts, even if you are right, with issues that have nothing to do with selling JUST A DOMAIN NAME.

You also say the contract can be changed and yet the Sedo rep said it was next to impossible and further - no one has ever gotten it changed. Any change would take at least 30 days for their lawyers to review according to him. Therefore I question why and how such strong language can be included in a domain name sale. If it was for a website or a company - maybe then, but just a generic name?

I would still like to hear from anyone else who actually sold a domain name only through Sedo if their contract had that same extra sentence?

I am working on getting this settled with Sedo now as the domain name gets about 20 offers a year on their marketplace and I don't want to go through the negotiations again and then get the same bogus contract.

Anyone else done a sale and can look over those lines in it?

Rick

ps, I did discuss it with them at the time, but apparently they dont wait for a signed contract to send to the buyer, they just send two contracts out and you never get one contract with both signatures. A bit curious in itself.

chipmeade · Nov 11, 2011

I don't disagree with you. It IS your right to change the contract, whether SEDO wants to accept it is up to them. Like any bureaucracy, change is going to spook them. Insist on a better broker to be involved. Ask for Dave Evanson.