Legal status of domain names: between right of use and ownership

By Yasmine EDDAM1 May 2025

Today, domain names are a strategic asset for any company operating on the Internet. Yet their legal nature remains difficult to define. These digital identifiers occupy an ambiguous position in our law, between a simple contractual right of use and true ownership. This classification is not just a theoretical question: it determines the protection afforded to the holder and the operations that can be carried out on this asset.

The complex nature of domain names

A technical resource first and foremost

A domain name is first and foremost a technical addressing element on the Internet. It enables a numerical address (IP address) to be associated with a name that users can easily remember. This primary function explains the hierarchical technical organisation of the domain name system, with different levels (top-level domain such as ".fr", second-level domain such as "example.fr").

This technical nature determines the legal framework for domain names. The management of the system is entrusted to bodies such as ICANN at global level or AFNIC for ".fr" names. These bodies define the contractual rules governing the allocation and use of domain names, although in most countries there is no specific legislation in place.

An intangible asset with economic value

Beyond its technical dimension, a domain name can have considerable economic value. This value is based on several factors: rarity (a name can only be attributed to one person), commercial attractiveness, traffic potential, or proximity to a well-known brand.

This economic dimension is recognised by tax law. The tax instruction of 9 May 2003 (BOI 4 C-4-03) considers that the costs associated with the creation or acquisition of a domain name constitute non-depreciable intangible items where the rights attached to the registration are not limited in time.

Transactions in domain names sometimes reach significant amounts. The name "crypto.com" sold for several million dollars. These exchanges bear witness to the economic reality of domain names as a valuable asset.

The different possible legal qualifications

Contractual right of use

The most obvious definition of domain names is that of a right of use arising from a contract. The European regulation on .eu specifies that names are allocated "for use". Similarly, the AFNIC naming charter provides for the allocation of a domain name for use for a limited and renewable period.

This right of use is temporary (generally renewable for one year) and subject to compliance with the contractual conditions set by the registries. The holder therefore does not have full control over his or her domain name, as would be the case with a true property right.

This contractual approach also explains why domain name disputes are often resolved by alternative dispute resolution procedures, such as the UDRP, rather than by applying intellectual property law.

Sui generis property?

However, some court rulings have recognised that the holder of a domain name is an "owner". In 2000, the Paris Court of Appeal ruled that the person reserving a domain name could be considered the owner. This qualification seemed to be supported by a decision of the European Court of Human Rights on 18 September 2007 (Paeffgen GmbH v Germany), which held that a judicial prohibition on the use of domain names constituted a violation of the right to property protected by Article 1 of the Additional Protocol to the Convention.

However, the concept of "property" used by the ECHR corresponds to an autonomous definition that does not exactly overlap with that of French law. It therefore seems excessive to deduce that the domain name is the subject of a property right within the meaning of article 544 of the Civil Code.

Other authors have proposed describing domain names as sui generis rights, i.e. specific rights that do not correspond to any pre-existing legal category. This classification would reflect the unique nature of the domain name and the right retained by its holder even in the absence of exploitation.

Protection of distinctive signs

The use of a domain name can give it protection under the law on distinctive signs. A name used as a "customer rallying sign" can thus be protected in the same way as a sign or a trade name.

However, this protection only arises when the name is actually used. As the Court of Cassation pointed out in an important ruling of 13 December 2005 ("Locatour" case), the registration of a domain name without use does not entitle the holder to trademark protection.

On the other hand, a domain name that is actively used can be considered as an anteriority that can be used against a later trademark application, in accordance with Article L. 711-4 of the French Intellectual Property Code.

The practical consequences of these qualifications

Tax implications

The legal status of a domain name determines its tax treatment. Considered as an intangible asset, it must appear as an asset on the company's balance sheet. In 2012, an administrative court ruled that the right to use a domain name "constitutes a potential source of revenue and is sufficiently durable for the person to whom it is assigned".

The annual fees paid to maintain the registration are deductible from taxable income as operating expenses. This distinction between intangible assets and maintenance costs is important for the tax optimisation of companies managing a portfolio of domain names.

Development and transmission

The classification of a domain name also has an impact on valuation and transfer operations. If the name is merely a right of use, its transfer is in reality akin to a termination followed by a new registration for the benefit of the "transferee". On the other hand, recognising a right of ownership facilitates legal transactions such as contributions to companies or pledges.

In 2000, the Marseille Commercial Court accepted that a domain name could be contributed to a company. Similarly, the possibility of leasing a domain name (often referred to by the inaccurate term "licence") presupposes a form of ownership.

However, these operations must comply with the rules laid down by the registries. Until recently, some domains, such as .fr, did not allow domain name transfers.

Associated legal guarantees

Finally, the legal classification determines the remedies available in the event of infringement of the holder's rights. If the domain name is considered to be a distinctive sign, it can be defended by actions for unfair competition or infringement, depending on the circumstances.

Case law recognises that the use of a trade name in a domain name, undermining the identification or advertising function of a trade name previously used by a competitor in the same sector of activity, constitutes an act of unfair competition (Cass. com., 7 July 2004).

On the other hand, it is more difficult to defend an unused domain name against third parties claiming prior rights. This is what is at stake in the practice of "cybersquatting", which consists of registering domain names corresponding to well-known trademarks and then selling them back to their rightful owners.

To guard against these risks, a preventive registration strategy is still necessary, as detailed below our article on domain name registration procedures.

Towards clarification of the legal status of domain names?

The legal status of domain names is still under construction. In 2010, the French Constitutional Council emphasised the importance of domain names in economic and social life, recognising that the rules governing their allocation affect "intellectual property rights, freedom of communication and entrepreneurial freedom".

However, this decision did not settle the question of their legal nature. In practice, domain names continue to be treated according to a pragmatic approach, combining contractual elements and protection by various intellectual rights depending on their use.

For businesses, this situation calls for particular vigilance in the management of their name portfolio. Optimum protection requires a strategy that combines preventive registration, effective exploitation and defence against infringement, as explained on our page dedicated to conflicts between domain names and distinctive signs.

If your company has complex questions about the legal status of its domain names or is considering operations involving these digital assets, our expert lawyers in domain names and intellectual property can help you secure these steps.