Registrars under fire in domain disputes

Are domain registrars making money from cybersquatters at the expense of legitimate brands? If so, why isn't ICANN stopping it?

Sarah Deutsche is on a crusade against cybersquatters. As vice president and associate general counsel at Verizon Communications Inc., she has sued many businesses involved in the illicit activity. Along the way she has recovered thousands of domain names that play off of Verizon's brands. But what really irritates her, she says, is who the perpetrators are.

Deutsche says that all of the companies Verizon has sued for cybersquatting are domain-name registrars that have been accredited by the Internet Corporation for Assigned Names and Numbers, the organization that oversees the Internet's domain-naming system. "They pay a $4,000 fee to ICANN and it puts them in business," she says.

Cybersquatting -- the practice of abusing trademarks within the Internet domain-name system, often by registering domain names that exploit common misspellings or typographical errors in trademarked names -- isn't a new problem, but industry watchers agree that it's getting worse (see "Domain-name wars: Rise of the cybersquatters"). The growth in cybersquatting is intertwined with the rise of domain parking, in which domains are registered for the purpose of generating advertising revenue, and for future resale of the domain to the highest bidder.

While some "domainers" register generic names, others use names that exploit trademarked brands in order to attract traffic and generate ad revenue. In many cases, Deutsche alleges, registrars -- or businesses associated with those registrars -- profit either directly or indirectly from domain-parking sites that use variations on popular trademarked brands and generate revenue by stealing traffic away from brand holders' sites.

Intellectual property holders have started pushing back aggressively against cybersquatters and domainers -- and the domain registrars seen to abet them -- by filing either lawsuits or complaints with ICANN using the Uniform Domain Name Dispute Resolution Policy (often called UDRP) procedure for addressing domain-name brand abuse.

Chicago-based online auction site uBid Inc., for instance, recently sued The Go Daddy Group Inc. and its subsidiaries for providing domain-parking services that uBid claims infringe on its trademarks (download PDF). Christine Jones, general counsel at Scottsdale, Ariz.-based registrar Go Daddy, says the case has no merit because the federal law known as the Anticybersquatting Consumer Protection Act applies only to registrants of domain names, not the registrars.

Go Daddy is not in the domaining business, Jones contends, although its customers may be. "We do have a small number of names, maybe a few thousand, that we use on a test basis, but we do not have a huge portfolio," she says. Go Daddy does not register domain names to monetize them, she adds.

But that practice is widespread and takes many forms, says Steve Metalitz, president of the Intellectual Property Constituency (IPC), an ICANN-sanctioned organization that advocates on behalf of brand owners. "Several registrars, including Go Daddy, have new registrations automatically resolve to a parking page if the registrant does not provide a server to which the name resolves," he says.

The money to be made from domainers has had a corrupting influence on some ICANN-accredited registrars, intellectual property holders say. Some turn a blind eye while collecting registration fees from cybersquatters, while others are actively involved in cybersquatting themselves, Deutsche claims.

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