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?

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But critics say ICANN has let things slide in the past for its constituent registrars. For example, some domainers -- and registrars -- earned a bad reputation by taking advantage of an ICANN loophole that allowed the practice that became known as "domain tasting" (a practice that, for the record, Go Daddy openly opposed). Until ICANN changed its policy in December 2008, registrars and others could set up domains and not pay any registration fees if the order was canceled within five days.

In the interim they would monetize the site with ads and wait to see how well it did. The domainers would then buy the domain or simply keep registering and canceling it over and over again to avoid paying for it -- a practice known as "domain kiting."

Both practices trailed off dramatically last year when search giant Google Inc. stopped including sites less than five days old in its search results and ICANN changed the rules. But some organizations -- including registrars -- got away with this practice for years, says James Carnall, manager of the cyberintelligence division at Cyveillance Inc., a company based in Arlington, Va. that monitors cybersquatting and other brand-damaging online activities for corporate clients.

And other problems remain, Metalitz says. For example, many registrars run other businesses that host or own pay-per-click sites, some of which may be involved in cybersquatting. However, those relationships are not clearly spelled out in the accreditation contracts, he says. In other cases, registrars may use a post office box as an address, so tracking down the location where a registrar does business is difficult.

"Even basic things like that are not in place. That's a problem for law enforcement and trademark holders," Metalitz says.

The problem is twofold, says Peter Kjaer, a lawyer with toymaker Lego Juris AS, based in Billund, Denmark: Cybersquatting is lucrative, and offenders don't pay a high enough penalty if they're caught. Currently, if a trademark holder wins a UDRP complaint, then the cybersquatter simply loses the domain name. But the loser of such cases should pay all costs relating to the UDRP process, Kjaer says. "This would cause a significant decrease in infringing domain-name registrations by cybersquatters," he says.

However, ICANN has no power to enforce such penalties against domain-name registrants. Likewise, the World Intellectual Property Organization and other dispute resolution bodies that handle UDRP cases have no authority to take action against registrars or registry operators. ICANN can terminate accreditation for noncompliant registrars, but it needs to be able to mete out other penalties as well, Metalitz argues. "It's building up enforcement, but it has a long way to go," he says.

NEXT: Image gallery: Spotting the cybersquatters

Copyright © 2009 IDG Communications, Inc.

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