Domain-name wars: Rise of the cybersquatters

Trademark owners say cybersquatting on the Web has gone too far -- and they're pushing back.

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Paul Levins, vice president of corporate affairs at ICANN, calls Deutsche's assertion "mischief making." Use of the newest GTLDs, such as .tel and .mobi, is growing, he says. Plus, two ICANN-commissioned economic impact reports, published in March 2009, show that increased competition would benefit consumers, adds Levins, noting that intellectual property concerns "can be addressed through existing legal mechanisms and appropriately designed ICANN procedures for protecting intellectual property."

Related blog: Why Wolfgang Puck wants his .food network.

But without additional protections, businesses worry that it will be impossible to protect their brand names online in an expanded GTLD universe. Goodendorf, for instance, frets that IHG will be forced to buy the same set of defensive domain names for each new top-level domain. "That will run up our costs even more, [and] it's going to become more confusing for people to find what they're trying to find."

Celebrities such as basketball star Steve Nash are another target of cybersquatters.

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Intellectual property owners complained loudly to ICANN through the IPC, one of several advisory groups to the ICANN board. In response to those concerns, ICANN asked the IPC to come up with recommendations.

It formed the Implementation Recommendation Team, which on May 29 issued a report to ICANN listing suggestions for dealing with the new top-level domains. These include the establishment of a list of trademarked names that can't be sold in the new GTLDs, a provision for rapid takedowns of sites that blatantly violate trademarks, disablement of offending domains instead of transferring ownership and requiring the complainant to pay for their registration, and a complaint mechanism to deal with registrars that don't cooperate with UDRP decisions (see sidebar).

A decision on the report's recommendations is expected, possibly as early as September, following a period of public comment and discussions this summer. It's unclear how many of the report's recommendations will be adopted, but IPC President Steve Metalitz says ICANN has done a good job so far in responding to the concerns of intellectual property holders.

"The board recognized that there is a problem. They won't roll out the new GTLDs until that problem is resolved," he says.

Unfortunately, the proposal applies only to new GTLDs when it's the existing ones that cause the biggest problems, Metalitz says. Even if every recommendation is adopted for the new GTLDs, getting the same rules applied to existing domains like .com will be tough, he adds. "The problem is, you have entrenched interests that are resistant to change," he says.

However, ICANN may be able to apply the new rules as existing registrar contracts expire, Levins says. "We may be able to retrofit the features that are in the new GTLD agreements to address abuse."

Meanwhile, the cybersquatting pandemic shows no signs of abating. While ICANN has made strides in improving oversight through its audits of registrars, the potential financial gains from cybersquatting remain too high and penalties too small to stop the growth in domain-name brand abuse, let alone deter the practice. That's why the IRT recommendations, even if applied to existing top-level domains, aren't likely to completely solve the underlying problem.

But the GTLD issue has intensified the focus on trademark abuse in domain names, and the matter now has ICANN's full attention. So the GTLD proposals could be a catalyst for change -- eventually. For Metalitz and the intellectual property owners he represents at the IPC, those recommendations represent one small step in the right direction.

NEXT: 7 ways to protect your brand from cybersquatters

Correction: This article originally quoted a source naming LLC as a domain registrar that engages in domain parking; however, while the company does buy and sell domain names and offers domain parking services, it is not a registrar.

Copyright © 2009 IDG Communications, Inc.

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