Domain Name System shows signs of stress from financial maneuverings

Cybersquatting, speculation hurt trademark owners and sow confusion online

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The World Intellectual Property Organization warned in a report issued last month that those practices threaten the interests of trademark holders and are causing confusion among Internet users. Francis Gurry, deputy director general of the Geneva-based WIPO, said in a statement that the new methods “risk turning the domain name system into a mostly speculative market.”

Gurry added that instead of being used to identify specific businesses or other Internet users, “many [domain] names nowadays are mere commodities” to be bought and sold.

It’s already possible to make astonishing sums of money selling domain names. Domain Name Journal, an online magazine published by Internet Edge Inc. in Tampa, Fla., reported that diamond.com fetched $7.5 million from a buyer last year and that vodka.com sold for $3 million.

What makes generic names such as those valuable is so-called type-in traffic from users who enter generic Web address names into their browsers to see what turns up, said Frank Schilling, a domain name investor and blogger who lives in the Cayman Islands. Schilling claims to own several hundred thousand domains, including generic ones such as antarctica.com.

Domain investors such as Schilling draw a sharp distinction between what they do in registering legitimate generic names and the actions of cybersquatters who register domains that use or closely resemble real brand or company names, such as microsotf.com.

That misspelled domain name was registered through EnCirca Inc., a registrar in Woburn, Mass. Private registration policies keep the domain owner’s name and contact information hidden from public view. EnCirca does provide a Web interface for e-mailing the owner of microsotf.com, but a note sent by Computerworld received no response.

Citing the software advertising on microsotf.com, Tom Barrett, EnCirca’s president, said he would call the use of that domain name cybersquatting. But Barrett added that he doesn’t have the power to do anything about the name or the Web site without exposing himself to possible litigation.

Asked about microsotf.com, a spokeswoman for Microsoft Corp. said the software vendor wouldn’t comment about a specific domain. But Microsoft announced last month that it had filed lawsuits against alleged cybersquatters in the U.S. and the U.K. The company also said that it had reclaimed more than 1,100 infringing domain names worldwide over the past six months.

Frederick Feldman, chief marketing officer at MarkMonitor Inc., a company in San Francisco that registers corporate domains and offers a variety of brand protection services, said a recent audit of 25 leading brand names found nearly 45,000 pay-per-click ad sites that use one of those 25 brand names in some way.

Fixing the domain name problems isn’t simple. For instance, private registrations protect domain holders from things such as identity theft. And trademarks aren’t always black and white. Domain name holders have complained of “reverse cybersquatting,” in which a trademark holder attempts to gain control of a name that the domain owner considers to be a generic term.

Jason H. Fisher, an attorney at Los Angeles law firm Buchalter Nemer Fields & Younger, said the biggest obstacles to fixing the Domain Name System are its international nature and the reluctance of the Internet Corporation for Assigned Names and Numbers to take action. Fisher said ICANN “would rather do nothing than make waves.” 

Copyright © 2007 IDG Communications, Inc.

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