Policy needed to stop lapsed-domain name hijacking, says ICANN working group

The secondary market lives on in a sophisticated form, with some registries blamed for doubtful dealings

After raising the question of misuse of hastily relinquished domain names (Computerworld, July 3), ICANN’s recent meeting in Morocco got down to some deeper discussion of the “monetisation” of names — the way they acquire more than their “face value” and are traded on a secondary market.

The simplistic standover tactics of domain-name squatters trespassing on trademarks have diminished since cases were successfully argued in court, a “domain-name marketplace workshop” heard. But human nature and the free-market system have evolved more subtle ways of exploiting the mone-tary value of some names, and essentially ethical forms of secondary market have evolved.

Even registrars are being accused of dubious dealing in names, and the debate reached a personal level in an exchange between Paul Stahura, CEO of registrar ENOM and Sarah Deutsche, associate general counsel for Verizon. Deutsche accused ENOM of holding “144 variations of our Verizon trademark and our Superpages trademark, which is the name of our online directory”.

Some of these names were apparently held by ENOM because the original registrant had defaulted on payment and others were in demand by more than one potential owner and ENOM was holding an auction.

“When we first complained to ENOM, they told us we had two choices,” says Deutsche. “One is we could purchase our names for US$160 (NZ$264) plus a US$29.95 registration fee or they would let the names be deleted. And deleted means it would be dropped back into the pool and auctioned off to the highest bidder.

“And you can see here that they have a very active practice of optioning Verizon trademarks.” She questioned the legality of some of these practices under US law.

Stahura in response disputed both the count of names and the timing of the inquiries that Deutsche says she had made. However, two of the names had already been relinquished to Verizon and the parties were confident they could negotiate the matter to a satisfactory conclusion.

It is clear that the general problem remains, however. “I think at a minimum we need a PDP [policy development process] to study these issues and suggest specific policies prohibiting registrars from promoting and participating in the speculation of typo-squatted trademarks in the secondary market,” Deutsche says.

Other kinds of speculation in domain names which gives them a monetary value were discussed. A registrant who thinks they can sell, say, advertisements for various brands of lip balm on an otherwise content-free “www.lipbalm.com” website can reserve the name without payment for five days (known as the “add grace period”) and test how many hits it gets, then release it back into the pool if the degree of attention looks like being insufficient to earn money. Only a small pay-per-click earning is sufficient to pay the domain-name registration fee, with the result that a large number of names are locked up in sites that are essentially content-free collections of advertising pointers. Some of them are tradeable on the secondary market at many times their original registration fee.

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