First .to, Now .tm, but new domain names may mean problems

As the well of unused Internet addresses ending in '.com' starts to dry up, savvy entrepreneurs are aligning with governments of smaller countries and using their national domain names to sell new Internet addresses for commercial use. In the latest example, NetNames of London and New York has forged an agreement with the government of Turkmenistan, a country in Central Asia, to launch the top-level domain (TLD) '.tm.' Because 'tm' is widely recognised as the abbreviation for 'trademark', NetNames is pitching the new domain name as a way for companies to assert ownership over their brand name, although the service claims no legal trademark protection.

As the well of unused Internet addresses ending in ".com" starts to dry up, savvy entrepreneurs are aligning with governments of smaller countries and using their national domain names to sell new Internet addresses for commercial use.

In the latest example, NetNames of London and New York said this week it has forged an agreement with the government of Turkmenistan, a country in Central Asia, to launch the top-level domain (TLD) ".tm."

Because "tm" is widely recognized as the abbreviation for "trademark", NetNames is pitching the new domain name as a way for companies to assert ownership over their brand name, although the service claims no legal trademark protection.

For a fee of US$250, customers can register a domain name ending in .tm at NetNames' fully automated Web site, at http://www.nic.tm/, the company said.

Most countries in 1994 were assigned a unique TLD by the Internet Assigned Numbers Authority (IANA). Internet addresses in England, for example, end in .uk, while those in Australia end with .au.

Given the sovereign nature of states, IANA has allowed governments to do with their TLDs more or less what they please, which has enabled companies like NetNames to license them for commercial use, according to G. Gervais Davis III, of the law firm Davis & Schroeder in Monterey, California, which specializes in Internet copyright and trademark issues.

The kingdom of Tonga and the tiny island of Niue, both in the South Pacific, are among those who have entered into similar relationships with U.S.-based companies to market their TLD, resulting in ".to" and ".nu".

The idea is an interesting one because it allows Internet registrars to sidestep a messy debate currently underway about who should be given the authority to register -- and hence profit from -- the most popular TLDs on the Internet -- including .com, .org, and .net.

Those TLDs are administered currently by IANA along with a U.S. government contractor, Network Solutions Inc. (NSI) of Herndon, Virginia. NSI's contract expires next month, and the U.S. Commerce Department has proposed an alternative system which would open up the business of assigning domain names to competition, and at the same time create a handful of new TLDs..

That proposal has been mired in controversy, with registrars worldwide accusing the U.S. Commerce Department of being too U.S.-centric. While that squabble continues center stage, companies like NetNames have been able to feed off of the demand for Internet addresses by turning to the TLDs assigned to nation states.

The ball was set in motion by San Francisco-based Tonic Domains Corp., which last June allied with Tonga to launch the TLD ".to," according to Eric Lyons, president of Tonic Domains. The island of Niue followed suit soon after and allied with another U.S. company to float its domain name -- ".nu" -- Lyons said.

Tonic Domains also attempted to strike a similar deal with the Federated States of Micronesia. The cluster of Pacific islands holds the TLD ".fm," and Lyons saw an opportunity to market it to the 8,000 or so FM radio stations in the U.S., he said. The deal never came off, however, because the government there "couldn't quite handle the complexity of what it entailed," according to Lyons.

Countries targeted typically are less technologically developed and have little use for the TLDs themselves. Tonga, for example, has only about 600 computers in the whole country, said Eric Gullichsen, spokesman for the kingdom of Tonga's consulate in San Francisco.

That doesn't mean developing countries don't benefit from the arrangement. Tonic Domain's operations are run from Tonga's San Francisco consulate, and His Royal Highness Crown Prince Tupouto'a of Tonga is a majority owner of the company, Gullichsen said. Tonic Domains has sold about 4,200 Internet addresses since June at US$100 each, and a portion of that money has found its way into a fund to open a science college on the island, he said.

NetNames, meanwhile, gives a share of the US$250 it charges for each registration to the Turkmenistan government, the company said.

NetNames also happens to be a member of the Internet Council of Registrars (CORE), an international alliance of 88 domain name registrars and one of the most vociferous opponents to the U.S. commerce department's proposed solution.

Using national TLDs for commercial purposes has not escaped criticism. For starters, the practice destroys the original intention of assigning a different TLD to each country, which was designed to help Web surfers identify where a company or organization is located before they access its site, according to trademark and copyright lawyer Davis.

In addition, an influx of new TLDs will complicate the problem of how to legislate against trademark infringements on the Internet, Davis said. The subject of trademarks in cyberspace presents a potential minefield of issues, with debates raging over whether trademarks should apply across national borders, and whether using a company name in an Internet address should constitute a trademark infringement at all, Davis said.

Some companies -- which have been characterised as overly paranoid or smart depending on who you ask -- believe that every time a new TLD appears they must register their trademark with that TLD before somebody else snaps it up and hence "steals their trademark."

To resolve that and other issues, a number of groups have proposed reserving the TLD ".tm" for use only by companies which can produce trademark registration documents, Davis said. For example, only a company which holds the trademark for "cheese" could use the Web address "cheese.tm." In light of that proposal, NetNames' use of ".tm" appears particularly obnoxious, Davis said.

Tonic Domain's Lyons acknowledged that adding additional TLDs is likely to further complicate the issue of protecting trademarks on the Internet. But, he argued, more than 1.5 million Internet addresses using ".com" have been registered, and new TLDs are desperately needed.

The introduction of new domains is unlikely to stop with Turkmenistan. An entrepreneur in Iceland has had an idea which utilises that country's TLD -- ".is," according to David Maher, a copyright lawyer with Sonnenschein, Nath & Rosenthal in Chicago and chairman of the Internet Policy Oversight Committee (IPOC).

The entrepreneur in Iceland proposes to use a subdomain -- the part of the address preceding the top level domain -- of ".this," creating ".this.is." That would, in theory at least, allow companies to have a Web address ending "www.this.is/companyX"

NetNames' New York office can be contacted on the Web at http://www.netnames.com/. Tonic Domains can be contacted on the Web at http://www.tonic.to/.

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