| There is a tendency to label anyone who is in the | | | | or is unfairly detrimental to the complainant's rights. |
| business of making money out of domain names a | | | | Desirable residences |
| cybersquatter, and in the process to regard them as | | | | The domains which have reportedly changed hands |
| guilty of fast practice verging on the fraudulent. | | | | for high sums of money tend to be generic names in |
| This article examines how the domaining business | | | | which it is difficult for anyone to claim trade mark |
| works, what are the legal considerations, and how it | | | | rights. For example, "Business.com" was sold for |
| might effect your own business. | | | | $7.5m, while "Wines.com" went for $3m and |
| There is a tendency to label anyone who is in the | | | | "Mortgage.com" for $1.8m. Misspelled domain name |
| business of making money out of domain names a | | | | "Voyuer.com" was auctioned for $112,100 at |
| cybersquatter, and in the process to regard them as | | | | Snapnames (apparently this is the highest sale price |
| guilty of fast practice verging on the fraudulent. But | | | | ever for a misspelled domain name). Clearly even if |
| is it appropriate to regard the growing body of | | | | these figures are inflated hype, domain names can be |
| entrepreneurs, known as "domainers", whose | | | | valuable commodities, and are of huge importance to |
| livelihood turns on building up large portfolios of | | | | e-commerce, and on-line branding. |
| domain names, as cybersquatters?. Although some | | | | The prices some generic terms have fetched serve |
| domainers may well be cybersquatters, many of | | | | to highlight their attractiveness. Even the owners of |
| them are not cybersquatters in the sense in which | | | | famous brands and trade marked names have made |
| the term is generally understood in the law. | | | | good use of generic terms as website addresses. |
| Cybersquatters | | | | Generic names and domaining |
| Cybersquatters register domain names, usually a | | | | So, generic names are gold for domainers, but names |
| well-established trade mark, in bad faith to gain some | | | | that target a specific audience are also valuable (for |
| commercial advantage. This usually involves trying to | | | | example, people looking for information on eating |
| sell it back for an inflated price to a party known to | | | | disorders). The way in which domainers make |
| be interested in having the domain name, again | | | | money from domain names is not limited to reselling. |
| usually the trade mark owner. Alternatively, the | | | | Indeed, the business model in the US tends more |
| domain is used to direct traffic to the cybersquatter's | | | | towards holding domains in a portfolio for web |
| own website and away from a competitor's. Worse | | | | advertising revenue rather than for resale. The |
| still, some cybersquatters use the domain to damage | | | | function of the domain is then to attract traffic and |
| the true owner's reputation. Generally though, the | | | | generate click revenue. The model specifically |
| difficulties that have arisen between trade mark | | | | depends on the 15-20% of surfers who reportedly |
| owners and registrants of certain domain names | | | | type a name into a web browser rather than into a |
| have been some of the main reasons giving | | | | search engine. This brings direct navigation |
| cybersquatters a bad name. | | | | traffic (as opposed to indirect traffic through a |
| The first-come, first-served system of domain | | | | search engine like Google) to the page at which the |
| registration, which generally prevails, creates a | | | | domain is "parked"(that is the place the domain |
| pressure to be the first to register a domain name. | | | | address arrives at), or to its website if there is one |
| This tends to lead to disputes on the "right" to | | | | developed, as there sometimes will be. |
| register. However, simply because you have a | | | | Where the money comes from. |
| registered trade mark or have been using a trade | | | | Imagine you are seeking internet information on job |
| name for a lengthy period does not mean that | | | | openings, and type into your web browser |
| another person with a legitimate reason for | | | | "careerinfo.com", hoping to find a useful site. You |
| registering the domain and using it in good faith must | | | | would reach a website populated with job-related |
| give it up. One example of this is the Prince Sports | | | | keywords. The domain owner, (sometimes referred |
| case in which Prince Sports were unsuccessful in | | | | to as a click farmer) would collect revenue |
| having the domain transferred to them from Prince | | | | each time you clicked on one of the featured ads. |
| Computers in the UK. | | | | The domainer's revenue would be by way of a |
| Administrative procedures to resolve disputes | | | | commission from Google or other search engines. |
| There are administrative procedures in place so that | | | | Although the amounts per click may be quite low, for |
| domain disputes can be resolved without recourse to | | | | a high volume site the numbers soon mount up to |
| the courts. This is vital in view of all the problems | | | | large figures. |
| with jurisdiction that inevitably arise in a global system | | | | The reason the revenue comes from Google or |
| like the internet. Domains and disputes are managed | | | | Overture or other search engine is that advertisers |
| by the Internet Corporation for Assigned Names and | | | | enter into arrangements with Google or other search |
| Numbers (ICANN). ICANN manages generic Top Level | | | | engines to pay whenever someone clicks on their |
| Domains (gTLD) such as .biz, .com, .info, .name, .net, | | | | ads. In order to get their links listed high in search |
| and .org, and delegates the registration of domains to | | | | results they bid on keywords. So, if the amount |
| registrars. There are over 1,500 accredited registrars, | | | | being paid per click for a keyword like "career info" |
| each with their own policies and procedures for | | | | were $3.06, then Google or other search engine |
| registering, maintaining and handling disputes regarding | | | | would keep the entire amount if the click on the |
| domains. | | | | advertiser's ad came directly from the results |
| When registering gTLD domains, the Uniform Dispute | | | | displayed on its own pages. However, as ads are |
| for Domain Names Resolution Policy (UDRP) is | | | | sometimes also sub-contracted out, so that they |
| automatically incorporated into the registration | | | | display on a network of third party sites (that is, |
| agreement. Complaints can be filed with one of four | | | | domainers' sites), if the click on the advertiser's ad |
| bodies, the largest of which is WIPO in Geneva. | | | | comes from a third party's page or website then |
| Typically filing a complaint temporarily freezes the | | | | Google or whichever other search engine has the |
| domain and prevents it from being transferred to any | | | | primary contract with the advertiser, would share the |
| third party until a decision has been reached. The | | | | $3.06 with the click farmer. |
| process is relatively quick and reasonably cheap, with | | | | Internet marketing firm Marchex Inc reportedly paid |
| decisions given between 30 - 60 days of filing the | | | | $164.2 million recently for a company, Name |
| complaint. | | | | Development Ltd, which owns a large portfolio of |
| Countries not using ICANN's UDRP may use a | | | | domain names. Marchex estimated that the Name |
| different form of dispute resolution. For example, | | | | Development portfolio had more than 17 million unique |
| Nominet is the Dispute Resolution System (DRS) | | | | visitors in November. |
| used for .uk domains, which like the UDRP is | | | | There are many facets to domain names, and |
| conducted online with no requirement for legal | | | | knowledge about how the industry works is useful |
| representation. Nominet's DRS is administered by the | | | | for businesses seeking to do business online, and |
| Centre for Dispute Resolution (CEDR). It will order | | | | choosing domain names. In future articles we will look |
| the transfer of rights of .uk domains, provided you | | | | at pitfalls in speculating on domains, valuation of |
| can show that (on the balance of probabilities) you | | | | domains, the UK domainer business, domain disputes, |
| have rights (either "passing off" rights or registered | | | | and the pros and cons of using administrative |
| trade mark rights) in the name which are identical or | | | | procedures as against court proceedings to retrieve |
| similar to the domain name. Nominet will consider a | | | | domain names. |
| registration abusive if it creates an unfair advantage | | | | |