Internet Newsletter for Lawyers
November/December 2003, by Delia Venables

Domains Are Hot Property
by Tim Brown

After the dot com bubble popped in the late nineties many commentators wrote off the Internet as a dead duck. The seeming myriad of "we-sell-aardvarks2u.com" e-businesses gave it a bad name. The Internet wasn't considered a serious player in the global economy and therefore its legal setup, matters of policy and governance were consigned to the back-burner by mainstream business as something of little interest or concern.

Skip forward to 2003 and where are we now? The Internet is ubiquitous. Mainstream commercial activity has become dependent upon email and, to a lesser but still significant extent, the web. Ask yourself what it would be like to be without access to your favourite business websites and your corporate email, even just for a day. So what is all this resting on? The domain name system. Meanwhile, how that system is governed and operated, and by whom, has now become of vital importance.

Matters of Internet policy and governance are controlled by a diverse range of different organisations - some, like IANA (Internet Assigned Numbers Authority) are concerned with purely technical matters of policy; others, like Nominet in the UK, have jurisdiction over a country's domain names; and other organisations are concerned with managing policy relating to generic top level domains like .com which affect all global Internet users.

Such is the lack of attention to Internet policy in general that the biggest recent story was Microsoft's decision to close down some of its chatroom services. Yet while the media decided to cover this largely irrelevant and public relations-induced announcement, a major fight was breaking out over actual control of the domain name system itself, following a fundamental change which had quietly been made to the entire Internet - affecting every browser and email client worldwide. This story, and one or two other current policy and governance developments, are covered below.

Trouble at the top - SiteFinder

September saw perhaps the most controversial issue relating to Internet policy ever to have struck the Internet. This was the unilateral introduction of a new "Site Finder" service by Verisign (the operator of the global .com and .net registries) raising questions as to which body is ultimately in control of the Internet. Verisign's "Site Finder" service began to operate on 15th September and resulted in users who mistyped .com or .net domains in their browser being redirected to a web site run by Verisign, rather than receiving a standard error message or one generated by the browser.

The Site Finder page suggested a list of related domains that the user might have been trying to reach and provided a directory of web sites. Verisign claimed that this service was provided to help Internet users find the sites they were looking for. However, it was also noted that the directory of web sites included sponsored links and other advertising which was generating revenue for Verisign.

To enable the service, Verisign used its position as the .com and .net registry operator to create a "wildcard address record" so that all attempts to reach a site, except those with valid domain names, resulted in redirection to Site Finder. Registries are the entities that ultimately run top level domains by maintaining the DNS databases which act like giant Internet phone books. The database matches the domain you type into your browser with the IP address for the computer you are attempting to contact. As there can only be one such database for each top level domain, companies like Verisign have a monopoly position by virtue of technical necessity.

The launch of Site Finder proved extremely controversial - a non-technical analogy might be if a telephone provider with a monopoly position in the marketplace suddenly changed their standard message: "the number you have dialled has not been recognised" to a message stating "the number has not been recognised but here are some other numbers which you might have been trying to reach [and some advertisements as well]". Imagine, too, that this message is provided only in English all across the world regardless of the local language of the telephone user.

SiteFinder raised a number of technical concerns as, in effect, every possible domain in the .com and .net space now appeared to be registered - breaking some anti-Spam software and other applications. There were also privacy concerns in that misdirected email would be "bounced" by Verisign's servers rather than simply generating an error message. In theory such emails could be monitored, archived or otherwise used by Verisign - although they had no plans to do this at launch.

In addition, some commentators noted potential intellectual property difficulties in that by redirecting misspellings of domain names corresponding to trade marks Verisign could somehow be passing off.

In light of these concerns the body charged with matters of Internet policy and governance, the Internet Corporation of Assigned Names and Numbers (ICANN), requested that Verisign suspend the service pending further investigation of its possible effects. Verisign, however, refused to do so, leading to a Wild West showdown. After an initial exchange of correspondence and a brief standoff, ICANN gave Verisign an ultimatum with a time limit - although what they were going to do if Verisign did not comply was very much in doubt. Some commentators thought that ICANN might not be able to enforce the registry operator's contract against Verisign - the only option which it had in reserve.

While Verisign finally backed down by ICANN's final deadline on 4th October, it is highly significant that the registry felt it could challenge ICANN's authority by refusing to remove the SiteFinder service for nearly two weeks after the initial request - a move which affected millions of Internet users and sent Internet Service Providers scurrying to rework their network architecture.

There have been other challenges to ICANN's authority over the last year or so and mutterings throughout the Internet community that perhaps other bodies, such as ITU (International Telecommunication Union) could do a better job. However, the US Department of Commerce, which awards the contract to govern the Internet, has renewed ICANN's contract for another three years. So at least for the time-being ICANN is here to stay.

Domain disputes

Another area of interest is the development of dispute policies by generic and country code domain operators. This is of great importance to lawyers and others wanting to protect their intellectual property rights on the Internet and especially when enforcing rights against cybersquatters or domain speculators. Dispute policies vary enormously in both application and effectiveness. Two contrasting examples may be taken from Nominet's approach in the UK and that of DENIC in Germany.

Nominet's Dispute Resolution Service (DRS) is one of the most admired and successful domain mediation and arbitration procedures. Since its launch in September 2001 approximately 1,000 complaints have been received by Nominet with a sizeable proportion of these being settled at the first informal mediation stage and around 160 cases being referred to an independent expert for decision. The system is seen by many commentators as a cost-effective way to challenge conflicting domains and the quality of decision is generally seen as impressive. In addition, the DRS is also one of very few domain arbitration systems that includes an appeals system - where decisions by the first instance expert can be reviewed by a three member panel. Ultimately a successful complainant may receive a transfer of the disputed domain name - in a step that takes place directly at the registry zone file, so that issues of foreign jurisdiction or remote registrants are minimised.

By contrast, the German naming authority DENIC does not have any system of domain arbitration. Conflicts over domain names must be thrashed out in the courts. On application and with supporting evidence of a trade mark conflict the German naming authority may be prepared to mark a domain "under dispute" which prevents the name being transferred to another user. However, this is a relatively neutral step which does not stop the current user from operating the domain for web or email services. Some therefore regard such a notification policy as rather toothless. However, the Italian country code registry has the best of both worlds - a "dispute marking" system and an arbitration procedure.

The contrast between the UK and German systems exemplifies the problems with global brand enforcement - there are over 250 different country code and generic top level domains, many with their own dispute system. Some countries, such as Ireland, the Netherlands and Switzerland have recently introduced new dispute policies while others have plans to do so in the future; still more are sitting on the fence. It has become increasingly difficult for intellectual property practitioners to keep abreast of the changes to each country code regime and it does not look like the operators are set to consolidate their policies or approaches any time soon.

IDN's

Another developing area of interest concerns Internationalised Domain Names (IDN's). These are domain names which can include non-standard character sets - accents, umlauts, non-western language alphabets etc. They present particular problems in terms of Internet policy and intellectual property enforcement because of the conflicts that can arise. For example, in a system where both café.com and cafe.com can co-exist, problems are perhaps inevitable.

Support for IDNs is mixed, with Afilias - the body that runs the .info generic top level domain - recently announcing the introduction of umlauts for .info. By contrast, the French naming authority - AFNIC - has come out both for and against IDNs, on the one hand welcoming their ability to recognise French language characters, yet also warning that they may lead to spiralling costs for businesses trying to protect their intellectual property by buying every possible combination of domain that might be similar to their trade marks.

Some registries are considering 'bundling' IDNs by offering them to the existing registrant of the corresponding standard character-set domain. This in itself may open a can of worms, bearing in mind the potential competing claims to the bundled names. Similarly, businesses are having to decide whether they want to convert their name directly into local language scripts in order to effect blocking registrations or whether, culturally speaking, an IDN should reflect a more descriptive approach to the mark. This would represent the difference between Lloyds TSB registering a transliterated version of their name in Chinese characters or registering 'big black horse' (or whatever the appropriate cultural descriptive for their business might be in China) or indeed both.

Given that English is not the first language for vast numbers of Internet users, IDNs are an inevitable development which is here to stay; how the law and policy will develop is not at all clear.

New TLD's

As noted above, there are over 250 country code and generic top level domains, each with their own changing policies and governing bodies, and with varying approaches to disputes. If this were not enough to contend with there are plans to introduce more domains over the next few years.

For example, the President of ICANN hinted heavily earlier in the year that three new generic top level domains would be introduced to complement existing gTLDs like .com and .net. In addition, the European Union was given the go-ahead to introduce the new .eu domain (technically, for Internet governance purposes, a country code - one wonders what the Euro-skeptics would think if they knew!) which is provisionally due to be launched later this year.

The rules concerning how these new domains will work, who can apply for them and how disputes will be settled are still developing. One topic under discussion has been whether there should be a 'taxonomy' for the Internet domain name space - accepted categories of new domains to be introduced. There are very strong views both for and against and the ultimate decision may affect the whole appearance of the domain name space for years to come.

.eu will be especially important in the UK when it is finally launched. We know from the European legislation (and in this fuzzy world of Internet governance it is relatively unusual to have any legislation underpinning the introduction of a domain name) that there will be a 'sunrise period' where existing trade mark holders may apply for a corresponding domain name, but the seniority of marks and the timing of the launch are still wide open.

The future

With all these areas still under development, the Internet is undoubtedly in its infancy. Perhaps it is unfair to expect significant maturity where, for example, the domain dispute regime is some three years old compared to over a century of trade mark policy, legislation and experience. However, never before has a technology so important, so global and so central to modern living arisen so quickly; there is little place for the rather considered, reactive approach of the traditional global policy makers.

As the fight between ICANN and Verisign illustrates, before the Internet fully matures we must expect a few years of teenage rebellion.

Tim Brown is a Senior Domain Name Consultant with Edinburgh-based Demys Limited. Demys handle Internet brand matters for an international client base and publish a free domain news service for business at www.demys.net.
Email t.brown@demys.com

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