Internet Newsletter for Lawyers |
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Trading companies were beginning to see the commercial possibilities of the Web but so also were the pornographers and crooks. There was a growing demand for meaningful and marketable internet addresses: .com names were being used for US companies and were also available outside the US, but .co.uk names were difficult to come by due to the obscure process for obtaining them.
I had recently taken over as the volunteer responsible for .uk. In principle there was no problem with taking a commercial view of the management of .uk, but in practice I soon realised that there was an enormous amount of mutual suspicion within the industry and many conflicting "visions" as to how .uk should be run and who should run it.
But why a legal approach? Is it not just a simple technical matter to run a domain name registry? In theory, yes, it is a straightforward technical task: you keep the domain name together with some details on who has registered it and who should pay, and make sure that the name "resolves" to an actual service when asked for by an internet user. Actually, the technical issues turned out not to be so simple, partly because of the many millions of domain names and partly because of the requirement to keep it all working "24/7". Making any technical change at Nominet is like changing the engines on an airliner while it is still flying at 30,000 feet.
However, the deepest complexities arose from legal considerations. From late 1995, we spent many hours with lawyers (of various flavours) both listening to their opinions (agreeing with some and disagreeing with others) and convincing them that the so-called "Nominet model" was legally and commercially viable.
In this article I discuss three particular legal questions which arose when establishing Nominet UK as manager of the .uk country-code Top Level Domain.
Who, then should be allowed to own and manage this entity? It was clear in 1995 that the government did not wish to take this on board; nor does it do so today. It was also clear that none of the commercial internet players would allow any competitor to take over .uk with the potential of a favoured place in the market. The prevailing political thinking is that businesses have to fall into one of three camps: they have to be in an open, competitive framework; be regulated by an Ofxxx; or, be run within a government department or agency. Nominet apparently could not fit into any of these. I like to think, therefore, that Nominet is a good example of the "fourth way". The "unique national resource" needs to be owned or entrusted for the benefit of the ultimate consumers whilst remaining in the private sector. It needs to be efficient and costs kept low.
The solution was clear: Nominet was created as a company limited by guarantee. The "guarantorship" was open to all who had an interest in being part of the governance, as quasi-trustees of the .uk resource. As anticipated, the majority of guarantors are ISPs, but also large-scale brand owners have taken a role. The guarantors have a strong economic interest in Nominet performing efficiently and cheaply: the more Nominet does for them and the cheaper the prices, the more competitive they can be with their own services. But at the same time, it was agreed that Nominet should only carry out tasks which need to be done centrally and not in the open competitive market. It appears that the management of other "common good" resources might be moving this way, for example, the National Air Traffic Service comes to mind; but I am personally dubious at the way the scarce 3G radio spectrum was auctioned off to the benefit of the Treasury and the cost of the end-consumer.
In conclusion to the first question, Nominet really derives its authority not from legislation or government fiat, but from its openness, its guarantors acting in a trustee-like mode, its efficiency and cheapness, and its very limited field of operation. It has proven to be a robust and stable structure.
Two complications arose from this: termination of the service and contractual agency.
Initially the registration service contract did not incorporate a clause specifying the duration of the service. Registration was therefore in perpetuity, as long as the fees were paid and the other conditions adhered to. There was also a provision for re-assignment: transfer from one registrant to another. This was needed to allow for business takeovers and re-organizations; legitimate trading in useful or memorable names; and also acquisition by the successful party in a dispute over a name. These two provisions quickly gave rise to "domain name warehousing". Simple warehousing was not seen as a particular problem. Indeed, it was argued that it was pro-competitive in that a clear market would emerge where the more desirable names could command a higher price without the registry itself being accused of monopolistic pricing. The downside came from the blurred line between the warehousing of "generic" names and the incorporation into domain names of the trading names or trademarks (registered or otherwise) of others, known as cybersquatting.
The termination clause was also silent on what happened on the death of an individual registrant or the dissolution of a corporation. Particularly for the latter, we were faced with the bona vacantia provisions of the Companies Act. After much pondering the Treasury Solicitor deemed that a registration in the name of a dissolved company should be considered bona vacantia and deemed it their duty to "sell on" such names at as high a value for the public purse as possible. This situation gave rise to several complaints and became quite difficult to manage.
People who register domain names usually want to use them for web hosting or e-mail. From the arguments about the "unique" role of Nominet discussed earlier, it was considered important for Nominet only to provide the registration services and not supply web hosting or e-mail services for end users. Nominet's guarantors (members) were intended to be the primary mechanism for these auxiliary services. On request of a customer, they would set up their own services and also assist the registrant in dealing with Nominet for their chosen domain names. In order to provide technical mechanisms to make entries and modification to the register, and to pay Nominet's fees, each member was required to enter into a separate contract with Nominet. In doing so, they became known as tag holders, referring to the unique tag recorded in the register against the domain names managed for their customers.
It was then necessary to determine if the tag holders were agents of Nominet or agents of the registrant. We quickly concluded the latter. Nominet did not feel it right to inhibit or restrict the flexibility of an open, competitive market by overly constraining the actions of a set of agents. Besides, the majority of the relationships between Nominet members and their customers concerned other services: the domain name fee was so low as to be insignificant in most cases.
So the contractual nexus became that of three contracts: between the registrant and agent; between the registrant and Nominet; and between the agents and Nominet. Nominet had no role to play in the first, and for the second, registrants were reliant on advice from their agents. But many ISPs, being of a more technical bent, did not always appreciate their role as their customers agent. Registrants have disputes with their agents about their competence, service provision, etc. They come to Nominet and, under their contract with Nominet, ask for their agent to be replaced by another. The first agent then claims that the customer has not fulfilled their obligation (usually by not paying) and refuses to allow a replacement agent citing that the customer had contractually agreed not to do so. Some registrants complained to their MPs when faced with Nominet's refusal to interfere in what it considered to be anothers contract. Legal advice soon made it clear that the registrants contract with Nominet was the only one which Nominet had to consider and the registrant now always has the right to force a change of agent.
Nominet has clarified the above issues in several revisions of its Terms & Conditions. The duration of the registration is now two years with the right to enter into a further contract. Termination occurs on the death of an individual or the dissolution of a body corporate (allowing some time for the executors of an individual to transfer or otherwise deal with the registration). Agency is clearly spelled out and the text has been re-written in "plain English".
It was felt that the law already had adequate provision for the proprietors of rights to take appropriate action against those who might infringe these rights in the form of a domain name. The many ways in which (trademark) names can be incorporated into domain names and the wide variety of web site content which can be associated with them means that only the owner of such rights can properly determine the exact nature of the infringement. In reality the material pointed to by the domain name has to be inspected and other evidence reviewed to see if it is an infringement or a perfectly legal clash, for example, Apple records, computers and growers is a commonly cited example. Tribute and protest sites incorporating the name of the subject of the tribute or protest were also an issue: is the use of ilovexxx.co.uk or xxxsucks.co.uk an infringement of the name xxx or merely part of a free-speech reference to it? After all of the above considerations, Nominet did not feel that it had the legal standing, authority or power to adjudicate. Although, in the early days, some rights holders and their lawyers tried to browbeat Nominet into such a role, we resisted and court hearings vindicated this approach.
But we were not content just to walk away from the problem. We felt that there was a public duty to help and that this was a key core function which the registry could facilitate without overstepping its own constitutional position. Nominet's first "Dispute Resolution Service" was created and Nominet's contract with the registrant modified to provide for a review by an independent expert on a challenge by another interested party. The first service gained us valuable experience in this new area of alternative dispute resolution. It helped us feed our experience into the creation of the Universal Dispute Resolution Service used by the generic top-level domains such as .com. However, the UDRP failed to incorporate our valuable mediation phase at the beginning of the dispute. Mediation today leads to successful resolution in over one third of the cases. The DRS has been amended at least twice since the initial offering. Online submissions of correspondence and computer assisted management of the cases is a key feature of the current service. Nominet has established a respected team of independent experts, has clarified the situation with tribute and protest sites and has generally made the Nominet DRS into one of the worlds best. It is interesting to note that with the pervasiveness of the internet in business, the understanding and use of domain name dispute resolution has become, in less than 10 years, a key skill for all Intellectual Property lawyers.
In summary and from the admirable position of hindsight, I have outlined what I perceived to be the major legal issues surrounding the establishment of Nominet and the domain name registration business. Ten years is not a long time, but we are a lot more certain now of the legal basis for domain name registration.
Dr Willie Black was educated as a mathematician and in the 1970s joined the Department of Nuclear Physics at Oxford where he programmed computers to communicate with each other. A decade later he became Programme Director of the Joint Academic Network. During that time, he served on and chaired numerous international committees on computer networking, managed JANET's transition to the Internet and, as a result, became responsible for the .uk domain. He began setting up Nominet UK in 1995 and oversaw its growth from 3 to 130 staff and from 25,000 domains to over 4 million. He left Nominet in December 2004 to develop his consultancy business, Broomfield Associates. He can be contacted for advice on domain names and Internet matters at wb@broomfield-associates.co.uk.
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