Domain Name Tasting

1. Domain Name Tasting By: Brett Lewis Esq. Lewis & Hand, LLP

2. What is Domain Name Tasting? • Also known as domain kiting • Domain names, often typos of famous marks, are registered en masse, and then cancelled before the expiration of the ICANN five-day registration grace period • The registry refunds the six dollar registration fee • Consequently, the domain name tasters are able to register domain names in bulk without paying • The domains are registered for their traffic value • Domains with traffic worth more than six dollars are registered long-term.

3. How Prevalent is DNT? • A vast majority of all domain name registrations are now part of this practice • According to Bob Parsons, the CEO of Go Daddy, 35 million domain names were registered in April 2006, 32.7 million of which were part of a kiting scheme

4. The Negative Effects of DNT • Roughly a million such domain names are registered per day • If the domain names generate any traffic, the same companies will reregister them immediately after they are deleted, perpetuating the cycle

5. Cont’d • The companies engaged in DNT profit by monetizing the resulting Web traffic through pay-per-click advertising programs • The net effect is that the domain tasters profit from unpaid domain names, many of them incorporating misspellings or typographical errors of registered trademarks

6. Cont’d • Even domain names with marginal traffic are perpetually registered, deleted and registered again • Domain name tasting increases the diversion of Web traffic to competitors’ Web sites • The practice also makes it more difficult to police brand infringement and phishing scams

7. Cont’d • Abuse of registrar credentials • The problem has only grown over time. Tasting is easy money for infringers.

8. How does DNT affect Trademarks? • The domain names that generate the most traffic (and thereby the most money) are registered long term by the domain name tasters • Some such domain names are based on generic terms or dictionary words, but many, if not most, include trademarks, confusingly similar variations of trademarks and/or typographical misspellings of trademarks

9. Cont’d • Even the registrations that are constantly churned include domain names based upon trademarks

10. Who are the Kiters? • The prime culprits are a subset of ICANN-accredited domain name registrars that are actively and aggressively gaming a loophole in the domain name registration system

11. Cont’d • In most cases, the registrars register domain names as registrants, for themselves • As such, they would not likely be able to avail themselves of the ‘Safe Harbor’ provision of the ACPA which exempts registrars from liability, except in the case of bad faith or reckless disregard. 15 USC §1125(d)(2)(D)(ii)

12. The Opposing View • If tasters were not registering typos, people would still misspelll wofrds. • Many internet browsers are configured to provide search results for misspelled domain names. • These results are much like the results offered on the domain name tasters’ parked pages. • Therefore, the end result for the trademark owner is the same -- the real difference is who pockets the money

13. How is this possible? • The Internet Corporation for Assigned Names and Numbers (ICANN) developed a five-day registration grace period, during which domain name registrations could be cancelled and refunded • The purpose of the grace period was to correct errors in the registration process

14. RCF 3915: Domain Registry Grace Period Mapping for the Extensible Provisioning Protocol (EPP) • Allows for a "grace period" after the initial registration of a domain name of 120 hours (5 days). If the domain name is deleted by the registrar during this period, the registry provides a credit to the registrar for the cost of the registration.

15. ICANN’s Stance on DNT • Historically, domain name tasting was not widespread. • In October 2004, Bob Parsons wrote a letter to ICANN, complaining about the practice • To date ICANN has taken no action to close the loophole, and has not indicated that it intends to do so

16. Legal Recourse • DNT may constitute cybersquatting under the Anticybersquatting Consumer Protection Act 15 USC §1125(d)

17. ACPA 15 USC 1125(d) • (d)(1)(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person (i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

18. ACPA Cont’d (ii) registers, traffics in, or uses a domain name that--(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or･(III) is a trademark, word, or name protected by reason of section 706 of title 18, United States Code, or section 220506 of title 36, United States Code.

19. Elements of the Statute • Registration of a domain name • With bad faith intent to profit • The mark must be a famous or distinctive trademark • The domain name must be dilutive or confusingly similar to the mark

20. Damages • 15 USC §1117(d) provides for damages that include, at the plaintiff’s election, either actual damages and profits, or an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name as the court considers just.

21. Tasting Cases • In May 2006, The Neiman Marcus Group (which includes Bergdorf Goodman Inc) accused Dotster of tasting a number of names meant to lure Internet users who were searching for the famous Neiman Marcus Marks • These names included, among others, the misspelled domain names: neimanmarqus.com, neimanmaracus.com and bergdorfgoddman.com

22. Cont’d • The suit further alleged that the site neimanmarqus.com displayed HTML links featuring advertisements for goods and services that are directly competitive with those sold or provided in connection with Neiman Marcus • This law suit eventually settled

23. Neiman Marcus Group Inc. v Name.com LLC and Spot Domains LLC • Neiman Marcus filed another lawsuit in March 2007, accusing Name.com and Sports Domain of improperly registering more than 40 Internet addresses that resemble the Neiman Marcus Marks • These 2 companies are based in Denver and share offices

24. Generic Typos • Differentiate cybersquatters from companies that register dictionary words, typos of dictionary words • The key determining factor is bad faith • A person or entity who knowingly registers a misspelling of a trademark with the intent to profit off of it is cybersquatting • Someone who registers dictionary word domain names without knowledge of a trademark holder or an intent to profit off of their marks is not

25. Web Pages as Billboards • A parked page on the Internet is much like a billboard • The owners of each sell advertising space • Advertisers, in the Internet context, bid on keywords with providers such as Overture and Google. • Content is supplied by the highest bidders

26. Cont’d • Only when the domain name holder had knowledge of a trademark, and posted, or allowed to be posted, links to competing goods or services, should the requisite bad faith necessary for a finding of cybersquatting exist • Many UDRP claims are being successfully defended on this basis. • It is important to understand how the industry works and to advise clients accordingly

27. Global Action • Nominet is the official .co.uk domain-name registry • It response to domain name tasting in the U.K., it has imposed limits on the number if registrations that can be deleted • Registrars may only delete 5 percent of their registrations or five domain names, depending on which is greater • Those guilty of domain name tasting could be suspended from the system or have their registry contract terminated

28. The Next Step • Lobby ICANN to close the loophole, and implement an additional non-refundable registration fee • Increase pressure on large scale domain name tasters through litigation • Take steps such as those taken by Nominet (.uk) • Companies identify and register trademarked domain names worth keeping

29. QUESTIONS?