Taking a Stand Against Web ‘Squatters’
The system for managing Internet addresses has been undergoing sweeping reforms recently to open it to competition. Included in that process has been an effort to deal with the contentious issue of “cyber-squatting”--the speculative buying and selling of addresses known as domain names.
In a situation that highlights the challenges of managing the complex naming system fairly and effectively, one of the five companies recently selected as an official Internet domain name registrar has either knowingly or unwittingly aided what may be the largest case of cyber-squatting.
Since February, New York-based Register.com apparently registered nearly 75,000 domain names for Pictureweb, a computer club in London, according to records generated by Network Solutions. Until last month, Network Solutions held an exclusive contract with the federal government to administer the Internet names that end with .com, .org or .net.
Most of the names reserved by Pictureweb, whose members are mainly students from the College of West London, according to an e-mail received from the group, were apparently random strings of four letters, such as RDCW.com, suggesting a computer-generated list rather than a thoughtful selection of salable names. The group would not respond to questions regarding its plans for the names or reasons for reserving them.
Some members of the Internet community are troubled that a company that may be associated with cyber-squatters was selected by the Internet Corp. for Assigned Names and Numbers, or ICANN, to be one of the first companies to compete with Network Solutions. ICANN, a Los Angeles-based nonprofit group, was formed to manage the Internet domain name system.
“If this is what it appears, it’s the very thing we’ve been trying to prevent,” said Don Heath, president of the Internet Society, an international policy organization based in Reston, Va. “It’s an abuse of what the Internet’s about and what it stands for.”
Heath, an advocate of self-regulation on the Net, fears that if ICANN’s selections appear ill-advised, it could open the door to heavy-handed regulation by national governments.
While the practice of reserving domain names in the hope of selling them later is not illegal, cyber-squatting has the potential to hinder electronic commerce by, in effect, holding hostage variations on trademarks, movie titles, place names or public events. Cybersquatting is also widely viewed as antisocial and wasteful of Internet resources.
Numerous companies have taken on the cyber-squatters. Microsoft and Mattel, for example, took legal action against the holders of such domains as microsoftwindows.com and barbiesplace.com who attempted to sell the names to the corporations.
But many names that do not appear to infringe trademarks sell freely, sometimes for high prices. A speculator recently sold wallstreet.com for $1.03 million.
To rein in cyber-squatting, the World Intellectual Property Organization has suggested a range of measures, including mandatory arbitration and the requirement that domain name registration fees be paid in advance. The latter is aimed at making mass speculation in names prohibitively expensive.
But many members of the Internet community have complained that the proposal would put too much power in the hands of large companies and make it difficult for individuals to register names for legitimate purposes.
Until now, a customer has gone to Network Solutions--or to a registration company such as Register.com, which applies to Network Solutions on behalf of the customer--and chosen a name not already taken. The cost has been $70 for each of the first two years, $35 per year after that. But names have been reserved without payment during Network Solutions’ billing period--up to 120 days--before being returned to the pool of available names.
But that process is changing. The increasing commercialization of the global computer network prompted the Clinton administration to encourage the Internet community to devise a plan to bring competition to the market.
Five companies--including Register.com and America Online--were selected to compete with Network Solutions as official Internet domain name administrators for a 60-day test period that began last month, though none of the five has begun formal registry services. At the end of the test period, other companies will also be allowed to compete.
Under this new system, prepayment for domain name registration will be required by all the competing companies.
Prior to its selection, Register.com claimed it had taken the lead among companies that register names through Network Solutions. Near the end of last year, it had registered about 100,000 domain names. So far this year, its registrations skyrocketed to more than 600,000, according to the company.
Register.com, unlike some other registration agents, does not collect upfront fees for registering names. Instead, it earns money via other services, such as hosting Web sites and by selling advertising.
“We attribute our success to great partnerships that have helped to promote us, a great domain name and a simple and intuitive process,” said Richard Forman, chief executive of Forman Interactive, the New York-based company that owns Register.com. He said he does not know what percentage of Register.com’s clients actually pay their registration fees to Network Solutions.
“If someone registers 5,000 names and pays, that’s a good customer,” Forman said. “If they don’t pay, that’s a deadbeat customer and a cyber-squatter.”
But a substantial portion of names reserved through Register.com would appear to involve name speculation without payment, according to a review of records of about 400,000 domain names applied for through the company.
Scores of individuals or companies registered from 500 to nearly 5,000 names each--and nearly 400 entities registered at least 100 names--from January through April via Register.com, according to data published and updated daily by Network Solutions. These mass registrations account for nearly half of all Register.com’s business with Network Solutions.
Network Solutions spokesman Christopher Clough said the payment rate by Register.com clients runs far below that of other major registration agents. “That caused a significant problem for us, in that invoicing and customer service comes from Network Solutions,” Clough said.
In the case of the English computer club, few of the names reserved by Pictureweb.com were paid for, and unpaid names are being decertified, Clough said. Pictureweb did not respond to calls or e-mails requesting further information, saying only that “since being contacted by Network Solutions a few weeks ago, we have ensured that all such activity concerning the registration of domain names has ceased.”
Forman said the Pictureweb sites were falsely registered using Register.com’s name, but without the company’s knowledge. Clough disputed the claim, saying the registrations can be “definitively” linked to Register.com.
“Cyber-squatting to the extent that they don’t pay is an abuse and a waste of the system. But that is going away” when the competitive market for prepayment requirements and name administration begins, Forman said.
A few experts share his view, including Esther Dyson, chairwoman of ICANN. “Maybe you will find that when their customers have to pay upfront that there is less cyber-squatting,” she said.
ICANN’s board will hold meetings about these and other domain name issues this week in Berlin.
Times staff writer Charles Piller can be reached at charlespiller@latimes.com.
