Beware of Domain Name Traffickers

Internet domain name registration is a first-come, first-served process. Because of the simplicity and relative low cost of registering a domain, trafficking in domain names has been commonplace since the inception of the Internet. It began with domain name hijacking. In its simplest form, hijacking is the registration of a domain name or names which incorporate the company name or personal name of a famous company or person and then offering to sell or, in fact, selling the domain to the rightful owner. This behavior, known as “cybersquatting,” was effectively outlawed by enactment of the Anticybersquatting Consumer Protection Act of 1999 (ACPA).

Perhaps cognizant of the ACPA, and surely aware that web surfers frequently make typographical errors when entering domain names in Internet browsers, traffickers soon realized the potential in registering names that, but for one or a few characters, are identical to a proper owner’s domain name. This practice, known a “typosquatting,” is discussed in greater detail in my article on this page entitled “Typosquatting and Domain Name Dispute Arbitration.” Typosquatting disputes are commonplace. As a general rule, unless the typosquatter (like the cybersquatter) can show a legitimate business reason (e.g., the disputed domain incorporates the registrant’s pre-existing business name) or a First Amendment “free speech” reason for registering a certain domain, domain name dispute resolution arbitrations and court proceedings routinely transfer the disputed domain to the complainant.

Undaunted by the futility of cybersquatting and typosquatting, domain name traffickers have invented new ways of commercializing domain names. Among these are domain name “spying”, “tasting”, “kiting” and “parking.”

Domain name spying concerns the practice of securing “potential” domain names. It involves a covert recording of an individual’s attempt to determine if a particular domain name is registered. This information is used by an interested trafficking party to register the domain name before the potential registrant has the opportunity to do the same. It is not presently known how spies discover the existence of an inquirer’s domain name searches.

Domain name tasting refers to the simultaneous registration of several domain names (often hundreds or even thousands). During a five-day grace or trial period common to most domain registrars, the taster can evaluate the short-term advertisement income from a given name, thus transforming the domain name system into a speculative market. The taster can then retain potentially profitable domain names in a manner that can harm the trademark protection of others while returning unprofitable names during the grace period at no risk (i.e., the taster receives a full refund for the cost of an unwanted domain registration).

The related practice of domain name kiting involves returning and then quickly reacquiring domain names within the 5-day trial period, thereby effectively maintaining perpetual ownership of the domains without having to pay registration fees for the repeatedly released and reacquired domains.

Domain parking sites collect and index additional links where domain name registrants share revenue generated by web traffic but do not directly compete with the holders of similar legitimate trademarks or brand names. Registrants of parking sites typically use computer software to automatically register expired domain names and then ‘park’ those domains on pay-per-click portal sites. Fortunately, in recognition of the harm inherent in automated registration, a World Intellectual Property Organization-recognized arbitration panel has determined that a failure to conduct a prior check for third-party rights, in circumstances such as bulk acquisition of domain names using a automated registration processes, constitutes “willful blindness” and thus bad faith registration.

There is no easy answer to the evolving problem of domain name trafficking. However, a few simple rules manifest themselves: (1) register desired domains as soon as possible, (2) be aware of the expiration dates of those registrations, and (3) vigilantly monitor the Internet for potentially conflicting registrations and uses.