CongressLine – Cracking Down on Domain Name Bandits

Carol M. Morrissey has been a Legislative Specialist in Washington, D.C. for 14 years. She is a lawyer and legislative expert who has authored a Congressional update column for six years.

What’s in a Name? The Domain Name Imbroglio

ICANN Competitive Domain Name Registrars

ICANN List of Businesses that have Qualified for Post Testbed Registrar Accreditation as of July 6, 1999

The Internet has irrevocably transformed our lives and has been the catalyst behind change the world over. As with any groundbreaking discovery, there are those driven to push the edge of the envelope, legally and otherwise. So yesterday’s hijackers are today’s “Internet pirates,” otherwise known as domain name bandits or “cybersquatters.” Cybersquatting is Internet parlance for the act of obtaining a domain name for the express purpose of selling it for a profit or to prevent someone else from possessing it. It has become a highly lucrative and speculative business, and people are out there right now reserving domain names in the chance that someday they will be in great demand (such as “”).

The System

Until recently, Network Solutions Inc. (NSI) of Herndon had an exclusive contract to administer the domain name system and anyone could register a domain name for a $70.00 fee. (For some background on this issue, please go to What’s in a Name? The Domain Name Imbroglio. By July 1999, ICANN, the new, non-profit Internet Corporation for Assigned Names and Numbers, had approved over 50 additional companies to engage in registration, although NSI will still maintain the master list of domain name registrations. (For the ICANN press releases announcing the companies selected to participate in the registration process, please see: and

Call for Regulation

So what’s to prevent the continuation of the cybersquatting craze now that the registration system has been opened up and is now truly a global enterprise? The answer is regulation. On March 4, 1999, the ICANN Board of Directors adopted a “Statement of Registrar Accreditation Policy” (Please go to:, for the text of the policy) which is to apply to registrars in the .com, .net., and .org or Top- Level Domains (TLD’s). The policy, which will be reviewed by the Board in the spring of the Year 2000, provides for a “best practices” approach to minimize conflicts that may arise out of domain name registration. These practices include a formal registration agreement, complete contact information and alternative dispute resolution.

Upping the ante, so to speak, the 171 member World Intellectual Property Organization (or WIPO), released a report entitled, Final Report of the WIPO Internet Domain Name Process, on April, 30, 1999 (the text of the report is available at and the text of a May 3, 1999 press conference discussing the report in detail can be accessed at: When the Clinton Administration made the decision to open up the domain name system to competition they anticipated an expansion of the already burgeoning practice of cybersquatting and requested that WIPO prepare this draft policy and submit it to ICANN for consideration.

ICANN Statement of Registrar Accreditation Policy

Final Report of the WIPO Internet Domain Name Process

May 3, 1999 WIPO press conference

Resolution on Report of World Property Organization

Sen. Abraham’s press release on the Anti-Cybersquatting Consumer Protection Act

Section-by-section analysis of S. 1255

Sen. Abraham’s floor statement on cybersquatting

The report supports a three-pronged approach to controlling the domain name registration system – contract, contact and exclusion. If adopted, the registration agreement or contract would require detailed contact information, define and bar “abusive” and unjustifiable registration practices and provide a framework for resolving disputes in the nature of cybersquatting. A highly controversial provision of the report mandates the creation of a list of trademarks (“globally famous trademarks”) that would be excluded from the registration process. Critics of this provision are concerned that there is no definition of a globally famous trademark and that, if adopted, everyone would attempt to place their trademark, unique or not, on the exclusive list.

ICANN met in Berlin at the end of May, 1999 and considered the WIPO report and recommendation. ICANN adopted a Resolution on Report of World Property Organization (the text of the Resolution is at in which they endorsed WIPO’s recommendations concerning alternative dispute resolution, referring it to the Domain Name Supporting Organization (DNSO) for further review and suggestions concerning implementation. The resolution notes that ICANN currently embraces many of the report provisions, such as contact information and prepayment. The majority of WIPO’s recommendations were referred to the DNSO for further study and review. The DNSO will open the provisions under scrutiny up to public comment and will submit its findings to ICANN at their August 1999 meeting.

Congress Steps Up to the Plate

Sen. Spencer Abraham (R- MI) introduced legislation (S. 1255) in June of 1999 to “protect consumers and promote electronic commerce by clarifying and enhancing trademark protections on the Internet.” Entitled, the Anti-Cybersquatting Consumer Protection Act, it provides for expanded civil and criminal penalties for a “willful” trademark violation, with heavier penalties for repeat offenders. In his press release announcing the legislation, Sen. Abraham touts S. 1255 as a first line of defense against web sites with inappropriate content which use misleading web addresses to attract children. (Sen. Abraham’s press release can be accessed at: A section-by-section analysis of S. 1255 can be viewed at: and Sen. Abraham’s floor statement is at:

The Courts

The courts have been hearing domain name disputes for years, slowly narrowing the scope of legal issues to be addressed. Most suits are brought under the Trademark Dilution Act and one such landmark decision is Panavision v. Toeppen (for the text of the decision, please go to: . The Toeppen case, which was decided by the 9th Circuit in 1998, construed the Trademark Dilution Act so that there is no right to buy up trademarked domain names and hold them hostage for money.

Courts are now being asked to review questions of jurisdiction and procedure (such as who polices trademark violations). Porsche Cars North America, Inc. (1999 U.S. Dist. LEXIS 8750) just lost a domain case in the Eastern District of Virginia over jurisdictional issues. The court ruled that the Trademark Dilution Act did not permit “in rem” actions (an “in rem” proceeding is one against property and is for the disposition of the property). The case was dismissed for lack of personal jurisdiction.

Perhaps when our laws have been updated to include problems specific to the Internet, companies like Porsche will be able to build and bring a stronger case. Meanwhile, Congress, the courts and national and international regulatory bodies are struggling with cybersquatting. Questions over domain name registration will eventually be resolved, but how soon, and at what cost to public figures and business, is yet to be determined.

Panavision v. Toeppen
Posted in: CongressLine, Cyberlaw Legislation, Domain Names