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Intellectual property lawyers and industry groups say a global Internet body’s decision to allow more generic top-level domain names will boost cybersquatting and related arbitration and litigation. They also criticize the organization’s new fees targeted at abusive temporary domain-name registrations, or so-called “domain-name tasting,” as inadequate to stop cybersquatters from cashing in on short-term registrations. Abusive “tasters” register Internet domain names, including some Internet addresses that are typos of well-known trademarks or brand names, and drop them before the end of the five-day grace period, which has allowed subscribers to test names before paying for them. The board of the Internet Corporation for Assigned Names and Numbers (ICANN) voted on June 26 to allow more generic top-level domain names beyond the 21 currently approved names such as .com and .biz and the country domain names such as .ca and .uk. ICANN’s new domain-name tasting polices would charge registry companies that manage a top-level domain like .biz or .com, and that offer a grace period, a 20-cent annual registration fee for all domain-name registrations above a certain threshold. Historically, ICANN charged only for domain names kept after a five-day grace period. It now plans to charge registries for all domain-name registrations that exceed 10% of the new registrations that month or 50 registrations — whichever is greater. ICANN’s board also voted to require registrars, or the retail domain-name sellers that registry companies work with, to charge subscribers for all registrations above this threshold. Plan still being worked on ICANN is still crafting an implementation plan, which must be approved by the board before rollout, but it announced a target start date of second-quarter 2009. Spokesman Jason Keenan said the application fee for generic top-level domain names hasn’t been set, but will be “in the range of $50,000 to $500,000.” Those who register common words as top-level domains, such as .sports, for example, could take registrations for the names before the dot, Keenan said. ICANN has also announced that it plans to set up a process for trademark owners to object to other parties’ attempts to register their domain names. The American Intellectual Property Law Association in Arlington, Va., is “not thrilled” with the domain-name expansion, said executive director Michael Kirk. The need for additional domain names isn’t clear and it’s likely to create consumer confusion and increase burdens on brandowners, Kirk said. “They’re now going to have to go through the process of [additional] policing and trying to prevent individuals from engaging in cybersquatting on their brand names,” Kirk said. “In the absence of a more compelling case of need, we’re sorry to see this come about.” More top-level domains will create “more opportunities for cybercriminals to harm people,” said Josh Bourne, president of the nonprofit Coalition Against Domain Name Abuse. The Washington-based coalition’s member companies include global corporations in a variety of industries including Eli Lilly and Co. and Hilton Hotels Corp. “We think the amount of cybersquatting is definitely going to skyrocket as a result of this,” Bourne said. “It’s going to lead to more fees for legal services, more revenue for domain-name [registration] companies and a lot more headaches for brandowners already struggling to police their brands.” Companies and their attorneys will also need to evaluate whether they can afford to — or afford not to — register their trademarked brand name as top-level domain names, said Ernest Grumbles III, an attorney at Minneapolis-based intellectual property boutique Merchant & Gould. “What if you have legitimate, competing trademark owners for different market segments, like Acme Café, Acme Sports, and Acme TV network?” Grumbles said. “Trademark law recognizes that those parties can exist and you’re going to see quiet planning for how people are going to position themselves.” Lawyers say ICANN’s new polices will have limited impact on domain tasting and other types of cybersquatting, which is still on the rise according to domain-name arbitration dispute data. The National Arbitration Forum (NAF) in Minneapolis and the World Intellectual Property Organization (WIPO) both reported rising domain-name arbitrations last year. NAF reported resolving 1,805 disputes in 2007, or 9% more than the 1,658 disputes it handled in 2006. WIPO reported 2,156 cases filed in 2007 — up 18% from 1,824 disputes in 2006. ICANN’s domain-tasting policies will only “slightly raise the financial hurdle that a domain name needs to meet in order to be profitable,” agreed litigator Bob Shaughnessy, a partner at Washington-based Williams & Connolly. Domain tasters that register sites can gather more than enough revenue through pay-per-click advertisements to cover the fee, he said. “It changes the economics very slightly for the operators who are in this racket,” Shaughnessy said. “It’s not going to put them out of business by any stretch.” The fee changes are likely to act as a tax on domain tasting that minutely impacts the economics of the activity but fails to deter cybersquatters, Bourne said. “It makes it a little more costly, but if they taste wisely they end up making back all that money in short period of time,” Bourne said. Talks on the proposals The policy changes targeted at cutting domain tasting “were preceded by a wide-ranging discussion involving all of the ICANN community,” said Keenan. Keenan also said that registry companies that manage certain top-level domains, such as the Public Interest Registry (.org), NeuStar Inc. (.biz) and Afilias Ltd. (.info), are “experiencing dramatic reductions” in domain tasting with similar polices. Registry companies typically work with large numbers of retail registrars that sell or lease domain names to subscribers. ICANN’s resolution also includes monitoring and reporting requirements so the board can assess the effectiveness of the change, he said. “While we can’t be sure this will eliminate domain tasting completely, it is targeted at eliminating abuse of the [grace period] for purposes of domain tasting,” Keenan said. Although the American Intellectual Property Law Association would have preferred that the grace period be completely eliminated because it’s the “root of the abuse,” it supported the compromise to restrict the number of new registrations that could be refunded, Kirk said. The domain-name abuse coalition wants ICANN to abolish the grace period because it’s rarely used for its original purpose. “It’s been so misused by tasters who use it as a filter,” Bourne said.

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