Domain Name Primer

As the Internet has exploded onto the business landscape, companies are quickly being forced to build Web sites, to create Internet strategies, and to register relevant Internet domain names. With over eight million domain names registered so far, good names are highly-prized—witness the recent sale of business.com for $7.5 million. So what is the domain name system, and what legal issues does it raise?

What is a Domain Name? Domain names are the convenient, human-readable combinations of letters and numbers that identify a location on the Internet, such as "hughesluce.com" or "yahoo.com." Most common domain names end with a dot and a series of three letters, such as .gov, .edu, .net, .org, or the ubiquitous .com. Each domain name corresponds to a series of numbers called an "Internet Protocol number" or "IP address" that serves as a routing address on the Internet. For example, the IP address for the domain name hughesluce.com is 208.35.145.201. By using this information, a computer can connect to the server hosting the Hughes & Luce Web site. The directory of all domain names and their corresponding IP addresses makes up the Internet domain name system, also called the DNS.

History of Domain Name System. In 1993, a company known as Network Solutions, Inc. ("NSI") entered into an agreement with the United States government to provide domain registration services and became the only company allowed to register Web site names ending in the popular .com, .org and .net suffixes. Initially, domain registration was fully subsidized by the National Science Foundation, resulting in free domain registrations for anyone interested in having a domain name. However, the Foundation soon discovered that the popularity of domain names would quickly drain its resources and stopped the subsidies in 1995. Thereafter, NSI charged registrants a $100 fee for a two-year registration, which was later lowered to $70 after a $30 government fee was discontinued. This fee was not without its opponents, however, and in 1998 a group of nine angry individuals and companies sued Network Solutions and the Federal government in a class action claiming that the fee was an illegal tax on computer users. On January 18, 2000 the Supreme Court affirmed without comment a Federal judge’s holding that neither the government fee nor the registration fee constituted an unauthorized tax.

Current Domain Name System. As the Internet grew in popularity, resistance to NSI’s domain-registration monopoly also grew. In October 1998, a new non-profit corporation called the Internet Corporation for Assigned Names and Numbers (ICANN) was created, and in November 1998, it began assuming responsibility from the U.S. Government and NSI for managing the Internet domain name system. One of ICANN’s first actions came in 1999, when it developed a Shared Registration System and a network of domain name registrars through which domain names ending in .com, .net and .org may be registered. NSI continued to register names, but other companies were also authorized to offer the service. By moving the domain registration system away from NSI’s monopoly, this new Shared Registration System has resulted in more competition, lower registration fees, and improved service—but it has not been without problems. For example, from time to time the Shared Registration System mistakenly allows multiple registrants to register the same domain name. These types of errors have resulted in registrants bringing a legal action against both the registration companies and the other registrants. Further, NSI has claimed ownership of portions of the databases developed by it between 1993 and 1999, and it has refused to share that data with other registration companies.

Domain Name Dispute Policy. The most active area of domain name disputes concerns domain names that are identical or substantially similar to a valid trademark of a third party. As part of managing the domain name system, ICANN developed a uniform dispute resolution policy that it requires all domain registrars to follow. Under the policy, disputes over ownership of a domain name registration is resolved by litigation between the parties claiming rights to the registration. Once the court determines which party is entitled to the registration, the registrar is required to implement that ruling. In disputes arising from registrations allegedly made in bad faith (such as "cybersquatting" and "cyberpiracy"), the uniform policy provides an expedited administrative procedure to allow the dispute to be resolved quickly and inexpensively through an arbitration-like procedure. In these cases, a party can initiate the administrative procedure by filing a complaint with one of the dispute-resolution service providers listed at http://www.icann.org/udrp/approved-providers.htm. Additional details on the uniform dispute resolution policy are at http://www.icann.org/udrp/udrp.htm. Currently, domain name registration companies are not required to monitor domain names for trademark infringement. This may eventually change as technology to check trademark registrations in real-time becomes more accessible. In the meantime, companies should closely monitor their trademarks and take reasonable steps to protect the marks, such as registering multiple word domains with and without hyphens (e.g., "hughesluce.com" and "hughes-luce.com"), and ensuring that a domain is available prior to launching a new product or service with a new trademark.

The domain name system is undergoing constant evolution and the policies and procedures surrounding domain name registration will likely be altered over the next few months as new issues arise. Further, many organizations are working on new technologies and systems to make the domain name system less relevant, allowing users to input terms and be taken directly to the trademark owner’s site regardless of the related domain. However, until such technology becomes widespread, companies should understand and monitor the current domain name system.