Domain Names: WIPO Panel Rattles Cage of Domain Industry With Fair Use Decision

(Long Island, N.Y.) Early this month, a three-person panel at the World Intellectual Property Organization rattled the cages of domain-name brokers by awarding control of a disputed name to an Indian tire manufacturer. The defendant in the private action, Vertical Axis, had claimed its ownership of ceat.com to be within the boundaries of fair use. Vertical Axis purchased the domain name in 2001, using it primarily to collect a profitable myriad of small fees for redirecting casual visitors to other sites.

The controversial practice of redirection has been savaged by critics as being nothing more than “cybersquatting,” but domain-name brokers and others have defended the practice as providing a useful service to confused Web surfers. Industry observers note that several other companies and organizations could have made equally compelling claims on the short, valuable four-letter name. They warn the decision could spark a clamorous race by hundreds of interested parties to be first to file UDRP claims on favored names, giving short shrift to the property rights of the original owners.

Even as custom domain names have soared in popularity, the security of those domain names has suffered from a growing number of attacks by criminals, governments and covetous companies. Drawn by the profit potential of hijacking the Web names of popular destinations, unscrupulous hackers have developed increasingly slick techniques for either surreptitiously stealing sensitive account details or bamboozling owners and unwary employees into revealing passwords and other information. Uncle Sam has taken to forthrightly seizing valuable domain names on legally questionable pretexts, and private concerns have become bolder about using formal complaint procedures to forcibly transfer control of disputed names.

VeriSign, the official central registry for the .com, .net and .name top-level domains (TLDs), reported this month in an industry brief that a fourth-quarter surge of almost 6 million new registrations across the globe had brought the total of domain name registrations among all TLDs to a record 225 million by the end of 2011. In spite of years of jealous pummeling from its cousins, the popular .com TLD remains responsible for nearly half of all registrations.

Domain names registered within the realm of the .com TLD tend to be more valuable than others, and some names can be very valuable indeed. In the summer of 2011, social.com was sold for $2.6 million, and dozens of other .com names fetched six figures each over the same year. With so much money at stake, name owners are justifiably nervous about threats to their investments.

In spite of a slowly advancing maturity, the World Wide Web still strikes many seasoned observers as possessing more than a few of the characteristics of the old Wild West. Complex trademark claims and other issues promise to provoke shootouts on the virtual prairies for many years yet.