More Domain Names, More Cyber-Squatting

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November 17, 2000 (4:45 PM EST)

By Mary Mosquera,

The seven new domain names approved this week will increase e-commerce competition on the ever-growing Internet -- and expand territory for cyber-squatters.

The Internet Corporation for Assigned Names and Numbers, or ICANN, christened on Thursday seven generic top-level domain names -- .biz, .info, .name, .pro, .museum, .aero, and .coop.They join the decade-old .com, .org, and .net.

ICANN is the group to which the federal government transferred technical administration of the Internet.

"Domain names are the gateway to communication on the Internet," said Richard Forman, CEO of New York's Register.com Inc. (stock: RCOM).

Register.com was the first ICANN-accredited registrar to break the monopoly of Network Solutions Inc., Herndon, Va., now a VeriSign Inc. (stock: VRSN) company.

"Creating new domain extensions will not only generate potentially millions of new domain names, but they will also create additional value for consumers, businesses, professionals, and non-profits over and above what is now offered through the current system," Forman said.

ICANN, criticized in the past for moving slowly and making decisions in closed meetings, has sought through a tedious process to bring more choice and geographic diversity to the Internet.

The board's action expanded the choice of address endings, the number of companies that will operate those databases, or registries, and their geographic base.

ICANN last year introduced competition among registrars, the accredited companies that sell online addresses ending in .com, .net, and .org. Network Solutions had been the exclusive registrar and still controls the .com registry.

"ICANN has a very difficult task. They have a very delicate political balance with all the interests in the Internet community," said Kirk Ruthenberg, partner at Sonnenschein, Nath & Rosenthal, of Washington, D.C.

Even if companies don't go out and buy names accompanied by the new suffixes, others are not free to go out and buy current trademarks, he said.

Cyber-squatting is a greater problem for small and medium-sized companies that don't have established intellectual property programs, as strong a brand as some big companies, and fewer resources, the attorney said.

Cyber-squatters buy up trademarked names and brands with the new suffixes and re-sell them in sometimes highly lucrative deals.

What's surprising is that they continue to be active in reserving trademarked names.

"I think many cyber-squatters bet on percentages. They figure they make some money off some of the domain names," Ruthenberg said.

Many of the ICANN name applicants incorporated recommendations from the intellectual property community to deter cyber-squatting on the new suffixes, said Michael Heltzer, the International Trademark Association's government affairs manager.

"ICANN deregulated the registrar industry, which has resulted in better prices and enhanced services for consumers,'' said Elana Broitman, Register.com's policy director.

With the seven new registries, "we believe the Internet community will reap similar benefits, most notably as new registries develop into credible alternatives to .com," she said.

Register.com is a participant in the registries for two of the seven approved proposals -- .pro through RegistryPro, a partnership between register.com and Britain's Virtual Internet -- and .info, as part of Afilias LLC, the 19-member international registrar consortium that includes Network Solutions.

Afilias had also proposed to operate .web, considered to be the next most popular suffix after .com. The ICANN board rejected its application due to a controversy over who should own .web rights.

Image Online Design Inc., San Luis Obispo, Calif., has operated an alternative .web registry for several years. The privately held company applied to operate the official .web registry but was turned down for insufficient experience.

Still, ICANN board member and Internet pioneer Vint Cerf said, "I'm still interested in IOD. To assign that to someone else given that they're actually functioning makes me uneasy."

The new domain names will not be available until at least early spring 2001. ICANN must still work out contract terms with the groups that will operate the registries, and the Commerce Department must also approve the domain names.