Bounty Hunters Counter Net-Name Squatters

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August 10, 1998 (5:05 PM EDT)

By John Borland,

A new breed of Web service is springing up to counter the practice of "cybersquatting," acting as a kind of domain-name bounty hunter for clients trying to expand their presence online.

Led by NetNames, a domain-registration company based in New York, these services will track down a name that has been registered overseas and negotiate with the registrar to take it over for their clients. NetNames has established a network of attorneys in 60 countries who are familiar with local laws and domain-registration rules, and has already posted a 75 percent success rate in winning over disputed domains, company officials said.

Legal disputes over Web addresses are as old as domain names themselves. Most of the court battles over trademarked names have focused on the big three top-level domains -- .com, .org, and .net. But as space inside these domains tightens and more overseas users come online, country codes such as Japan's .jp or France's .fr are increasingly becoming battlegrounds for domain disputes.

"It's standard practice now to protect trademark registrations in every conceivable form in every conceivable domain," said G. Gervaise Davis, an intellectual-property attorney in Monterey, Calif.

NetNames has offered its Global Recovery Service for about 30 companies since March on a trial basis, and is expanding the practice now that they have established a record of success, he said.

In about half the company's successes, the case is resolved at the level of the country-code registrar itself, without ever contacting the owner of the domain name, said Jan Kallberg, NetNames' legal counsel. Many country-level registries will not register a name if there is a chance of trademark confusion, and will delete a registered domain if shown the conflict, he said.

But Kallberg has also developed relationships with some of the Web's biggest cybersquatters, who hoard domain names in hopes of selling them for a profit. He said a low-key approach, rather than threats, has enabled NetNames to win over many of them.

The cost of retrieving a domain name this way has proved to be far less than a lawsuit. "Most of these have been solved for under $5,000 a case," Kallberg said. "Some are even solved for just a few hundred dollars a case. We'll call the registrar and say 'This is insane,' and they agree and shut it down."

But critics say this kind of service supports an increasing imbalance of power between large corporations and small domain holders. In many cases, no clear case of trademark infringement exists, or the two parties have equal rights to the name. But the smaller party often can't afford a lawsuit and is forced to capitulate before trial, Davis said.

"It can cost up to $150,000 just to get a hearing on the case," the attorney said.