Poachers Capture Old Domain Names

If you currently own a domain name you cherish, you need to be careful because it's all too easy to lose it. It could be a mistake or fraud, but either way, you could have a major problem when you discover that you’ve lost a valuable domain name.

First, we had cybersquatting, which started in the Net's early days. Then, you had people who grabbed company names as domain names before the company with that name registered it. McDonalds and MTV are examples of famous companies that had cybersquatter problems early in the Internet Age over their company names. Today, most cybersquatter issues tend to be over variations on a company name like mtvmusic.net.

Now, enter the poachers. They grab domain names when a domain name that a company had previously registered becomes available for any of a multitude of reasons. It could be things like a company letting their registration expire by mistake, domain name registrar error and, sometimes, hard to identify shenanigans.

In yet another example of law always develops after the new technologies it regulates, there's little clear law on the issues that arise from domain name poaching. For instance, let’s say the reason a domain name became available was registrar error. Should the name go back to the original owner? Would it matter if the name were trademarked? What should the answer be if it’s a generic word like lawyer.com?

King for a Day

Before you answer the questions, take a moment to consider how valuable a domain name can be and then, since the law is unsettled, let’s play King and decide what you think the law should be.

What if Amazon.com's registration somehow became available--even for an instant--and some association for the preservation of the Amazon forests took it. In creating this fictitious scenario, let's even assume that the problem arose because somebody in Amazon.com's organization mistakenly forgot to pay the fee to renew the registration. So now, I’ve set it up so that it’s Amazon.com's fault. Should this be a case of you snooze, you lose? Darwinists would probably say "yes."

Now, let's change the facts. Let's talk about your home and assume that you "forgot" to pay your property taxes. In that case, the legal system has elaborate procedures in place to insure that you don’t accidentally lose your home to the highest bidder on the courthouse steps. Does your domain name deserve similar protection?

Is your "ownership" of a domain name a "property" right similar to home ownership or is it more like a contract right? This distinction is important because if it's a mere contract right, the law generally provides fewer protections than if it’s a property right.

In one infamous case involving the domain name "sex.com," the owner of sex.com sued the registrar when it allegedly mistakenly cancelled his registration. The basis of the lawsuit included claims of breach of contract, breach of a fiduciary duty, negligent misrepresentation, and conspiracy to convert property.

The lower court ruled in favor of the registrar. In its ruling, the court said the registrar did not have a contractual commitment to prevent the assignment of the domain name to someone else and that a domain name isn't property. This was one lower court's take on the issue and not necessarily the last word. The issue remains, what should the law be?

Redemption Grace Period

It looks like we're heading toward a new policy that will provide for a 30-day redemption grace period. During the grace period, the domain name cannot be transferred to any third party. The hope is that this solution will resolve the issue since the domain name owner will presumably notice that their Web site isn't functioning.

With that as the ultimate notice, it will give the domain name owner time to resolve the issue before somebody poaches the name. I think it’s hard to come up with a reasoned argument against this 30-day hold. It seems to achieve a proper balancing of everyone’s interests.

Still, there are many poaching disputes already out there. Courts are being forced to grapple with the murky legal issues that arise. If there were a trend, it would be that the registrars generally come out smelling like a rose. Maybe it’s because they have good courtroom lawyers and well-written one-sided non-negotiable agreements.

Whatever the reason, the registrars have this nasty and I think well-earned reputation for arrogance and poor customer service. As a group, they typically personify customer-service organizations with phone numbers like 1-800-WeDon'tCare. Maybe a few court judgments with hefty money damage awards for when they give away somebody’s domain, due to registrar error, might make them more responsive. A little accountability can go a long way.