The National Internet Exchange of India in a recent proposed amendment to the Terms and Conditions for registration of domain names, seeks to restrict the resale of domain names at high prices. The amendment intends to target domain name registrars who use proxies to indulge in such resale practices that are prohibited to them. This would ultimately increase reasonable access to domain names, which would improve the ease of doing business in India. However, it would effectively ban existing business models like domain name investing. The blog discusses the intention behind the amendment and whether there is a necessity to create exceptions for certain circumstances of genuine resellers.
The National Internet Exchange of India[1] (NIXI), authorised by the Government of India to maintain the .IN as well as the .BHARAT domains recently released a proposal requesting public consultation for draft amendments to the Terms and Conditions for Registrants, which concerns the holders of .IN domain names. The draft amendment restrains domain name registrars such as GoDaddy from using proxies to circumvent the prohibition on the resale of domain names at high prices. In doing so, it effectively bans domain name investing, the practice of purchasing domain names solely to resell them for profit at a later date. For example, a holder can register a range of generic domain names such as “table.in” in bulk, speculating that they might be purchased at a future date. These domain names are listed for sale on an online marketplace or auction, where the holder determines the price of the name.
To be clear, NIXI presently prohibits domain name registrars from directly or indirectly engaging in misconduct such as cybersquatting or selling domain names at a price that is exceptionally higher than the published maximum retail price (MRP). Cybersquatting takes advantage of the first come first serve nature of the domain name system by registering existing trademarks as domain names, even when the applicant does not possess any right to the trademark.[2] The idea behind the practice is to extort trademark holders for access to domain names at a higher cost than they would otherwise have to pay. However, domain name investing, which the NIXI’s proposed amendment seeks to ban, is quite different from cybersquatting, as it involves purchasing domain names based on common terms such as “biscuit” or “news' ' which cannot be registered as a trademark.
It is understandable that NIXI would deem domain name investing to serve as an equivalent nuisance to cybersquatting. For instance, it could reduce ease of doing business for start-ups wishing for seamless and low cost access to generic domain names that may suit their business’ profile. At the same time, however, domain name investing has been recognised as a legitimate business practice globally, including in several disputes decided under the Internet Corporation for Assigned Names and Numbers’ (ICANN) dispute resolution policy (UDRP). One case involved a complainant that was a Northern Ireland based media company with the trademark “UTV '', whereas the respondent was based in South Korea and invested in common word-based domain names like utv.com.[3] The dispute resolution panel decided that the complainant’s trademark did not have a strong reputation in Korea and was merely a generic acronym registered under the respondent’s legitimate domain investing business. However, the international context, where such situations may arise that acronyms in one country may have no meaning within another is quite separate from the domestic context.
In addition, no international or domestic practice permits domain name registrars from engaging in domain name investing as it constitutes a conflict of interest. This conflict arises due to their access to insider information on the searches and demand for certain names. Domain name registrars can utilise this information to quickly purchase names through resellers and offer them for sale at a high price - a practice known as front running.[4]
While the proposed amendment seeks to target the possibility of misconduct like front running and resale of domain names through proxies, the current framing is very broad as it restricts both registrars as well as registrants from selling domain names at “higher/unjust” prices. Without defining this provision more specifically, the amendment creates a situation where the resale of any domain name may be up for dispute. This could entail problematic consequences in situations where the resale of domain names is for legitimate purposes. For instance, a company filing for insolvency may wish to sell its domain name at a price that would take into account the 20 years of renewal fees it paid to maintain the registration. However, it may be prohibited from doing so if the NIXI’s proposed amendment goes through as it currently stands.
It might, then, be prudent for the NIXI to qualify its amendment and refer specifically to front-running as an activity. Enforcement, in this regard, may be challenging. However, it is likely to prompt fewer implementation challenges than a blanket ban on reselling .IN domain names at a higher price. The NIXI may also make provision to recognise legitimate purposes for reselling.
In conclusion, the domain name system is integral to the digital infrastructure underlying businesses today. Terms and conditions involved with domain name registration need to target front running and other harmful practices by registrars but in a clear and specific manner. A robust framework for domain name registration and resale must provide balanced solutions to effectively improve the ease of business and provide flexibility for genuine resellers. In an environment where digital presence is becoming increasingly essential for traditional businesses as well as start-ups, ensuring reasonable access to domain names will be essential to their growth and thus requires urgent attention by the authorities.
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[1] NIXI is a non-profit company authorised by the Government of India to maintain India’s top-level domain .IN as well as the .BHARAT domain. Applicants who seek to purchase and register domain names within the .IN or .BHARAT domains are allowed to do so through accredited domain name registrars such as GoDaddy or CDAC etc.
[2] WIPO, Guide to WIPO Domain Name Dispute Resolution
[3] UTV Limited v. Unitedeurope Consulting, Kwang Pyo Kim Case No. D2011-2293, WIPO Arbitration and Mediation Center
[4] Michael Palage, New gTLDs: Let the Gaming Begin Part I: TLD Front Running, The Progress & Freedom Foundation, July 2009