Re: Internet domain name controversies

On 10/11/96, Mark Voorhees wrote:
>
> On Thu, 10 Oct 1996 10:06:40 -0700, Mario Heilmann wrote:

>> 
>> Does anyone know why internic does this strange domain name policy?  
>> Why do they insist on spending enormous amounts of money defending 
>> themselves in lawsuits, if they could easily avoid this?  Is there 
>> anything Internic stands to gain from this policy?

My guess is that the theory you offer is the correct one. That is, NSI rather cynically assessed who tends to have more money for litigation, and chose to establish a policy that simply does nearly everything that the moneyed side could want. And, even after months of illustrations of instances where its policy diverges radically from what a court would do, and diverges radically from what is fair, NSI sticks with its decision since to do otherwise is to risk having the change interpreted as an admission of error.

According to press reports, NSI is making preparations for an initial public offering of stock, and the underwriter for the offering is going to want to know what NSI's monetary risks are relating to domain names. The underwriter will want to do its "due diligence" in an attempt to assess the risks.

What NSI seems to miss is this: the monetary risk for NSI arising out of being sued by a trademark owner is probably far, far less than the monetary risk for NSI arising out of being sued by a domain name owner. The reasons are simple. First, as a general rule in trademark cases the victorious trademark owner does not get a damage award at all from *anyone*, let alone from a doamin name registration authority, but only gets an injunction. Second, no court has ever held a domain name registration authority responsible for monetary damages in a domain name trademark case. Third, in the cases that present the closest analogies (stock market ticker symbols, 800 numbers that spell neat things) no court has ever held the stock exchange or phone company liable for monetary damages. For all these reasons it is in fact irrational for NSI (a company with tens of millions of dollars in annual revenue, and with a corporate parent having billions of dollars in annual revenues) to be paralyzed with fear at being assessed damages after being sued by a trademark owner, and it is unjustified for NSI to use this fear as an excuse for cutting off domain names (and putting little guys out of business) at the slightest hint of irritation or covetousness on the part of a trademark owner.

In contrast, the monetary risk to NSI arising out of being sued by a domain name owner is non-negligible. If a domain name owner gets put out of business by NSI because of NSI's wrongfully cutting off a domain name (for no better reason than that a covetous trademark owner asked it to do so) then the damages a court might assess against NSI are bounded only by the harm the court later determines was caused ... and by the punitive damages a judge or jury might award for such callous treatment of an innocent domain name owner. And indeed most of the domain name owners that have sued NSI to try to keep their domain names have asked explicitly for money damages. (Links to many of the domain name owner's court complaints are found at  <http://www.patents.com/nsi.sht>.) In contrast, none of the trademark owners that have sued NSI have sued NSI alone, but have always also sued the domain name owner. And none of the trademark owners that have sued NSI have asked explicitly for monetary damages against NSI.

In other words, even if we were to accept NSI's apparent decision criterion, namely, looking out for itself and freely trampling on the rights of others if it offers any possible monetary benefit to itself .... even on that criterion NSI's selected policy is a failure. If it had stuck by RFC 1591 as its domain name trademark policy, it would probably never have any damage awards assessed against it in favor of trademark owners. But its present fourth policy (like it second and third policies) is a minefield of risk that it will sooner or later cut off a domain name (unjustifiably) and have some massive damage award assessed against it in favor of an innocent domain name owner.

The founders of the Internet said (in RFC 1591) that the domain name adminstrators "are performing a public service on behalf of the Internet community." One wishes that NSI would live up to the obligation of public service on behalf of the Internet community that it assumed when it accepted its five-year term as temporary adminstrator of the COM domain and other domains. But NSI has said many times in public forums that it feels it has no choice but to look out for number one, namely itself, and that the interests of domain name owners are subservient to its own interests. Sadly, even its efforts to look out for number one are, for the reasons set forth above, poorly served by NSI's present policy, and run the risk of undermining its IPO.

Carl Oppedahl
<carl[_at_]oppedahl.com> Received on Mon Oct 14 1996 - 15:34:06 GMT