The Domain Name Registration System

Liberalisation, Consumer Protection and Growth

Jenny Ng

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136279454
• Edition: 1
• Topic: Law
• Subtopic: Science & Technology Law
• Index: Law

This book offers a comparative analysis of the domain name registration systems utililsed in Australia and the United Kingdom. Taking an international perspective, the author analyses the global trends and dynamics of the domain name registration systems and explores the advantages and disadvantages of restrictive and less restrictive systems by addressing issues of consumer protection. The book examines the regulatory frameworks in the restrictive and unrestrictive registration systems and considers recent developments in this area. Jenny Ng also examines the legal and economic implications of these regulatory frameworks, drawing upon economic theory, regulatory and systems theory as well as applying rigorous legal analysis. In doing so, this work proposes ways in which such systems could be better designed to reflect the needs of the specific circumstances in individual jurisdictions. The Domain Name Registration System will be of particular interest to academics and students of IT law and e-commerce.

Part I
The domain name
registration system

Overview and international perspectives

1 Liberalization, consumer protection and growth

The tug and pull relationship in the domain name registration system

The idea of the liberalization of the rules within the domain name registration system is one which is rather appealing to many countries. However, it is also one which is to be considered with caution as less restrictive rules may result in an increase in domain name disputes.

A restrictive registration system requires certain requirements to be satisfied, such as proving one's eligibility to register the domain name, before it can be registered. An unrestrictive registration system has minimal eligibility requirements. While restrictive registration conditions may lead to fewer domain name disputes, they result in a considerably smaller number of domain name registrations. ¹ Since 2003, there has been a distinct trend of countries transitioning from restrictive registration systems to less restrictive ones. There are several reasons for this trend. An important factor contributing to the liberalization of the registration system in many countries has been the desire to make it easier for registrants to register domain names in that country's domain space, ² thereby increasing the number of names registered in that country code domain. ³

There is a ‘tug and pull’ relationship between the seemingly opposing objectives of, on the one hand, liberalizing the registration rules to promote growth in domain name registrations and, on the other hand, ensuring that the interests of consumers and businesses are adequately protected. Restrictive registration principles have been seen as best serving the objective of consumer protection while less restrictive registration principles have been seen as most effective in increasing the number of domain names registered in a country code domain space.

Historically, the imposition of restrictions on who could register a domain name and what they could register was seen as a way of minimizing the problems caused by abusive domain name registrations involving practices such as cybersquatting, which is when someone registers or uses a domain name with the bad intention of profiting from the goodwill of a well known name belonging to another user, and typosquatting, which is the practice of URL hijacking that occurs when a user makes a mistake when typing in a web address into a web browser. The interests of consumers and businesses were considered to be better protected by the imposition of restrictions on registration. ⁴ However, now that many countries have taken a more liberal stance and adopted less restrictive registration principles, it begs the question of whether the objective of consumer protection can be more effectively pursued by other means.

In countries where registration principles have been liberalized, the ideal of consumer protection has not been ignored or overlooked. Experience has shown that consumer interests can be effectively protected in systems based on less restrictive registration principles. Countries that have liberalized their registration systems have implemented other mechanisms to ensure that the level of abusive registrations is minimized. In many countries, liberalization of the registration system has been accompanied by a strengthening of the arbitration system to ensure that the domain name registration system continues to offer adequate protection for consumers. The effectiveness of measures implemented in countries that have adopted unrestrictive registration systems is indicated by the fact that countries such as the United Kingdom, which has an unrestrictive system, has been found to promote consumer protection ⁵ and has a domain space which is trusted by its users. ⁶

Liberalization of the domain name registration rules

The liberalization of the domain name registration rules and principles can occur in two principal ways. First, the rules within the registration system can be liberalized by relaxing a few restrictions or making eligibility criteria less restrictive, without fully migrating from a restrictive to an unrestrictive model. This kind of liberalization can be observed in the Australian domain name registration system. Although still characterized as restrictive, the Australian domain name registration system has undergone some relaxation in the past few years, with a view to the commercial realities. A good example is the relaxation of the transfer rules that now allow the resale of domain names, ⁷ whereas previously the sale of domain names was strictly prohibited.

Overall, the Australian restrictive system can be seen as one which has embraced the concept of liberalization for a long time, albeit in a slow and careful manner, and it continues to do so. It is not overly restrictive, and this is manifested in the auDA Review's Final Report where it discussed the ‘close and substantial' connection rule and stated: ‘The consensus view of the Panel is against an “open slather” approach to domain name registrations in .au. Equally, the Panel does not support the proposition that the policy rules should be made more restrictive.’ ⁸

Restrictions are imposed where needed. For example, the rule against misspellings which prevents one from registering misspellings acts as a safeguard against abusing the registration rules in the practice of domain name monetization. By the same token, restrictions are not imposed where they are not needed. For example, Australia does not impose a rule against domain name tasting as the problem of domain name tasting does not occur in Australia.

Second, liberalization may occur by migrating from one kind of registration system to another, such as Sweden's migration from a restrictive to an unrestrictive system in 2003. Achieving an increase in the number of domain names registered in a particular domain space, particularly in a country code domain, is important as it maintains the stability of the domain name industry. Lack of growth in the industry may affect certain key players within the domain name industry such as the registrars who provide their services to the registrants. A reduction in growth will affect their ability to bear the costs involved in providing the high level of services that they currently provide.

In many countries, domain name registration systems have been liberalized because, under their old restrictive systems, growth of the system was stunted. ⁹ Thus, these countries have liberalized their registration systems to promote growth in the number of domain name registrations and to make it easier for the end users to register their domain names. ¹⁰

‘Growth’ vs ‘consumer protection’

The type of registration system that each country adopts is dependent on its own set of circumstances and priorities. Consumer protection is a priority in many countries. This is not surprising as abusive registrations such as typosquatting and cybersquatting are problems which cannot be ignored. Thus, in countries that have liberalized their registration systems, it is a matter of finding ways to balance the different priorities within the country's domain name registration system. In particular, finding the right balance in the ‘tug and pull’ relationship between consumer protection and promoting competition and growth in domain name registrations — two important but different priorities — is a challenge for every country. Liberalization of the registration system may promote growth but it risks sacrificing the ideal of consumer protection if there are not enough safeguards. A proper balance needs to be struck to ensure that consumer protection is not sacrificed or adversely affected by the liberalization of the registration system.

The first few countries to liberate: the Swedish experience

The Swedish system was initially a restrictive registration system which had a geographic restriction and a limitation on the number of domains per applicant. Furthermore, the registration of the domain name could only be made after a pre-screening process. ¹¹ The registrants had to meet the eligibility criteria, for example, the domain name had to reflect the name of the applicant.

This registration system was not popular with the registrants as they found it to be too restrictive. As a consequence, the number of registrations dropped as potential registrants switched to Generic Top-Level Domains (gTLDs) or the open Country Code Top-Level Domains (ccTLDs) of a coral island in the Asia Pacific called Niue. Niue's .nu ccTLD was popular among the Swedish registrants as it was unrestrictive and was a catchy vanity domain name for advertising purposes. The unrestrictive registration system in Niue made it easier for the registrants to register their domain names. It was also popular as the syllable ‘nu’ translates as ‘now’ in Swedish, Danish and Norwegian, and this was also very catchy for advertising purposes. For example, a Swedish parachutist club registered the Swedish version of ‘getupandjump.now', and Vicks Vaporub registered the Swedish version of ‘wakeup.now'. ¹² Prior to the reforms, two-thirds of all domain names held by Swedish registrants were registered under a TLD other than Sweden’s .se.

The Swedish system was reformed into an unrestrictive registration system in 2003 to regain a larger number of domain name registrations. ¹³ However, admittedly, the liberalization of the registration principles has also led to an increase in the number of domain name disputes. By the end of June 2004, 45 domain name dispute cases had been decided. According to the IIS (Internet Infrastructure in Sweden) Foundation, this number of cases was to be expected. However, by way of contrast, the new Swedish system has regained a larger number of domain name registrations. It received about 1500 applications each month. ¹⁴

The ‘tug and pull’ relationship between the priorities of
consumer protection and promoting growth in the domain
name registration system

The Swedish example illustrates the ‘tug and pull' relationship between two important priorities in the registration system which are consumer protection and promoting growth in the number of domain name registrations. Prior to the reforms in 2003, Sweden conducted an evaluation of its old system on 17 September 1998. The final report entitled ‘.se?’ ¹⁵ stated that the restrictive registration system resulted in very few domain name disputes and cybersquatting problems. However, it also found that the restrictive registration system led to a smaller number of domain name registrations, a costly and time-consuming process and confusing sub-domains. The domain names were usually very long and not user friendly enough for consumers transacting online as they preferred shorter domain names which they could easily remember.

Thus, in 2003, the old restrictive registration system was reformed into an unrestrictive registration system. This was despite the fact that the restrictive registration system would result in fewer domain name conflicts and cybersquatting problems. In light of the circumstances where Sweden was already losing two-thirds of its registrants to other domain spaces in unrestrictive systems such as the gTLD or .nu, this reform was seen as necessary if the Swedish registration system was to regain its competitiveness. Consumer protection had to be afforded by other means such as by using the arbitration system. Admittedly, there was a certain increase in the number of domain name disputes in the unrestrictive system. This is an inevitable result which the Swedish domain name authority would have weighed up and understood (and expected) to be the price for the more competitive unrestrictive system — and mitigated this cost by managing cybersquatting cases with an efficient arbitration system and a safe and secure domain name registration system.

The unrestrictive registration system in Sweden was more competitive and popular with its registrants as the registrants were starting to register their domain names in the .se domain space. The new system was receiving 1500 domain name applications each month after the reforms in 2003. Thus, the new unrestrictive system is able to compete with other ccTLDs such as .nu, whereas it was not able to compete with .nu prior to the reforms.

The global trends in recent times illustrate that many countries are liberalizing their domain name registration systems to promote growth in the number of domain name registrations. Thus, in many countries, it is a matter of understanding the tug and pull relationship between the two priorities of consumer protection and promoting growth in the number of domain name re...

Table of contents

• Cover
• The Domain Name Registration System
• Routledge Research in IT and E-Commerce Law
• Full Title
• Copyright
• Dedication
• Contents
• Preface
• Acknowledgements
• List of abbreviations
• PART I The domain name registration system: overview and international perspectives
• PART II Comparative analysis: consumer protection and growth in domain name registrations in the United Kingdom and Australia
• Notes
• Bibliography
• Index