JMBM IP Update: “Domain Tasting” Challenged in Federal Lawsuit

The registrar Dotster, Inc. has been sued in U.S. District Court in Washington State, based on causes of action including cybersquatting, trademark infringement, false designation of origin and dilution, as well as state and common law counts. Whereas a French court earlier this year imposed liability on a registrar after it had registered various infringing names on behalf of its client, in this lawsuit the complainants are alleging that Dotster registered infringing domain names for its own use, effectively acting as both registrant and registrar.

ICANN (the Internet Corporation for Assigned Names and Numbers) allows registrars a five-day grace period after a domain name is created to decide whether or not to delete it, in which case the registration fee is refunded. Dotster allegedly exploited the grace period provision by registering domain names and determining how much traffic they received before the grace period expired. Names with lower traffic were then deleted at no cost while Dotster kept the others, since names that point towards Web sites containing pay per click links or pop-up advertisements are more profitable the more traffic they receive.

This phenomenon, known as “domain tasting,” is beginning to cause concern among the Internet community, although ICANN has not been able to determine how widespread it is. In the case of Dotster, the lawsuit alleges that it failed to list WHOIS information in its registrar database for the domain names in question, even though failing to do so is a breach of the agreement that ICANN has with its accredited registrars. The complainants’ lawyer had earlier written to Dotster about one of the infringing domain names and Dotster agreed to delete it, but the registrant’s identity was never revealed. The lawsuit also alleges that Dotster sold domain names through a connected company, RevenueDirect.

The lawsuit requests that Dotster, together with one of its employees involved in domain name sales, be ordered:

  • To pay $100,000 in damages per domain name
  • To repay all profits made from the alleged unlawful acts
  • To engage in corrective advertising to undo any consumer confusion

Please let us know whether your company is having difficulties with third-party cybersquatters and domain name infringement, as we have extensive experience in aggressively pursuing clients’ rights online.

For more information, contact Rod Berman at 310.201.3517 or RBerman@jmbm.com.