TESTIMONY OF KEN STUBBS
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON THE JUDICIARY
SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY
INTERNET DOMAIN NAMES AND INTELLECTUAL PROPERTY RIGHTS
JULY 28, 1999
Introduction
My name is Ken Stubbs. I appreciate the opportunity to appear at this hearing. I hope to provide you today with the perspectives of Internet domain name registrars, which I bring to you in three capacities. I am associated with Domain Names International, a Florida-based company seeking to enter the domain name registrar business that is now being opened to competition. I am also Chairman of the Executive Committee of CORE, the Internet Council of Registrars, a not-for-profit association of more than 50 domain name registrars of all sizes, including my own and many others like it. Finally, I am one of three representatives to the ICANN Names Council who have been elected by the registrar constituency of the ICANN Domain Name Supporting Organization, also known as the "DNSO."
For more than two years, CORE has been intimately involved in the entire Internet governance process. CORE's member companies come from more than 20 different countries but, in accord with the strength of America's influence in the Internet, the largest share of CORE registrars are U.S. companies with a presence in many American cities. Wherever CORE members might be located, however, they share a dedication to working cooperatively with the Department of Commerce and the entire Internet community to ensure a responsible transition from the past domain-name registration monopoly to a vibrant competitive environment that provides fair procedures for protecting businesses, intellectual property owners, and consumers alike from the abuses now present on the Internet.
CORE and its members contributed extensively to the Green and White Papers, as well as the myriad of meetings and conferences leading to the creation of ICANN last fall. CORE members have participated fully in the evolving ICANN process, submitting public comments leading to ICANN's adoption of the registrar accreditation policy underlying the newly introduced competitive system and working with other segments of the Internet community to construct the participatory structures of the recently recognized ICANN DNSO.
The DNSO is responsible for formulating consensus-based recommendations on policy issues concerning domain names. It consists of seven different constituencies, including one for domain name registrars. The registrar constituency, which is open to all ICANN-accredited registrars, elects three representatives to the 21-member DNSO Names Council, which is responsible overall for managing the process by which domain name recommendations are formulated.
In addition, CORE was chosen last April to be one of the five registrars to participate in the test bed for evaluating the NSI "shared registration system," by which the Department of Commerce is introducing competition into the domain name registration business. In this regard, CORE is acting as a single registrar, but is dealing with the public through its various member companies. So far, 12 CORE members are committed to provide registration services through CORE. CORE has recently "gone live" actively registering domain names through five of its members, with the other seven participating CORE members to begin operations shortly.
Overview
The subject of today's hearing is the relationship of Internet domain names and intellectual property rights and is one about which domain-name registrars generally, and members of CORE and of the DNSO registrar constituency in particular, are keenly interested. Registrars recognize that for their businesses to thrive in the long term the new competitive marketplace should be fashioned in a way that accommodates the goals of the Internet domain name system with those of the intellectual property system. With the introduction of competition, system-wide reform is needed of past practices on the Internet that have led to misleading use of domain names, confusing consumers and infringing the rights of trademark owners. The new competitive system should also ensure that accurate, up-to-date contact information is available for every domain name so that violations of copyrights and trademarks as well as technical problems can be quickly corrected. Finally, all participants in the new competitive environment should be given fair access to the existing registration base developed by a series of exclusive government contractors over the past thirteen years.
While the Internet community, through ICANN, has developed a system that would promote vigorous competition while accommodating intellectual property concerns, implementation of that system has been frustrated by the refusal of the incumbent government contractor, NSI, to recognize ICANN or to subscribe to the consensus-based ICANN policies. This refusal has had devastating effects both on the effort to introduce competition and on the prospects for fair treatment for intellectual property on the Internet. In my testimony, I will address four points: the need for a universal prepayment requirement; the need for a publicly available, accurate, up-to-date, and unified source of contact information about domain names; the need for a uniform domain-name dispute resolution policy; and the need for fair competitive access of the legacy registration base compiled for the government by NSI and prior government contractors.
Prepayment
Cybersquatters and cyberpirates have massively exploited NSI's pay-later registration policy to tie up hundreds of thousands of domain names for months with no intent to pay. They do this by sending NSI domain name registrations that copy the names of legitimate businesses and then ignoring the invoice for payment that often arrives from NSI weeks later. By the time NSI gets around to canceling the unpaid registration, many months have passed and in the meantime these speculators often openly offer to ransom these hostage names to the highest bidder. The more sophisticated cyberpirates prolong the hostage crisis by submitting new registrations for the same names immediately as their unpaid registrations are canceled.
These abuses are truly breathtaking in scope, with 34% of the over 500,000 domain names NSI registers each month eventually being canceled for nonpayment. Because of these serious problems, the practice of pay-later registrations has long been condemned throughout the Internet community, except of course by the cyberpirates and by NSI itself, which benefits because pay-later allows NSI to expand its sales through impulse buying by customers not having access to credit cards or similar immediate payment vehicles.
To address these abuses, the ICANN registrar accreditation policy, which was adopted after extensive public input reflecting the broad community consensus, requires ICANN-accredited registrars to obtain a reasonable assurance of payment (such as a credit card) before allowing a registration to go active. NSI, however, has refused to become an ICANN-accredited registrar or otherwise to adhere to this prepayment requirement. The result is a significant competitive advantage for NSI, in that it alone offers customers the ability to register without having to provide a credit card or to wait for slower means of payment to clear. The effect of this NSI refusal to observe the same rules as other registrars is not only a destruction of effective competition but also continuation of the massive speculative abuses that NSI's pay-later policy promotes.
Last week NSI issued a press release announcing that it will reform its practice by adopting a prepayment model. NSI's claimed reform is entirely cosmetic and does nothing to effectively combat the abuses caused by NSI's pay-later policy. After issuing this press release, NSI promptly wrote the reseller community offering to include NSI "premier partners" in a program where there "will be NO CHANGES to the invoicing process" currently used by NSI. By continuing its pay-later policy for resellers, NSI will have a vast competitive advantage over ICANN-accredited registrars, because only NSI can continue to have resellers sign up customers without requiring prepayment, instead allowing NSI to invoice the customers directly at a later date. This unfair competitive advantage will also ensure that cyberpiracy continues unchecked, since the vast majority of unpaid abusive registrations are being accomplished through NSI's resellers.
In sum, the Internet community, including registrars other than NSI, recognize the need for and broadly support a prepayment requirement. If the ICANN process were allowed to work, prepayment would be a reality and cyberpiracy would be greatly reduced. But NSI has frustrated the process by refusing to become accredited. If there is to be a level playing field for competition and an effective means to stop cyberpiracy, NSI's refusal must come to an end.
WHOIS System
Another important aspect of ensuring beneficial coexistence of the domain-name registration and intellectual property systems is the convenient availability on the Internet of accurate and up-to-date contact information about registered domain names. This information allows trademark owners to seek to correct infringing use of domain names and also allows copyright owners to obtain information about domain names being used to distribute pirated content. It is also necessary for technical reasons, to allow those operating computers on the Internet to work together to solve interoperability problems.
By Internet tradition, public access to contact information about domain names has been provided by each top-level registry through a program known as "WHOIS." Until recently, members of the public could go to the "internic.net" web site that NSI operated for the government under its cooperative agreement and determine the names and addresses of registrants as well as technical contacts and registration dates.
In designing the shared registration system under which competition is to proceed, however, NSI significantly altered the way that WHOIS service is provided, so that under the current system public access is neither convenient nor, in the case of NSI-sponsored registrations, accurate and up to date. Under the NSI design, the WHOIS service is split into two levels, with a registry-level WHOIS provided at a new web site (www.nsiregistry.com) and with each registrar required to provide an additional WHOIS service. Users seeking information about a .com domain must now first go to the registry WHOIS, which provides only the identity of the registrar through which the registration was made, and then go to the appropriate registrar's WHOIS server to obtain information about the registrant and the domain name's contacts. This new procedure has resulted in extensive public confusion, which has been magnified because NSI concurrently redirected the internic.net web site to its own web site (without Commerce Department permission), so that users going to the formerly comprehensive government-sponsored WHOIS service now end up at a site that has only data about registrations made by NSI.
The ICANN-adopted registrar accreditation policy recognized this flaw in NSI's design of the shared registration system and provided a mechanism for a centralized WHOIS service operated by a neutral entity, with each accredited registrar providing its data. This mechanism, however, is not feasible at this time because NSI has refused to become an accredited registrar or to provide its registration data to a central database.
Another problem with the current WHOIS system is that in many cases the contact information for domain names is inaccurate or out of date. This obviously presents problems for intellectual property owners as well as for those needing ready access to operational information. The Internet community generally recognizes these deficiencies and, and a result, ICANN's registrar accreditation policy requires registrars to take reasonable steps to correct or update erroneous information when it is called to their attention. Although the accredited registrars understand the need for, and do not object to, this requirement, NSI's refusal to become accredited and follow the policy precludes effective correction of contact data for the large majority of registrations that NSI will continue to sponsor.
Dispute Resolution
As recognized in the White Paper, the Internet has resulted in challenges to the trademark system. Domain names have taken on a commercial significance in addition to their role as technical identifiers. Many trademark-based disputes, some involving legitimate claims on both sides and others involving abusive cybersquatting or cyberpiracy schemes, arose.
To alleviate the trademark/domain-name dilemma, the White Paper called on the World Intellectual Property Organization to "to convene an international process including individuals from the private sector and government to develop a set of recommendations for trademark/domain name dispute resolutions and other issues to be presented to the [ICANN] Interim Board for its consideration as soon as possible."
After an extensive consultation process, on April 30, 1999, WIPO submitted to ICANN its final report which called for an administrative dispute-resolution process for domain-name disputes resulting from cybersquatting, cyberpiracy, and other types of "abusive registrations." On May 27, at its next quarterly Board meeting, ICANN endorsed the principle of a uniform dispute resolution policy among registrars in the .com, .net, and .org top-level domains and referred the WIPO report to the ICANN DNSO for recommendations on the provisions of such a policy. The ICANN Board also encouraged the test bed registrars to work together to formulate a model dispute resolution policy for voluntary adoption until the DNSO can complete its work and an ICANN-established dispute policy can be implemented.
CORE and, by my observation, the ICANN-accredited registrars generally, agree that a uniform policy among registrars for handling domain disputes is needed. Although registrars want to engage in fair, heads-up competition, introducing a multitude of different dispute policies into a single top-level domain not only would create pointless confusion but also threatens disastrous results for trademark holders as cybersquatters and cyberpirates shop around from registrar to registrar for the dispute policy that permits the most abusive registration tactics.
The registrars are anxious for the Internet community, through the ICANN process, to come to consensus on what the uniform policy should be. The ICANN DNSO has formed a working group that is actively engaged in developing consensus recommendations. Responding to ICANN's encouragement of voluntary efforts in the meantime, the test bed registrars have jointly drafted a model policy based on the WIPO recommendations. Several of the test bed registrars (including CORE) plan to adopt that policy in the very near future, once final revisions are made to account for recent comments.
As you can see, using the ICANN process, the Internet community has risen to the challenge to formulate a uniform policy that fairly resolves domain name disputes. That policy, however, will have limited application unless and until NSI recognizes ICANN and becomes accredited, so that it operates by the same rules as all other registrars.
Access to Legacy Registration Base
In 1993, NSI took over the .com, .net, and .org registry database from the prior government contractor, SRI. In the ensuing six years, NSI has accepted registrations from the public and maintained the database through the government-sponsored "Internic" service. Until 1995, NSI was paid directly by the government for the Internic services; since then Internic has been funded by fees that the government has allowed NSI to charge registrants.
In October 1998, when NSI's cooperative agreement for Internic would have expired, the Department of Commerce granted NSI a two-year extension in exchange for NSI's promise to reengineer its system to allow competitive registrars, accredited by ICANN, to have equal access to the registry. As I have mentioned, in April of this year the beginnings of competition were introduced through the opening up of the registry to five ICANN-accredited registrars, including CORE. Because of technical problems with the shared registration system designed by NSI, as well as a predictably uncooperative atmosphere between NSI and the test bed registrars, actual competition has been considerably delayed. However, four of the five registrars, including CORE, are now actively selling registrations in competition with NSI. The result has not only been lower prices--one CORE member has dropped the price for a two-year registration from $70 to $50--but also much more convenient and user-friendly registration services.
But true competition requires a level playing field and equal access to the registry. This has been thwarted as NSI uses misplaced intellectual property claims to gain preferential access to existing and future registrants.
NSI claims it owns the data in the .com registry, even though it has maintained the registry for the government under a cooperative agreement, has always been required to make it publicly available, and, indeed, inherited the registry data in 1993 from the prior government contractor. This data should be viewed as a public resource, not a proprietary database owned by NSI. All competing registrars should be granted "equal access" to this data in the registry, as NSI promised last October when it got the two-year extension. Yet NSI has kept all the existing customers, has the only bulk access to data about these customers, has contractually prohibited competitive registrars from sending renewal solicitations to these customers, and has itself repeatedly sent bulk "spam" e-mails to these customers seeking to sell its services.
This not only is an unfair tilt of the competitive playing field toward the monopolist, but it also is an unwarranted private claim to exclusive intellectual property rights in a database compiled for the government under contract. Akin to this, NSI also grabbed public property when it hijacked the internic.net web site, which has long been associated with the government-sponsored Internic registration service (Internic is a registered trademark of the U.S. Government), and redirected that site to NSI's own web site (www.networksolutions.com). Unless this appropriation by NSI of the government's intellectual property is corrected, there will never be a level competitive playing field, and the public will never be able to enjoy the benefits of full and fair competition.
Conclusion
The Internet community has come together through ICANN to adopt consensus-based procedures that will minimize conflicts between intellectual property interests and the domain-name system. ICANN's DNSO and the ICANN-accredited registrars are working on a dispute resolution policy that will serve the legitimate needs of intellectual property owners, the public, and business alike. These efforts, however, have been effectively thwarted by NSI's refusal to participate constructively in the ICANN process and to become accredited so that it operates under the same rules as its competitors. Instead, NSI has sought to stall the introduction of effective competition by making spurious claims of ownership in publicly owned intellectual property and by adhering to its own policies that provide it unfair competitive advantages, while wrecking significant harm on the intellectual property of others.