If you have a website on the Internet, it is very likely that you do
not own the domain name you are using — despite what you may believe.
Over 90 percent of all domain names were registered through Network
Solutions, Inc. and that company specifically retains ownership of
domain names in their registration agreement, according to Chris Truax,
a lawyer specializing in Internet law. He runs the
DomainNameBuyersGuide.com, which offers free information on domain name ownership issues.
“A lot of people don’t realize it, but when you register a domain name you are signing a contract. The terms of those contracts vary widely between registrars. Network Solutions, of course, is the original domain registrar, and they have a set of terms in there that are very different from terms in some other registration agreements. We think that right now that’s a very important issue for consumers to look at,” Truax told WorldNetDaily by phone from Switzerland.
He also pointed out that most website owners are not aware of an important clause in the registration agreement used by NSI and others, which enables the registrar to cancel any domain name registration for any reason at any time.
The NSI agreement states: “You agree that we may terminate our service(s), including our domain name registration services, in the event that you use such service(s) for any improper purpose, as determined in our sole discretion.”
Truax said NSI is not alone. Many of the registrars reserve the right to revoke a domain name for any reason.
“That’s something consumers need to be aware of before registering a domain name,” Truax said.
Until recently, Network Solutions, Inc. was the only company for consumers to use to register a domain name. Deregulation in January 2000 brought many competitors offering a variety of different agreements from which consumers could chose. Although NSI maintains a very high percentage of all domain registrations, its market share of new registrations is now only about 38 percent.
It is also possible to switch domain registrars to obtain a more favorable contract, but as yet there are no statistics on how many clients have made the move. Truax said his DomainNameBuyersGuide is a resource for anyone who wants to find an alternative registrar.
Only one registrar,
Paris, France-based Gandi.net, provides clients with an agreement that explicitly states: “The client owns the registered domain name. GANDI simply acts on the client’s behalf.” Some companies leave the question of ownership vague and unanswered, while others explicitly retain ownership and charge for the use of the domain name.
Truax said he and several other lawyers have studied many of the existing registrar agreements. They ranked each and have placed their findings on the Internet for anyone to use at no charge as a public service. Truax is not affiliated with any registrar, and does not receive advertising income from registrars. He added that not all registrars have been rated as yet, but that they soon will be.
There has already been a
legal dispute over domain name
ownership, and NSI has established legal precedent in the state of Virginia for its claim that domain names are like telephone numbers. You can use it for as long as you pay your bill, and for as long as the registrar allows you to — but you do not own the domain name if you are registered with NSI.
“Network Solutions went to the Virginia Supreme Court and argued that you don’t own your domain name. So in Virginia at least, domain names aren’t intellectual property,” explained Truax.
A lower court had ruled that domain names registered to James Tombas of Canada could be garnished by NSI and sold to pay legal fees. NSI disagreed and appealed to the Virginia Supreme Court where the ruling was reversed.
The court ruled that a domain name is “the product of a contract for services,” and therefore “is not subject to garnishment.”
A top Internet executive who previously worked for NSI now works for an Internet hosting service that no longer provides domain registration through NSI. Although he was reluctant to permit his name to be used, he offered a strong opinion about the recognition of domain name ownership.
“To me, it’s common sense that domains should be classified as real estate, virtual real estate,” the former NSI executive told WorldNetDaily. “By definition, real estate information is a matter of public record. If domains were treated like numbers, Amazon.com would not be a registered trademark. You cannot trademark a number. Business.com would not have sold for $7.5 million since it’s illegal to sell numbers according to the FCC. And, people wouldn’t be recognizing domain sales as a capital gain (after X number of months) since the practice would be considered illegal by the IRS.”
He added, “Maybe my logic is incorrect, but if domains were not an asset, wouldn’t all sales be treated as ordinary income? As NSI has demonstrated in the past, treating domains like numbers minimizes their liability. Clearly, everything points to this and market share preservation for as long as possible.”
Truax agrees, and said he is very concerned about all registrars that restrict ownership rights of domain names.
“The registrars we have ranked highly don’t explicitly put in their registration agreement that you don’t own your domain name and you have no rights. Gandi is the only one that has an affirmative statement that you do own your domain name,” Truax explained.
He said that this is a good time for consumers to get involved because domain name law is in the early stages of formation.
“Right now we’re making rules for how domain names are going to be handled in the future. We think it’s important that consumers get in on this and understand that they do have real choices, and exercise that choice,” said Truax.
Bob Evans, who is WorldNetDaily’s chief technology officer, is not concerned about the lack of ownership provided by NSI and other registrars.
“All anyone or any company really has is a ‘right to use agreement.’ That is, until a challenge appears to threaten the TLD (top level domain) manager to a point of cost. It is then very possible that usage will go on hold or be removed completely. Suits regarding ownership continue on a daily basis. They cross borders and oceans,” Evans told WorldNetDaily.com
Evans defended NSI and said all registrars have the right to cancel a domain name.
“You can’t blame NSI for this. They are protecting themselves. It cost them more money in time and labor than the $50 one paid for the domain,” Evans explained.
Evans said all registrars could change their agreements at any time as needed.
“If some new legal precedent is established which can cost them for previous domains registered and established, they need to adjust to protect themselves,” he said.
Does Evans think the concerns expressed by Truax are of importance?
“I don’t think you will find that a TLD manager or affiliate simply removes ‘usage title’ to a domain for any reason except that they were put in a position of cost or forced to via an established legal system. So I don’t think any of this is a concern,” Evans stated.
Evans does think competition with NSI is good for the industry. It may be the only aspect of the issue on which both Truax and Evans agree.
“Competition is a good thing. Customers will leave a service if the service is bad. With or without such a site, it’s basic business 101,” said Evans.
Truax said consultants are technical experts, but not necessarily legal experts. He was critical of those who tell their clients not to worry about ownership issues without recommending legal consultation.
“If people decide that it’s no big deal, then that’s fine,” responded Truax. “That’s the way the market works. That’s great. Before people can make that decision they have to know that it’s an issue. In other words, we think it would be a mistake for people like a consultant to say we know this and we’ve decided it’s not important and move on.
“These are not technical issues. These are cultural, legal and political issues. I personally wouldn’t be comfortable if I were going to get a domain name and start a business and I was going to spend a lot of money advertising that domain name and getting it out there, and I would certainly want to have as many rights in it as I could get,” he added.
Truax said there are many influential groups, including government authorities, which can exert pressure on domain name registrars and force them to take a domain name away from a person or company.
“The U.S. government or any major group or organization can put pressure on Network Solutions to withdraw a domain name. Anyone could. This is something I was personally involved in as an attorney, which is the reason I can talk about it,” explained Truax.
An organization created a parody of the official Vatican website and called it Vaticano.org. The parody site looked like the official site at first glance, but the content was “humorous, wacky, and made fun” of the Catholic Church and was “clearly not real,” according to Truax.
The Vatican complained about the site and NSI refused to renew the domain name. Instead, it let the registration expire and gave the name to an “organization that’s closely linked to the Vatican,” said Truax. “So that’s one example of how Network Solutions exercised their prerogative,” he added.
The NSI registration agreement states: “Unless otherwise specified, each Network Solutions’ service is for a two-year initial term and renewable thereafter for successive one-year terms. Any renewal of your services with us is subject to our then current terms and conditions and payment of all applicable service fees at the time of renewal and in the case of domain name reregistration, the domain name registry’s acceptance of your domain name registration.”
Website owners may find they have another problem — the resale of domain names. Some registrar agreements are worded in such a way that they can refuse to transfer a domain name from one party to another, according to Truax.
“Part of Network Solutions saying that you don’t own anything is that they restrict the right for you to transfer it to a new owner. In theory, they can void your domain name if you attempt to transfer it to someone. In other words, they’re saying unless we grant permission you can’t transfer your domain name. They do allow people to transfer domain names to someone else, but they reserve the right for themselves to deny it,” said Truax.
Consumers are generally unaware that most registrars reserve the right to change their registration agreements at any time. Truax pointed out that NSI could make any desired change to its contract without providing any notification of the change. If you don’t like the changes, your only choice is to discontinue service with NSI and risk the possible loss of your domain name because NSI does not have to approve of a request for transfer to another registrar.
According to the NSI agreement: “You agree that we, in our sole discretion, may modify our dispute policy. We will post any such revised policy on our Web site at least thirty (30) calendar days before it becomes effective. You agree that, by maintaining the reservation or registration of your domain name after modifications to the dispute policy become effective, you have agreed to these modifications.”
Similar statements are made in other parts of the NSI agreement regarding other changes the company may decide to make. The Gandi registration agreement cannot be changed, according to the agreement itself.
NSI has recently entered the market for the resale of domain names. Truax believes NSI will eventually grant permission for transfer of names only if done through the company’s on-line system, so they can make a profit on the sale.
“It’s only one more step for Network Solutions, or any registrar who has a provision like that, saying, if you’re going to sell your domain name you have to sell it through us, and we have to get our cut. I’m not saying they have plans to do that, but if you put all those things together, it’s certainly something. They’ve left the door open. That’s the best way to put it.”
If a domain name has been registered previously, but is not renewed, Network Solutions has begun a new policy of not releasing the name for someone else to register it. Instead, it will auction the name off to the highest bidder. This also prevents NSI competitors from gaining access to the expired domain name for their clients.
Other registrars are complaining to the Internet Corporation for
Assigned Names and Numbers (ICANN) because they believe they should have access to all unregistered domain names. ICANN, the newly formed international regulator of the Internet, has not yet responded to the complaints, nor to requests for an interview with WorldNetDaily.com.
“NSI’s policy toward non-renewed domains is one-sided at best. These names should be made available to all prospective domain customers, not just a former monopolist’s customers,” an executive for one of the largest website hosting services explained.
Truax said he has created his site as a service to consumers in the hope that educated consumers will help to change the current system.
“The only thing that’s going to make Network Solutions change is market pressure,” explained Truax. “I’m sure that if two million people decided tomorrow that they didn’t like the terms and decided to transfer their registration to a new registrar, that Network Solutions would seriously consider changing some of these terms.”
He said that anyone with a domain name could change registrars very easily on-line. Gandi, and many other registrars, provides an easy-to-use system for those who want to make a change.
“Basically you just give authority to the new registrar to transfer your domain name to them. They take care of all the technical details. Some of them even have an on-line form to do it,” said Truax.
When other registrars began and NSI lost their monopoly on domain name registration, the simplified method of transfer was established.
“Apparently that was one of the big sticking points when they worked out how the competitive system would work,” said Truax. “The people who wanted a competitive system insisted that Network Solutions has to transfer domain names for people who want to.”
Truax denies any tie with registrars.
“Network Solutions has publicly accused me of being biased, which is just simply not true. If Network Solutions gets its act together and does a good job and modifies its agreement, we’ll be perfectly thrilled to give them a five-star rating. We don’t get any money from any registrars. We don’t get any money from anyone,” he responded.
The DomainNameBuyersGuide has no advertisers or sponsors. Truax and some of his lawyer friends have created the site and the five-star rating system as a free service to consumers.
NSI has not responded to WorldNetDaily.com’s requests for an interview made by phone and e-mail several times over the last month. WorldNetDaily was able to
confirm the claims made by Truax through
documents on the NSI website.
“Practically speaking, your Web Address (domain name registration) is the core of your Internet identity, your online brand. Your customers will remember this name and use it to find out about your products and services. And since no two parties can ever hold the same Web Address simultaneously, your Internet identity is totally unique,” explained NSI in the “Frequently Asked Questions” section of its website.
What is a web address, or domain name?
The NSI website states: “Technically, a Web Address is an addressing construct used for identifying and locating computers on the Internet. While computers use Internet Protocol (IP) numbers to locate each other on the Internet, people find them hard to remember. Therefore, Web Addresses were developed to permit the use of easily remembered words and phrases to identify Internet addresses.”
Truax was also critical of NSI because the registration agreement enables the company to refuse to register a selected domain name for any reason. The wording of the agreement could include the re-registration of a domain name when it is time for renewal, according to Truax.
Rankings completed by Truax and his staff of volunteer lawyers are given in three categories: legal rights in each registrar’s agreement, annual fees charged by registrars, and an overall score.
“‘Legal rights’ is given the most weight for two reasons. First, the legal rights offered by different registrars vary widely. Second, a domain name can be a very valuable piece of property, especially for an organization or business. Your legal rights in your name should be your most important concern when choosing a registrar,” said Truax.
The DomainNameBuyersGuide gives a maximum rating of five stars, with five being the best. NSI is rated one star, while Gandi received five stars. Truax said the rating system is based on the content of the registration agreements.
The fact that Gandi clearly states, “The client owns the registered domain name,” and that Gandi can’t change its contracts at will puts Gandi and NSI at opposite ends of the rating system.