Dotster named in massive cybersquatting suit

Neiman Marcus, Bergdorf Goodman claim domain registrar grabbed trademarked domain names through novel and illegal scheme.

A new federal lawsuit charges that Dotster, one of the largest domain name registrars, has unlawfully participated in a massive cybersquatting campaign targeting companies such as Cingular Wireless, Disney, Ikea, Google, Neiman Marcus, Playboy and Verizon.

The lawsuit, filed Thursday by high-end retailers Neiman Marcus and Bergdorf Goodman, alleges that Dotster abused its status as a registrar by "checking out" hundreds of domain names that closely resemble the correct ones--and then keeping only the ones that were visited by Web users who couldn't spell very well.

The misspelled domain name, when visited by CNET on Thursday evening, included code in its Web page that references Dotster and its subsidiary featured advertisements for Neiman Marcus rivals such as Bloomingdales and JCrew. By early Friday, however, that Web site and dozens more had been taken offline.

Court exhibit
This excerpt from a court exhibit
lists domains that are allegedly
operated by Dotster and are similar
to trademarks.

Cybersquatting, the practice of registering domain names that may violate a company's trademark, is hardly new--it's been around for more than a decade. Also called typosquatting, it's led to high-profile spats such as Apple Computer's successful attempt to claim and Canadian teenager Mike Rowe's registration of

But this Dotster lawsuit involves allegations of a new twist on the concept: a registrar using its special status with the Internet Corporation for Assigned Names and Numbers to secure misspelled domains temporarily for a few days, measure the traffic, and then pay for only the ones that would be lucrative in terms of advertising.

Dotster did not respond to repeated messages left on Friday with its legal department and two other employees.

Neiman Marcus and Bergdorf Goodman's complaint and exhibits, which total 155 pages, include excerpts from a conversation with Dotster employee Scott Fish, who allegedly asked for $1,000 for the name

"It gets a good amount of traffic right now, and would be a great domain to brand," said a purported e-mail message from Fish to a prospective purchaser.

The unnamed purchaser replied: "$1,000? Really? Would you take $500 for it, paid through Paypal?" according to the e-mail exchange included with the complaint.

Fish eventually agreed to sell it for $800, according to the alleged exchange.

While other registrars have been accused of this practice, and typosquatting has even been the target of a Microsoft Research project called "Typo-Patrol," this appears to be the first dispute with a registrar that's led to a lawsuit.

"What's unusual about (the allegation) is that it's not just any cybersquatter, it's a registrar, which is a problem," said Ann Ford, the managing partner of DLA Piper Rudnick Gray Cary's Washington, D.C., office, who specializes in trademark and copyright law.

Ford added that a lawsuit, rather than ICANN arbitration (a common way of resolving domain name disputes), was appropriate in cases involving registrar malfeasance. "Money damages as well as injunctive relief will better serve to shut down this typosquatter--if it is indeed the identified registrar--as opposed to simply having the existing bad faith domains transferred," she said.

The lawsuit--filed by the law firms of Christie Parker and Hale and Perkins Coie--charges that Dotster violated federal laws against trademark infringement and dilution, federal cybersquatting laws, and Washington state consumer protection laws against deceptive acts and practices.

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