The World Intellectual Property Organization has released its anticipated plan for curbing "cybersquatting," which would require domain name registrants to provide accurate contact information and pay for names up front. Currently names can be put on hold for 60 days without payment, allowing "speculators" to shop names around for resale buyers before they even own them.
But the proposal also includes a controversial provision that gives special rights to "famous" trademark holders around the globe, which observers say could be very problematic.
The WIPO report will be passed on to the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit corporation recognized by the Commerce Department to oversee the technical underpinnings of the Net and to foster competition in the domain name registration market.
Officials at WIPO hope the system will be adopted quickly and increase consumer confidence in the Internet as a safe place to do business.
"We think the report is, in may ways, the first step toward introducing some order in respect of a practice that we think nobody defended in the course of the whole process," Francis Gurry, WIPO assistant director general, told Reuters. "Everyone agreed that cybersquatting was an abusive practice and was abusive because it was undermining consumer confidence."
Cybersquatters were among the first to realize the commercial potential of a Net storefront. Many scooped up valuable names and were able to resell them later for big money. Speculators, on the other hand, have been known to hold thousands of names while they look for buyers and then to let the registrations expire if no one bites.
Under the WIPO proposals all domain name registrants would have to provide accurate contact information so that owners could be reached quickly if a dispute arose over their name.
"A domain name should not be activated by a registration authority unless it was satisfied that payment of the registration fee had been received," the report also states.
This would require the world's primary registrar, Network Solutions (NSI), to dramatically change its registration system.
"We received the paper on Friday. We are assessing what the outcome for NSI will be as we speak," said NSI spokesman Brian O'Shaughnessy.
The WIPO report also calls for owners of "famous and well-known" brands to be granted "exclusions" so that their name can't be registered by anyone else. The system would be administered by international arbitrators, and complainants could take their cases to court if they were unhappy with the rulings.
Legal experts agree that the paper is a step in the right direction, but they say the proposed special treatment for famous names is sticky.
"[The proposal] will discourage pure speculators," said Mark Radcliffe, an attorney with Gray, Cary, Ware & Freidenrich. "But the famous marks section is very controversial, because how do you tell when a mark is famous internationally? As of now these [trademark] rules are interpreted under national law."
Michael Froomkin, a professor at the University of Miami School of Law, who has closely followed the WIPO proposal, agrees.
"It's much better than the previous draft with the exception of that chapter," he said. "But it's giving people privileges they wouldn't have under current law."
Still, WIPO's Gurry defended the idea of special protection for big corporate names, saying cybersquatting has hit them hard.
"Globally famous trademarks have been the consistent subject of cybersquatting," he told Reuters. "They're the first target."
Reuters contributed to this report.