According to Seattle-based Web company Virtual Countries, the country wants to take control of SouthAfrica.com, a domain name it first registered in 1995.
In a pre-emptive strike that legal experts say could set new rules for government Web addresses, Virtual Countries on Nov. 13 filed suit in New York federal court, seeking to block an arbitration proceeding over the domain name before the World Intellectual Property Organization (WIPO).
The issue of government Web addresses raises several difficulties under current domain name rules, meaning conflicts such as the SouthAfrica.com dispute are bound to multiply, according to Calif.-based attorney G. Gervaise Davis III, who has represented numerous clients in domain name disputes.
At issue in the SouthAfrica.com case, among other things, is the legitimacy of dispute resolution panels--including WIPO--that have been authorized under a private law agreement to rule on domain name conflicts by the Internet Corporation for Assigned Names and Numbers.
"It's a significant problem, and there is not a lot of law on the subject," he said. "While private companies might find a legitimate use for geographical names, the practice can cause a serious inconvenience to political entities."
Many governments have so far avoided using the ".com" top-level domain in favor of country codes such as ".us" for the United States. The Web address system also reserved the use of ".gov" for federal U.S. agencies. That has left the field open to entrepreneurs to register country and city names, raising the potential for confusion between official government sites and private ones, according to Davis.
Governments face mushrooming competition from companies offering guides to entertainment and tourism, for example, as well as domain name resellers and "cybersquatters" who hope to sell addresses for quick profits.
Virtual Countries chief executive Gregory Paley said the value of country domains was underscored recently when the Korea.com domain was sold for $5 million to Thrunet, Korea's largest Internet service provider.
One legal precedent favoring political entities over private companies in such disputes already exists. On June 9, WIPO transferred the domain Barcelona.com from an individual to the city of Barcelona, which owns trademarks on its name.
However, many cities and countries do not own trademarks on their names, making domain ownership murky.
"In the U.S., geographical names can't be trademarked," said Davis, although he added that registering domains beginning "Cityof..." or "Republicof..." may present more clear-cut cases of out-of-bounds practices.
Virtual Countries said it believes it has acted within the rules and deserves to hang onto the address as well as domains for 23 other countries not currently in dispute, including Sweden.com, Russia.com and Switzerland.com.
"This is a silly case," said Virtual Countries' Paley. "It's clear they just want a better address. They want to take away all the assets we've been developing under this domain for years."
Paley pointed out that South Africa already operates a Web site under the SouthAfrica.net domain and administers its own country domain, ".za." All of the Virtual Countries Web sites include disclaimers explaining that they are not official government sites, minimizing potential for confusion, he said.
In addition, Paley said the company did not register the domain name in "bad faith," one of the conditions for WIPO to order a name transfer.
Representatives of the South African government were not immediately available to comment.
Depending on how the SouthAfrica.com dispute plays out, others could find their Web addresses targeted by governments interested in getting higher-profile online real estate.
That's not good news for current domain name holders. According to one domain name watchdog group that was recently formed, legitimate mom-and-pop e-businesses are losing their domain names to larger companies at an alarming rate in arbitrations.
Formed by the Association for Domain Owners' Rights, the Top-Level Domain Lobby and KeepYourDomain.com, the coalition found that WIPO awarded plaintiffs 84 percent of the names they sought in the first half of 2000.
According to domain name attorney Davis, the problem could be sorted out in a different forum.
"The tougher questions won't get resolved until there is some international cooperation," he said. "Ultimately I think they will pass a law forbidding private companies to register these domains."