NSI Class Action Lawsuit Over Domain-Squatting

Mr_Reaper writes: "Some people from eyeondomain.com started a class action lawsuit against NSI for not releasing expired domain names. If you've tried to grab an expired domain name and couldnt get it this maybe something to look at." See our previous story. The law firm is seeking affidavits from people who have attempted to register expired domain names which Network Solutions is holding on to -- you can email for more information if you want to submit such an affidavit.

Comments

NSI doesn't delete domain names either

[tgw]

NSI squatting on expired domain names is definitely an issue. The other side of the same coin is that they don't delete domain names, either. I bought a domain name a year or so ago to play a prank on a friend. Only needed it a short time. Since NSI sends junk email & snailmail to every domain holder, I wanted to get rid of the no-longer-needed domain - to cut down on junk mail from NSI. I submitted the request to delete the domain weeks ago. It processed through their system okay. Then I got an email that said that it had to be "reviewed" for approval, or some such thing. It's weeks later and the domain name still hasn't been deleted.

Over a year ago I sold a domain name to somebody. I submitted the paper work to NSI to change possession of the domain. They still haven't done it. I eventually just changed the IP addresses on the domain to point to the new owner's hosting service, since NSI didn't do their job.

This is what government-sponsored monopolies get us. It's pretty sad. And maddening. I hope this law suit costs NSI a lot of money.

Re:The easy solution - but it's wrong

[billstewart]

Sure it's a "silver bullet" - you're trying to get rid of werewolves, and you think it'll magically help the problem. As another poster pointed out, it'll just drive the problem underground. If the free market thinks names have value, which it apparently does, it'll apply economic processes to them, and price controls never do work well.

Besides, there's an easy workaround, which the free market will discover about 15 minutes after you get such a rule passed, which is that corporations are cheap and fungi-bull. Instead of Joe Cybersquatter buying "ValuableName.Com", and selling it to Valuable, Inc., he

• spends $50 setting up a Delaware Corporation "FooBarClone Inc.",
• sells the name "ValuableName.Com" to FooBarClone for $35, and
• sells Valuable Inc. the keys to FooBarClone Inc. for $Negotiable.

So it's raised the cost of cybersquatting the name by $50, which may keep a couple of the small players out, but doesn't change anything fundamental. Alternatively, if Joe's more of a technical guy than a business guy, he could do a technical dodge around the rules

• Sets up Joe Cybersquatter's DNS Outsourcing Service,
  
• Hosts a couple of nameservers at a colo vendor,
  
• Provides primary and secondary DNS service for customers who own their own names,
  
• Provides primary and secondary DNS service for customers who want to use one of Joe's names, like ValuableName.Com, for $Negotiable/year,
  
• Charges extra for complex subdomain structures
  
• Keeps renewing the names with NSI so they don't get away.
  
• Offers "Cybersquatter Prevention Service" to keep those nasty cybersquatters from stealing the name you've been renting if you don't renew your service promptly every year. You wouldn't want something bad should happen to your name, like some pr0n site renting it after you, now would you.....

Re:"Sign Police" == "Business Licensing"

[SlashGeek]

I think you might have missed what I was saying a little with the "Sign Police" analogy. Yes, storefront busineses are required to pay the town and federal govt for taxes, licences, and other costs. The situation I was trying to describe is the town would take a successful businesss, and say

"Hey, that sign you have outside and that phone number that everybody knows gets a lot of response, we are going to charge you 5 times as much this year to keep that telephone number and keep that business name. If you do not pay us more, we will take over your telephone number and name, and use that to make money because even though we didn't come up with the name we controll it and can charge you as much as we want to use it every year."

And it is the same with the telephone company. They charge you every year for advertising, but do they charge you MORE if they detect that you got a lot of telephone calls last year? No, they don't. I am not saying that the NSI does not have the right to charge yearly for re-registration, or inital registration, only that if they ask $25, any available name should also be $25. They didn't come up with the name, they should have no control over it's sale price. That creates an unfair advantage over smaller business or companies that may have interest in a name, whether it is an expired name, new name, or renewed name they already own. First come, first serve. The only time I can justify the sale of a domain name for a high cost is if the business is going with it, ie: if Taco sold Slashdot... oh wait he did.. eh... well you know what I mean. But in that case it's the business as a whole that is selling for a premium, the domain is only a part of that business.

One other thing to clarify here; I realize that this article deals with expired domain sales, I am talking a little more in the unexpired sense, but this really scares me. If the NSI wins here, that might mean (or make them think it means) that they have 100% control over what happens with all domain names, and that when a contract for a domain expires that they have the option to charge higher premium to renew that name. It's not that inconcievable to see them not renew unless you pay their premium for your own domain name, using the excuse that because the contract expired (they could force this, I'm sure) that they now own it and can charge a premium. As this could affect every internet business (and nonprofit) site out there, I feel this deserves mentioning.

So no, I am not saying that the NSI does not have the right to charge for a service, only that the service they provide should be limited to selling a blank space between the "//" and the "."

What is between the // and the . should not matter.

Your easy solution == Liberal Solution

[tswinzig]

Simply regulate the industry so that nobody's allowed to sell a domain name for more than, say $35.

Goodbye capitalism, hello communism.

it sure seems like it would cut out the majority of the dirtbags involved in domain reselling.

There are much better ways to do that without requiring the U.S. government to get involved in price-fixing.

The first problem to solve is Network Solutions holding on to domain names after they are no longer being paid. This is simply a legal matter. They have no right to hold onto those domain names. Their job is to facilitate the sale of domain names to people and companies, and to run the root DNS servers. They should have no control over who gets to buy the domain names, I think that's clear.

Second problem -- cybersquatters. It's similar to real estate. Instead of predicting where the next major boom is going to be, and buying all that land, 'squatters try to predict the hot names on the internet. The difference is that it is cheaper to squat a domain name than a piece of real estate. So what happens in the real world when a land squatter has bought up all the available land in an area, and wants a price the market considers "too high"? Simple... either the price comes down so the market will buy, or the market GOES ELSEWHERE. In the case of domain names, this means the market puts pressure on other top-level domains, e.g. .biz, .sex, .bank, etc. They can (and probably will) learn a lot from the usenet-style naming conventions before long. wellsfargo.bank is just as easy to remember as wellsfargo.com.

And finally, technological innovations will eventually wipe out the cybersquatters just as it created them. If I still have to type "slashdot.org" in a stupid web browser in three years, I'll eat my hat.

"Hello Search Engine. View Slashdot."

WHAMMO.

So please, let's not get the government involved in yet another area of our lives.

-thomas

Re:Domain Squatting is a Postmodern disease

[pjrc]

It certainly is valuable to have a relatively short domain name, and one that is somewhat pronouncable. A couple years ago, when my little web site could no longer be hosted at the university, all four letter names even somewhat pronouncable were taken, so Robin and I went for PJRC, taking a couple of our initials each.

A while ago, a couple people mentioned that someone had taken my domain name and was selling it. It turns out that, not being pronouncable, PRJC is a common misspelling, and these bastards are squatting on it, along with nearly every other imaginable combination of four letters. I sent them an email asking if they'd be willing to sell PRJC, thinking maybe I'd throw $100 or maybe even $200 at it... more than ten times what they probably paid for it in their bulk purchasing. They wanted $2000. They were willing to entertain "reasonable" offers, which more or less means four digits.

Lately, I've been doing a little bit of looking at the web logs, and it looks like the traffic comes from more or less three places:

• Search Engines: vast majority of visitors leave quickly
• Links: this how people who really are interested in the site usually find us
• Archiver Programs: a lot of people run programs like Teleport Pro to grab a complete copy of the site

From that, I'd suggest that MCMay has a valuable point that search engines' results are much more important than the domain name, links from other sites are the most valuable. Fortunately, we get quite a few links because I've spent years slowly building up quite a number of pages with lots of info.

In the last several months, we've started selling parts, circuit boards and kits for a couple the projects, and it certainly seems like the best way to spend money to promote the site is with an affiliate program. I'll probably end up doing a bit of cgi coding sometime in the next several months and add something like this. Even if we end up sending out $100/month (if we actually sold enough stuff in a month to pay that much, I could quit my day job and work on the web site full time!).... that'd be a lot better use of money than giving it to those damn squatters.

So, dear reader, if you've got any experience setting up one of these affiliate programs or you've had good or bad experience participating in them, please drop me a message with your experiences.

This Is What Happens...

[n3rd]

when a for profit company is in charge of something that should be independent, such as domain name registration.

NSI, like any other company has to make money, moreover profits. Since they are in control of all of the domains, they can hang onto the good ones (or ones who's ownership has expired, such in this case) and resell them for a higher price, thus making a profit and helping the company.

Imagine if Marvel Comics printed 10,000 copies of a hot first issue comic book. It then released 5,000 onto the market, and kept 5,000 for itself. Then, when the comic was selling for $300 each, Marvel sold the 5,000 it kept for $300 each.

Every business has to make money, and maximize its profits. But the way NSI is going about it, is at least shady, and at worst illegal.

Re:This Is What Happens...

[Enry]

Wrong analogy. The 10,000 Marvel Comics are exactly the same. Marvel also gets to choose the price based on what the market will bear.

NSI's domains are all unique - they must be. turdburglar.com and burglarturd.com (if they exist) are two completely different sites. The fact that one is held does not mean that the value of all other domains increase.

NSI advertises their domain pricing at $35/year. It's not "ask us for a quote for turdburglar.com". It's $35. Microsoft pays $35 for microsoft.com, just like Taco pays $35 for slashdot.org, and I pay $35 for each of my domains. I could care less if MS paid $2,000 for microsoft.com. It will not influence my cost ($35).

There is only one problem...

[Thalia]

I agree with the concept that NSI should be forced to give up those domain names. And I do think that joining is a good idea. Although, if you join a class action, the likely recovery is in the pennies, while all the money is received by the named plaintiff and the attorneys, so keep that in mind. But, on reading the complaint, I found a fairly major problem. In order to have an actual case, the plaintiffs have to prove that an action or lack of action by the defendant caused them harm, and that the defendant had a duty to act to prevent this harm. I see proof of harm, and that defendant (NSI) caused the harm. But this complaint does not allege a duty on NSI's part to give up those domain names. The closest it comes is by stating: "NSI is restraining trade ... despite the fact that NSI disclaims rights in domain names." (Statement of Facts, Paragraph 44). This is not enough to establish that the NSI has a duty to release those names. I expect that NSI's answer, which is not available online as far as I can tell, focuses on the fact that they have no duty to be prompt, or to release domain names. I do think that a case could be made by the other registrars that the NSI's actions is an interference with their business. But it is much harder for an individual to take on the NSI, and somehow prove the obligation to release domain names. Thalia This is not legal advice, so don't even think it.

Didn't-cha know?

[DiviN]

if one's IQ exceeds the one of the plastic pot plant in NSI's main lobby, he/she has no chance of ever being hired by NSI...

We've been transferring hundreds of domains in the past year and have been using their fancy online forms for dozens of NIC handle contact changes. Guess what 3 times these actions went smoothly. THREE TIMES. Three times out of hundreds.
Whenever one of our less experienced clients decides that he/she needs to make some changes, we usually advise them to get things rolling, get the dreaded NIC tracking number and then immediately start spamming NSI on a daily base.
For that purpose we use a variety of *real* NSI email addresses on a rotating base.
Per average it still takes about ten days four emails and two faxes to get any changes done.
So, for the heck of it, we transfered one unused domain name back to NSI, just to see what would happen [well, okay, the team was heavily betting as well].
Guess what? Transferring *to* NSI took 4 hours!

So, it's quite obvious, if there is money in it for them they have no staff shortages and the system works smoothly. If there is no money in it, then they make it as difficult as possible to deter people from changing.
Talking about abusing monopoly powers...

For a short time we even had accounts with NSI because we hoped that things would work more smoothly. Far from it! Our accountants are still in a clinch with their accountants about some missing funds...

Just a reminder of the finer workings of the 'Great Equalizer' - which unfortunately tends to fail to reconscile.

I think I speak for us all when I say...

[1010011010]

Put them against the wall.

________________________________________

The problem...

[Slngal 11]

The problem with NSI is that they are serving two roles. They run the root DNS servers. This gives them a guaranteed flow of income no matter how much the customers hate them. Their second role is that of a registrar.

Now, they seem to do a pretty good job of running the root name servers. The problem is that this position gives them an advantage over the other registrars. For one, they are guaranteed to have income. No matter how badly they screw up, or how much market share they lose, they will still have money rolling in because all of their competition has to pay them. In addition, as in this case, they can arbitrarily snap up domains without having to actually pay for them. Any other registrar that wanted to play this game would have to fork over cash to NSI to fund it.

What I think ICANN should dictate is this. One or more companies will be given contracts to register domain names, similar to what is done now. A second group of one or more companies will be given contracts to run the root servers. People who register a domain will pay the first group. The first group will pay some fee to the second group for each domain they want served. The contracts for both groups will stipulate that they are not allowed to own, be owned by, partner with, or be the same as any company in the other group.

The abuse that is happening with the current system is out of hand. NSI is acting like a greedy spoiled brat who is causing untold amounts of grief for thousands of hard working admins out there. Unfortunately, with the current system, they can and will keep doing it. In fact, I would expect their behavior to actually get worse as their market share declines. As they lose customers, past behavior indicates that they will abuse their power more to make up for the lost profits.

Property

[SlashGeek]

This all really goes back to the debate about whether domain names are property, and if one can "own" the rights to a domain name. In the case of a trademark, such as Microsoft, try that one at Register.com and see what it says. It will tell you that Microsoft is a Trademarked name and cannot be registered etc etc. Why should this be different for any other for-profit website? Even if it is only profit from banners, it is a business, and many online business have their domains as their (trademarked) business name. Is there a minimum profit or sales that the site or company has to maintain to have a name "trademarked" like MS does? It seems rather unfair that some companies have total control over their domains and other, smaller ones have to pay the piper for the rights to their own business.

Think, there are perhaps hundreds of millions of small business on the web. If these were storefront businesses, could the Sign Police come around once every 2 years and tell them that because they have a really cool sign and buisness name, that it will cost them $xxxxx.xx dollars to keep their mom and pop store open for another two years? I seriously doubt it. I hope the courts rule in favor of eyeondomain.com and everyone else involved in the Class Action Suite. The Intellectual Property that represents a domain, particularly one that is registered to a for-profit site, is the sole creation of the registrant. NSI had nothing to do with thinking of a name, creating a business model, designing the site, etc. They are there only to provide a service, and nothing more. The Internet Chamber of Commerce if you will.

Good luck to everyone at eyeondomain.com and company.

Motive for the suit?

[Masem]

Obviously, I agree that the NSI action of holding onto domains is bogus, but as others pointed out, NSI theorhetically holds all domains by their updated User Agreement, and therefore they have a right to sell them for such. This part *may* hold up in court.

But this then sounds like the lawfirm has a more important goal in mind: point out the fundamental flaws of NSI, such as retroactive changes in User Agreements, poor customer service, etc etc, such that NSI is penaltized by the court system for their actions. The auctioning of expired names is merely a tip of the iceberg of abused that NSI has done for years.

What about fraudulent billing practices?

[aberoham]

In late August I became a Tucow OpenSRS Registration service provider and accordingly transfered my domains from Network Solutions to Tucows.

One domain transfer was specifically completed on 9/22/00. Part of the transfer process is that the new registrar contacts the old registrar to notify them of the request and asks for their approval. (Is the domain paid for and not caught up in a dispute?) Network Solutions ACKNOWLEDGED this transfer request, allowing it go thorugh.

Now, a full two and a half months later, I get a nasty "FINAL NOTICE" bill from Network Solutions for the same domain that they acknowledged the transfer of. The envelope even has big bold writing on the front "Urgent: Your domain name is vital. Don't lose it." I'm not that stupid, and am not about to give Netsol another dime for a domain they're not even the registrar of, but what about non-techs who don't know any better?

I think whomever's going after Netsol with a class action suit should go after them for this shady billing scheme. I'd be willing to bet that at least 30% of the folks who get one of Netsol's bogus 'FINAL NOTICE' invoices pays it even though they've transfered the domain to a different registrar.

If you're looking for more info on duped out of $35 yourself, a long discussion about Netsol's hoaky billing system has taken place on the OpenSRS mailing lists. See http://www.opensrs.org/archives/mailing.index.shtm l...

-Abe

Re:The easy solution

[bnenning]

The solution is democracy in the form of government control. This should never have been let in the hands of a private organisation. The US gov should take its responsabilities. Domain names are a public service and they should have a fair system. They would control the root servers and would control registration, at a flat fee, no reselling, no transfer allowed. This would just eliminate this ridiculous market of names.

Nice in theory, and completely unenforceable. I could buy up all the domains I wanted, then offer a web hosting service where my customers choose which of my domain names they want to appear under. I haven't resold or transferred any domain names, I'm just providing a service for my customers. I suppose you could try to fight by making me declare the purpose for each domain name I register and using a huge content monitoring system, at which point you run into the pesky problem of the Constitution.

The market is NOT the answer to everything.

True, but it's generally a better answer than "government bureaucracy".

Unless I'm Mistaken...

[zpengo]

Isn't there some kind of loophole in the User Agreement that basically states that the users never actually *own* their own domain names, but that NSI officially owns them and is just letting people use them? This whole thing could have been an evil (but brilliant) trap from the beginning -- We're basically just creating a massive list for them of every domain name anyone could ever want; and then handing possession of those names over to them.

Register.com all the way, baby!