Wecome to Legal Monday! I wanted to kick off 2008 by discussing an exciting, developing case on domain tasting. This case has three things that I think make for a sexy case. (1) It involves at least one well known party. (2) It exposes a cunning money-making scheme or business plan. (3) Finally, It’s obvious that this scheme should be illegal, but it’s not obvious which law is being broken.
Dell has stepped in where I-CANN and Verisign have feared to tread by filing suit against one of the largest domain tasting networks. Dell did everything right to put itself in a good position for this lawsuit. Unfortunately, documents filed with the court last Friday, January 5, 2008 indicate that Dell may lose the case despite its efforts.
Part I of this post talks about Dell v BelgiumDomains, LLC.
Part II of this post asks a few questions about domain tasting.
Part I
Dell v. BelgiumDomains et al., 1:07-cv-22674-AJ (SD Fla. 2007)
Dell v. BelgiumDomains et al., 1:07-cv-22674-AJ (SD Fla. 2007)
Let’s recap the facts for those of you who haven’t been following this case over the past two months:
In the Southern District of Florida, Dell filed suit against three domain registrars, ten John Does, and a gentleman who goes by the name of JP Vasquez. Dell alleges that these defendants were involved in a domain tasting network that registered and used over sixty-four million domain names. According to John Levine and Jay Westerdal, these three registrars have been responsible for about 72.5% of the 255 million domains tasted in the past six months and have the most egregious history of domain churning.
According to Dell's Complaint filed in October 2007, the registrars acted in concert with several shell corporations scattered around exotic locations with liberal banking laws, such as the West Indies, the Caribbean, Mauritius, Panama, and Argentina. Dell cannot yet identify who owns these registrars and shell companies (hence the John Doe defendants), but it does know that Mr. JP Vasquez managed the registrars out of Florida. Like smaller scale domain-tasting rackets, the network passed around profitable domain names like a hot potato in order to take advantage of I-CANN’s five-day refund policy. If you keep passing around your domain names in an endless loop, you never have to pay for the privilege of owning and using the web addresses. Meanwhile, the profitable sites bring in pay-per click dollars. If you want more information about how the scheme works, I commend to your attention the Washington Post article outlining the facts more fully.
No One Knows Who the Man Behind the Curtain Is.
Vasquez, a man of simple means, does not appear to be the mastermind behind this international scheme. All that is certain is that the Dr. Evil orchestrating this plot must have extremely deep pockets. Keeping millions upon millions of domain names registered, even if only for brief, temporary intervals, takes substantial amounts of cash.
Dell v. BelgiumDomains, LLC et al was originally filed “under seal” (that's a term of art meaning "in secret") so that Dell could swoop in with its forensic experts, image the hard drives, and freeze the defendants' U.S. assets before they even realized they had been nailed. Dell needed this information to build its case and find out who is behind the domain-tasting network.
While Vasquez originally claimed that he would cooperate by preserving and turning over valuable evidence, it appears that Vasquez changed his mind.
Dell Accuses Defendants of Destroying Evidence
Dell filed a request for sanctions last Friday, January 5, 2008, accusing the defendants of willfully and in bad faith erasing information from nine out of twenty-two servers. Allegedly, the defendants began erasing data only three days after they were instructed by the Judge to preserve evidence and hand it over to Dell. The defendants, who had remote access to the servers, used BCWipe to permanently and selectively delete information on at least five of the servers.
Dell is Seeking a Default Order Against the Defendants for Spoliation of Evidence.
In response, Dell is asking the Court to enter a default judgment (in other words, to give them an automatic win) as punishment for spoiling the evidence. You can read the Motion for Sanctions and the supporting declarations of the forensic experts here and here.
Granting a default judgment for spoliation of evidence is an extraordinary remedy and the chances of it being granted are slim. However, the defendants’ conduct is certain to inspire rancour in the judge hearing the case. It is more likely the court will award monetary sanctions than hand Dell a freebie win.
Dell’s claims may not survive without the missing evidence. There is solid evidence that the registrars are involved. However, without proof that the registrars and the foreign shell companies were acting in concert and owned by the same person/s, Dell’s case weakens.
Dell May Encounter Collection Problems Even if the Court Grants its Request for Default Judgment.
Further, even if the Court does award a default judgment or monetary sanctions, it is not clear whether Dell will be able to collect on the judgment. Having a slip of paper signed by a judge that states someone owes you money doesn’t put the cash in your bank account. You’ve got to chase it down. Dell probably doesn’t have much of a chance of getting to Dr. Evil’s assets.
The Defendants are Seeking to Dismiss the Case, including Dell's Big-Money Trademark Counterfeit Claim.
In addition to destroying evidence, the defendants are also trying to use legal means to avoid responsibility in this case. They have requested dismissal of Dell’s claims. They claim that Dell’s claims are inapplicable and improperly pleaded. Most of Dell’s claims against the defendants are what you would expect in a domain tasting case: trademark infringement, trademark dilution, unfair business practices, etc. However, one of Dell’s claims, trademark counterfeit, is considered by many to be a novel claim that would expand the purview of trademark law. The U.S. law on trademark counterfeit can be found at 15 U.S. Section 1114(1).
Dell Has the Chance to Win Multi-Millions in Damages if the Court Allows the Counterfeit Claims to Go Forward.
Why bring in a counterfeit claim at all, you may be asking? The difference between a counterfeit claim and a regular infringement claim is hundreds of thousands of dollars in damages. Check out this math: If Dell proves its infringement claims, it can “win” up to $100,000 per domain. That sounds substantial, but it’s nothing compared to the damages for trademark counterfeit. If Dell proves its counterfeit claims, it can earn up to 1 million dollars per violation.
The defendants argue in their Motion to Dismiss that there is no such claim as trademark counterfeit in the domain tasting context. Hosting ads on an infringing domain name, the defendants argue, is not like selling fake Gucci bags on the street. Instead, it is a bona fide business model. The defendants claim they are offering a search service. Well, that’s one way to look at keyword advertising, I suppose.
Dell, on the other hand, argues that counterfeit is not limited to mislabeled physical products. Rather, trademark counterfeit should be defined broadly as occurring whenever a deceptive commercial practice involves an “identical or substantially indistinguishable” mark.
These are very different visions of counterfeit. It will be interesting to see whether the court will be willing to expand the law and hold that mass cyber- and typo-squatting amounts to counterfeit. There hasn't been a ruling on either the request for sanctions or the request for dismissal. I'll keep you posted as those decisions come in.
Part II
The Domain Tasting Debate
The Domain Tasting Debate
People have divergent, passionate views on domain tasting. Most people agree that registering and using web addresses that include trademark infringements or typographical errors, such as many of those in the Dell case, should be off limits. No one except Dell should be allowed toe use DellFinancialServices.com.
However, people disagree passionately about domain tasting purely descriptive, non-infringing sites, such as icecream.com.
Domain tasting is not illegal or against I-CANN policy so long as there are no trademark issues. Regardless, some people believe that I-CANN should take immediate action to curtail domain tasting. They believe it stresses the registries’ resources and harms legitimate businesses by hoarding all of the good domain names. Further, small business owners, lacking the resources to do any medium to large scale tasting of their own, are disproportionately shut out from valuable web addresses. The big fish keep getting bigger and it doesn't trickle down from those off-shore banks.
The Public Interest Registry (PIR) that registers dot-org web addresses has eliminated free trial periods for some registrars in order to discourage domain tasting. David Marher, PIR’s Senior Vice President, told The Washington Post that PIR was “being hit by a few registrars that were tasting millions of domains but literally deleting 99.9 percent of their domains so they wouldn't have to pay for them.” PIR decided to take action because domain tasters were straining the automated systems and hoarding domain names from ‘legitimate’ users. In June 2006, PIR instituted a five cent surcharge for registrars that deleted 90% or more of their domains within the five-day grace period. The policy was successful. Almost overnight domain tasters abandoned dot-org domains.
Despite PIR’s success, there is no similar policy for companies managing other top level domains. Verisign, for example, has no current plans to institute a similar program. There is speculation that Verisign refuses to take action because it makes money off the domain tasters [gasp]. However, Verisign claims that it is waiting for ICANN to issue a universal policy for all registries. [Don't hold your breath.]
Jay Westerdal has started an excellent post listing some pros and cons of domain tasting. There is also a good thread with well-made points on both sides of the domain tasting debate at webmasterworld.com.
As always, thanks for your attention. Please let me know if you have any questions or concerns.
Very truly yours,
Sarah
It's unreal to me that the court did nothing more strict than tell the defendants "don't wipe those hard drives." I can't imagine that years from now, there won't be some sort of an automatic "seize and copy" action for digital files, to prevent this kind of abuse. If, in your words Sarah, the case is unlikely to be given the default judgement even AFTER the defendants destroyed evidence, it seems as though everyone's best policy is simply to wipe their hard drives as soon as the gonig gets rough.
Rand,
You're feeling all the right things here. Thus frustrating thing for Dell here, I'm sure, is that they initially did the right thing. They convinced the Court to let them file the case in secret so as to not tip off the defendants. They also convinced the Court to let them engage in accelerated discovery and seize all kinds of matierials relating to the businesses.
Looking at the documents filed with the Court, it's not clear what went wrong. The original order granting Dell permission to seize evidence allowed them to go to Mr. Vasquez's house with a U.S. Marshal and remove anything relating to the business. It appears that this was done successfully and that is how Dell discovered the off-site server co-location.
For some reason, instead of going to the offsite facility right away and imaging those servers, Dell waited a few days. It could have been that Dell's experts or the U.S. Marshal had a scheduling conflict. It could have been that Dell wasn't sure the original order allowed them to search and seize at locations other than Mr. Vasquez's home (although it certainly does as indicated by it's plain language). Based on the lack of information (even in the supporting declarations!), it is unclear why these servers weren't imaged on the same day that the defendants were served with the lawsuit and Vasquez's home was searched.
This is rendered even more inexplicable by the very lengthy well-written motion authored by Dell in which it explains to the Court back in October why secrecy and the seizure order are necessary. Both the Court and Dell were well aware that destruction of evidence was not only possible, but likely given the nature of the scheme. That is why they were permitted to enter Mr. Vasquez's home and remove many items and computers. That is why they should have immediately then gone to the off-site location.
It's a mysterious world.
But surely not giving a default judgement does not exclude the possibility of a separate ruling concerning the spoiling of evidence after an order to preserve?
If one burns down a warehouse then it might not be possible to prove that there was a hydroponics farm operating there, but there is still a charge of arson to consider.
What an appalling analogy!
You're right on Mr. Manley.
Even if the Court refuses to enter a default judgment (again, it's an extraordinary remedy), the Court has several other options.
1. Money damages. Make them pay.
2. Find them in Contempt of Court. The judge has the power to find someone in contempt whenever that person fails to follow a clear order. A small amount of jail time is a possible, although extraordinary punishment for contempt of a civil order. The question here would be, who should go to jail? Mr. JP Vasquez may not have been responsible himself for erasing the hard drives. It was probably Dr. Evil from the safety of his remote tropical location. Thus, would the judge be promoting justice by locking up the known henchman without any proof that the henchman is actually responsible for violating the Court's order? I highly doubt it. Thus, unless there is some specific evidence point to Vasquez, I don't think jail time is likely.
3. Changing Evidence Rules. A common remedy for spoliation is for the judge to change some evidence rules and presumptions. As everyone knows from television and movies, The Presumption of Innocence is a big deal. The credibility of the legal system depends upon requiring the plaintiff (Dell) to demonstrate through proof that the defendants (Dr. Evil and his companies) are guilty. Dr. Evil doesn't have to prove that he is innocent. HOWEVER, courts will re-write the presumption of innocence rules when there iey shouldn't benefit from a complete presumption of innocence. The maxim “omnia praesumuntur contra spoliatorem” means all things are presumed against the spoliator.
4. Criminal Convictions on Federal Charges. It is possible that the judge will request that the Department of Justice file federal Obstruction of Justice charges. Since the whole Enron fiasco, these kinds of cases and convictions are more common, especially in the context of big business.
5. State Civil Law Suit for Destruction of Evidence. I'm not certain about this because I'm not licensed to practice in Florida law, but I believe Florida is one of the few states that has a separate tort for Destruction of Evidence. Thus, Dell could start another law suit or amend its current complaint to include this cause of action.
I assume the Court will impose a combination of 1 and 3. Dell may also move to amend its Complaint to include a the destruction of evidence claim.
I think the bigger problem here is that Dell may not be able to track down the identity of Dr. Evil if enough evidence was destroyed. Who knows what they were able to get off of Vasquez's home computer, other seized documents, and the subpoenas sent to Google and Verisign. They also can require Vasquez to answer questions. So, there are other avenues to get information. It's just too early to tell how fruitfull that will be.
I'm anxious to see the defendants' response to the Motion for Sanctions which should come out in a couple weeks or so.
Best Regards,
Sarah
I'll take a small side bet on contempt.
Domain tasting is scalable for Registrars, which is what most of these shady LLCs use as their business front. (More domain tasting / domain kiting explained by Godaddy's Bob Parsons) It's often a complicated trail of shady business ties that try to hide the business ownership from any one individual: Corporations formed of these various LLCs.
From the individual point-of-view, if you've become a victim of domain tasting, look at the date of when the domain was registered and wait 5 days. (7?) This is the limit that a registrar can taste a domain for free. Whatever you do, DON'T email the "owner" of the domain trying to acquire the domain. For this business to scale they automate everything, and when a domain receives an email it gets flagged and they'll put a lot higher value on it than the $5 you can pay to register the domain in a week's time.
Also, DON'T click on anything (especially ads...) at the new domain. That probably doesn't need to be said, but hey.
Finally, when doing whois searches make sure that you're not going through a portal that these tasters can scrape. That's how they create their taste lists. It's also a good idea to brainstorm domain names in advance of your search and be ready to purchase when you do search. The extra $15 that you might spend on a few too many domains can save many times that in headaches down the road.
These are great tips. Thanks CA!
Glad to help. I did a bit of research into Belgium Domains a while back when a domain I was looking at got tasted. I was able to get it back though by waiting to the moment when their 5 day taste period expired, and then registered the domain for myself
If you want to look at their LLC docs you can do so here:
BelgiumDomains' LLC
As well as run searches here: Florida Dept. of State, Biz Search
I'm whiping my hard drive right now. Too bad other crimes are not as easy to get away with. Maybe I'd go rob some banks then. ;)
But seriously. When I started reading this I thought "Only a lawyer could call a court case sexy." but half way through, it's actually very interesting.
I'm not convinced that what they're doing is so illegal. They are selling ad space. If they put up a flyer under a Dell billboard selling home made computers, would that be illegal?
What is clear is that the laws are inadequate. Would someone get off so easy if they threw away a murder weapon or if they burned all their documents? I think the judges don't treat data the same as paper or physical evidence. I agree with Rand. There is obviously room for a law allowing seizure of hard drives in order to preserve evidence. Even if that person is then allowed to only pull out relevant files requested under supervision through one of those forensic software that can't delete but only read from a drive.
It's really unbelievable how powerless the courts are. Why would anyone comply if the criminal mastermind offers you money in an offshore account to shut up and wipe your drive. Even if you get sued and lose everything, you can retire to the Bahamas or something.
Good article Sarah.
i agree. that is a sexy case.
i like sarah's unfair business practices analogy: The big fish keep getting bigger and it doesn't trickle down from those off-shore banks.
But being successful is not illegal.
The only exception to this rule being Microsoft, of course. I wonder how long it is before Google reach the lofty hights of always being in the wrong, purely by dint of success?
Tax evasion can be...
. . . fun?
Hi nicknick!
I understand your hesitancy to consider domain tasting illegal. I don't think that domain tasting necessarily has to be nefarious.
I think what sets these guys apart, however, and put them firmly into the crooked camp, is that thousands of their millions of domains are blatant trademark infringements.
For example, according to the Complaint, the defendants registered and used DellFinancialServices.com to host ads for Dell's competitors. Further, Dell actually owns and has registered "Dell Financial Services" as a trademark.
I'm convinced this one instance of tasting, at least, is quite illegal.
That said, is Dell3700.com, another of the defendants' domains, a trademark violation? This one is more iffy in my opinion. The salient issue with trademark are consumer confusion and dilution of a famous mark. I don't think that a consumer would be confused by Dell3700, but its arguable that it "dilutes" the value of the Dell's famous mark.
BTW, Thumbs Up for "Whiping my hard drive right now."
Whip it good.
Sincere Regards,
Sarah
I don't have a problem with people registering domains speculatively, but the whole 'tasting' thing seems weird to me. I can't see any reason for allowing people to cancel a domain name purchase and get a complete refund (partial refund, maybe).
Having said that, it's not really my place to tell ICANN how to work.
Tasting isn't really the issue here though - this is all about trademark infringement. The dellfinancialservices.com example you give is clear infringement if Dell hold that exact phrase as a trademark. I'm a little wary of the others however - some are much less clear (we got a legal letter asking us to allow one of our domains to expire without renewal because it contained a brand-name trademark - the domain was tutorial.com which seemed to me a pretty legitimate possible website - all about how to use the services offered by . I have no idea if we could have fought it, but it was practically worthless to us, so we are just doing what they asked).
Hi Will,
I'm sorry to hear that you gave up tutorial.com. Obviously I'm not an expert in U.K. trademark law, but I understand that it's pretty similar to the U.S. in that you can't trademark purely descriptive phrases like "tutorial." The letter was probably mostly hot air.
Ah well. If it wasn't pulling you in any cash, I guess it's not a big loss.
Sincere Regards,
Sarah
To clarify - it wasn't tutorial.com (that would have been a great domain name and I'm sure we would have fought harder). If the brand was abcd it was abcdtutorial.com. I think it was appropriate for someone other than the brand to own as they run a service that a lot of people need help using...
No great loss though - it wasn't that great a domain name.
Will, I had the exact same thought. I think that the onus MUST be on the company to register that EXACT PHRASE as a trademark, AND prove that the person who started the website hasn't done something legitimate with it. I.e. what if there's a guy named John Dell in Omaha, who starts his own little financial planning company with that domain? There's no way I'd give Dell, Inc, the benefit of the doubt in that case.
One specific instance in which I can see this having some real effect is KNOL.com. I was joking around with Matt McGee the other day about it, but that is a legitimate company, and even if Google doesn't register Knol as a trademark I am sure they'll go after a legitimate Dutch vaccum business to try to get that domain.
Sarah, any idea what the law says on this?
I think that there is precedent for this, both in the UK, where International Investment Research already had a web-mail application named gmail, and in Germany, where a Hamburg based firm have a hybrid mail service of the same name.
Google's help page on the subject still suggests that they are fighting for the right to use the name and, in general, the search giant seems somewhat put-out, but inadequate IP searching and protection - the English and German firms were respectively using the name 2 years and 5 years before Google - an issue in its past, it is surprising that the same mistake might have been made again.
With knol.com sitting on a generic tld I would imagine that Google will have a stronger case in a US court. This is a shame, but it is likely that Google would, if it decided to, win through pure weight of numbers.
I can't believe Google didn't know the .com wasn't available before they started. Even tiny companies look at those kinds of things, right?
I hope they don't bully the company who legitimately owns and uses the domain.
There was also the controversy last year (I think) with the guy called Mike Rowe who registed mikerowesoft.com I think. Just because it is your name doesn't automatically give you the right to trade under it if it infringes trademarks (I don't think - Sarah?). I think there are a lot of grey areas around all of this - especially when it is not the exact phrase. www.disney-sucks.com??
The Mike Rowe debacle was quite a lot earlier than that, but with him being a minor it ended with a tour of Microsoft and an x-box, as I recall.
Pheonetic IP is harder to enforce when it comes to domain names. Microsoft used the argument to win Mikerosoft.net and when going after mikerowesoft.com (although that was settled outside a courtroom), but when it went after Spanish mocosoft.com Microsoft went a step too far and lost.
This does remind me of previous Dell activities. When it comes to protecting their trademark, Dell can be somewhat overzealous at times. The famous battles with another Spanish site, belonging to website designer Paul Dell, being a prime example.
Just another example I'd like to add to the mix:
Nissan.com / Nissanusa.com
This is a particularly juicy example too. Mr Nissan clearly had cause to select the domain and, because of his industry, was likely to be an early adopter.
By 1994 and 1996, when the .com and .net domains were respectively registered, there can be little doubt that Mr Nissan new of Nissan Motors, nor that their name was famous enough (and his brand small enough) that he would know that the domains he was registering would, from a public interest perspective, be most obviously controlled by the Automobile giants.
Whilst the reality is that he owns the domains through a mixture of early adoption and luck and, even at the time that they were registered, he would have been aware that he was likely to be infringing trademarks, I cannot help but want to side with the underdog.
This example is closer to the Dell and Microsoft ones than the European gmail issues (where the non-Google products per-dated the Engine's mail client offering) but is particularly noteworthy because the smaller firm still controls the domain and makes legitimate use of it.
Would it be ridiculous to suggest that, were Nissan Motors an American company and Nissan computers a Dutch concern, things may be somewhat different?
A juicer list would be of all the domain search portals that register your searches. For example, go to a site with a whois lookup, search for some nonsense, available domain, check it in a day or so, and--what's this?!--it's registered.
Of course it's just being squatted for who knows how long. Hopefully ICANN will enact a PIR like policy and put an end to all this nonsense with .com registration.
Edit: When I first wrote this I used NameCheap as an example, but what's even more confusing is that it might not be NameCheap's fault if these searches are being ported out from the Verisign Registery level. Obviously this sort of experience is going to hurt business for the registrars, making the legitimate ones appear to be participating in search scraping and the sale of user information. At the end of the day, it sounds like Dell is going to need some superb investigators.
As a matter of fact, I do have ideas on what the law says. I have a post forthcoming on this for Legal Mondays, but I'll give you a summary here.
If you own the trademark and a business in your same industry has the domain for your mark, then you can get them booted off the domain. You have priority over them because you had the mark first. This is a classic example of cyber-squatting.
If you own the trademark and a business in a different industry has the domain for your mark, then you are probably out of luck. If it's a different industry, then there isn't any chance of consumer confusion and therefore you don't have the right to boot off the other guy. You just have to find a new domain.
If you own a trademark and it's a really famous trademark, like Disney or Candlyland, then you have more rights than someone without a famous trademark. If another business in a different industry has the same trademark as you, you may be successful in kicking them off the domain if you bring a 'dilution' claim. Dilution isn't really about custumer confusion, like classic infringement cases. It's about 'tarnishment' and 'blurring.' Blurring occurs when the connection between the plaintiff's goods or services and the representative mark is weakened in the minds of consumers. The Nikepal case is a good example of this. Tarnishment, on the other hand, takes place when a defendant's use of a mark is considered unsavory or unwholesome when used in connection with inferior products. The candyland case is an example of this.
This is why big companies with lots of money and lots of lawyers are more aggressive about trademark. If they have a famous mark, they have more rights.
Dell is a famous brand. If they can prove that Dell11300.com blurs the connection between it's products and other services, then it can win it's case and take back Dell11300.com. It's not easy to prove 'actual dilution,' and it's not easy to defend it. It usually involves the presentation of a lot of hokey surveys. (90% of our target customers associated Dell11300 with Dell computers.)
Ebay is another company that is famous for being aggressive with its trademark. Dilution is a powerful threat, even if it is difficult to prove in Court.
I think the issues of Phonetic IP and typo-squatting really test the limits of the law. The rules are the same (Does the domain MIkeRowesoft.com confuse consumers? Does Dellfinancialservices.com lead to dilution?), but I don't know how to feel about the outcomes. I'm morally conflicted. Is this admirable business opportunism? Do I really believe that MikeRowesSoft would confuse consumers or dilute the value of microsoft's branding? Not really. But does that make it okay?
The bottom line, as demonstrated by the gmail case, is that the most important thing is to be first to use your trademark within your industry and register your marks. This puts you in the best offensive and defensive position.
For domain speculators, the lowest-risk sites are those that are purely descriptive such as greatbeaches.com or besticecream.com or kitchenappliancesusa.com. General, descriptive domains are almost never worthy of copyright protection so you can't get sued over them.
When being threatened by a company who claims you are diluting its famous mark, remember that it's actually quite difficult to prove dilution. But it's also difficult to prove no dilution. Thus, a lot of smaller businesses are making the smart ecnominc decision (but poor 1st amendment decision) to cave under pressure and settle prior to suit.
I wonder if Mr. Nissan ever wishes he would have settled instead of trying to re-enact David and Goliath? I think anyone who has ever been a party to litigation will tell you that it takes years off your life--even when you win.
Another comment worth as much as many blog posts. Thanks Sarah :)
When we finally get ourselves to Seattle or you are in London, we should talk about all this stuff offline - there is only so much you can say in a public forum!
Kudos to PIR for taking effective action. I've been keeping my eye on domaining lately and it is very frustrating to see so much tasting going on - these people have some very sophisticated systems and are sucking up any words/phrases with any semblence of life to it. The small players don't stand a chance. It's a friggin racket!
Fantastically interesting post. From the perspective of a former website owner and having gone through the laborious process of finding a domain that fitted the website it is great to know someone is trying to sort out these "cowboys" and stopping them ruining our fun. keep up the good work.
You might want to update this article in view of new developments both at ICANN and in the case. Last week ICANN changed the rules slightly to make tasting go away completely, and Dell got their hands on several million dollars of the defendants' money. Bret Fausett blogged on both, I'll have entries up soon at https://weblog.johnlevine.com
Apparently Google is set to kill domain tasting.
This makes sense. The domain tasters definitely bring BAD PR, and eventually the questioning comes around to the advertising networks that allow it to be monetized.
I saw that! Isn't that an elegant solution to so many problems?
Jay Westeral wrote a nice post on the topic for those people who may not have seen the news.
It looks like Google made the right move and not a moment too soon. Bravo.
Thanks Link Dev for adding this news to the thread.
Best Regards,
Sarah
Great post Sarah.
I wonder if this tasting biz is as automated as people say then I would also think the "John Does" would build in some sort of automated delete mechanism.
I'm probably too simplistic, but I'm thinking Joh Doe would "ping" Vasquez's PC on a regular interval. If if hit a certain fail threashold, such as his machine being seized, they would enact a batch routine to delete files.
If it was a false positive, they would restore from a backup and proceed as normal.
lthouse, my friend, you have a criminal mind.
Genius.
Criminal mind, no.
Operational mind, yes.
I did a similar system with a pager 20+ years ago on an online trading system. Based on a how far a user got into the system, a code would be generated.
In my case, I needed to know of failures and had a programmer write a routine that would dial into the trading system and do a test trade. If they got stopped at various points, a code would be sent to my pager. Based on the severity of the code, I could react accordingly.
For my scenario, the motive was revenue. IF the systems were down, the firm made less commissions more complaints awaited me in the morning.
I suspect these domain tasters have a similar type of motivation except it may be averting detection as oppsed to customer satisfaction.
Surely if there were backups, the court could impound those?
Of course, if the backups are held by a John Doe, then they have to be found first.
A good point. Well made.
That's a fascinating case, Sarah. Thanks for describing it with such completeness and tenacity. By now it seems like a complete mess. The various participating lawyers must be delighted they're involved.
Sarah,
What is Dell's motivation for filing this suit? It doesn't seem that they have been harmed in any way so I assume that they think there is some payday to be had by filing this.
I think it was caused by Belgium Domains registering trademarked Dell terms as dot-coms.
Mr. ChuckAllied is correcto.
Dell has at least two very good motivating economic factors to file suit.
(1) The cyber-squatters are diverting Dell's potential customers away to its competitors through advertisements. This translates into lost sales.
(2) Dell needs to protct the value of its trademarks. Trademarks protect your branding and your goodwill. Customers rely on a businesses reputation when making purchases. We want to know that the Dell computer we're buying is in fact made by Dell because that will come with certain expectations about price, quality and customer service. By allowing other people to use your trademarks, you are exposing your business name to poor branding and trade dilution. Never underestimate the value of your brand. Remember that trademarks are the legal mechanism that helps protect your brand.
In sum, Dell had to file suit in order to protect its goodwill and recapture those potential customers who were being syphoned off by cyber squatters.
Personally, I think this is a very exciting case. If I were an attorney at Dell, I would be hungering for this fight as well. Just think of all the investigation you would need to conduct in the West Indies, the Virigin Islands, Mauritius and other exotic locations. (I'm mostly joking. mostly.)
Best Regards,
Sarah
Ha! Now there are some investigative perks. I'm with you though that this would actually make for a pretty compelling story. It's definitely a part of the wild and woolly Internet days where--conceivably--a few people with a few computers, and some craziness, go on a big, greedy land grab. It'll be interesting to see if some straight-arrows from Dell can pierce the Domain Tasters' armor.
I cannot see a default order being entered here - the case covers domain tasting, an act which, whilst often iniquitous, is not illegal. Should the case entirely avoid the practice, it is still likely to raise itself above the parakeet [sic] enough during hearing, that some level of precedent is set.
Even if it were a case which stood to serve as less of a precedent, the spoiling of evidence does not sufficiently validate the accusation that the registrars were operating as a cartel.
The infringements of trademarks aside, the case now rests on a lot of circumstantial evidence and, whilst the act of wiping the servers is clearly deserving of punitive action, Dell's own tardiness in executing the seizure order must also act against them in turning this to their advantage.
I foresee a serious financial penalty for spoiling of evidence, perhaps with costs for bringing this to trial awarded to Dell in light of the same, but no really clear ruling on trademark counterfeiting.
If a counterfeiting claim is upheld it could prove hard to confine, possibly reaching outwards towards the likes of C|NET, with their search.com domain catching swatches of .com.com typos every day.
Whilst the defendants' claim that they are offering a search service appears spurious, it is not so very far removed from the search engines who use tool bars to direct users who mistype a brand name on to a search results page which displays advertisements.
I do not know if I would go as far as sexy, but it certainly is nice to find a truly noteworthy case in the ocean of litigious drivel which generally surrounds our industry. I always enjoy a case when I really cannot see how it should turn out, let alone how it will.
You're right on again about the counterfeit claim. It has the potential to make domain speculating astronomically expensive. It really depends on what will pass as a counterfeit domain. If the courts require the domain to be an exact word for word, no typo copy of a registered trademark, then it won't be such a big deal. But if trademark law expands, as many fear it is in the process of doing, then domains that include part of a trademark (Dell1113.com, for example), could be considered counterfeit. This would be a serious problem. So far, however, there is more fear about the expanding scope of trademark than there are court rulings.
Thanks for pointing out the similarity between SE tool bars and parking pages with ads. I like to be reminded of the grey areas.
Thanks for highlighting this case! I hadn't hurt about the $0.05 charge that PIR did and how it worked out.
Great post. Full of mystery and intrigue :)
A friend of mine filmed two cops roughing up a suspect in Wakefield, UK and of course it went to court. His hard drives were immediately seized and professionally analysed by a lab to check for tampering and image manipulation. But of course the difference here is that siezing his hard drives would not endanger his means of earning a living like siezing the servers.
However, there should be the most severe penalties in my opinion for tampering with evidence, physical or digital. An option would have been to immediately take a copy of the server drives I guess.