Are domain name registrars responsible for intellectual property infringement?

A recent case filed by Dell against a number of domain tasters and their registrars attempts to hold the registrars liable for infringing some of Dell’s intellectual property. The claims that are relevant to domain name registrars allege that at least 3 registrars created a chain of registrars who took advantage of the ICANN 5 day redemption period to profit off Dell’s trademarks. Dell alleges that these registrars allowed domain tasters to redeem domain names at one registrar and subsequently register it at an affiliated registrar. This would preserve the taster’s interest in the domain name, and allow the affiliated registrars to share in any click through revenue created by the registration of the name.

Without going into the technical legal arguments raised by this case, a suit against domain name registrars has serious implications for hosts and other internet infrastructure providers. Dell’s arguments are very similar to copyright infringement claims made in the early days of the web: that those who facilitated the infringement of the copyrighted work were liable as third parties since they facilitated the infringement, and profited from it through the fees they collected. While the facts in Dell’s case are pretty sensational (a chain of registrars profiting off a nuance in ICANN rules), the case shows that transparent attempts to exploit legal loopholes, are often only temporarily successful. In this case, setting up a chain of (allegedly) related registrars to profit off of a registered trademark merited a swift response from Dell.

So what does this mean for hosts and other Internet infrastructure providers? The first lesson is that the doctrine of third party liability for intellectual property infringement is alive and well. This means that you need to remain aware and vigilant about your business activities. This vigilance is important particularly in the area of trademarks, where, unlike copyrights, there is no “safe harbor” for businesses who are simply links in the chain of bad acts of customers or third parties. A second lesson relates to Domaining. While initially a suspect business, domaining has become a legitimate part of the Internet. Hosts and other Internet infrastructure providers need to be aware that registering domain names involves a different risk assessment than other business efforts. Because domainers tend to be very creative in their business, and business creativity often requires a higher level of legal analysis, those who provide business services to domainers need to examine whether the processes and procedures they have put into place effectively isolate the risk that these new customers may pose to their business.