Dotster, the domain-name registrar, said in recent court documents that it stopped the controversial practice of domain “tasting” in November, six months after a federal lawsuit by Neiman Marcus accused the company of massive cyber-squatting. The case has been settled, and details may emerge soon.
Court documents reveal details of how Dotster began tasting, stopped it, and then resumed it. To “taste” a name is to register it for a maximum of five days and evaluate how much traffic it gets and how much revenue it generates from paid-search ads. If the name generates more revenue than the annual cost to register it, the taster keeps it. Tasting exploits a rule that allows registrars to return to VeriSign within a five-day grace period any .com or .net name that was registered for a customer by mistake, and recoup the $6 wholesale price paid to the registry.
Dotster CEO Clint Page said in a court filing that the company has built a “significant” portfolio of domain names of its own. ICANN-accredited registrars are not barred from speculating in large numbers of domains under ICANN rules, though some in the domain market consider the activity a conflict of interest because their principal reason for existence is to serve customers wanting to register names.
Page said Dotster began tasting names for itself on a limited basis in December 2004, then stopped in early 2005 after the “applicable registry” — apparently VeriSign — disallowed registrars to do tasting. Dotster resumed tasting in June 2005, he said, “when the registry again permitted this practice.” Page said Dotster used automated systems to taste names that had not previously been registered, but that “had been typed into Web browsers on multiple occasions.” This indicates it had access to its own data, or obtained other data, on the surfing activities of Internet users. To earn revenue off its domains, Dotster served up pay-per-click ads sold by Google, which works closely with the domain industry.
“Dotster adopted a screening system in an attempt to ensure that the domains identified by its automatic process did not include third-party trademarks or clear misspellings of any such trademarks,” he said. It not only used computer programs to “scrub” names, but also had employees review names that it wanted to retain before the five-day tasting period expired. However, Dotster failed in its screening efforts. “Because of the volume of names and the time in which the employees had to complete their review, the process was not as effective as it should have been,” Page said.
Neiman Marcus accused the company of registering hundreds of domains infringing on its trademarks, as well as other large companies’ marks. The names included nemimarcus.com, neimanmarisu.com, neumanmarcos.com, and newmenmarcus.com.
Page said Neiman Marcus has “tried to create the impression that (Dotster’s) names all consist of typo-variants of trademarks,” but “this is not the case.” For instance, he said, Dotster owns generic addresses such as headlice.com, babyfun.com, laboratoryexperts.com, lowestpriceclothing.com and nailpolishfacts.com. (Update: A reader points out that Dotster no longer owns headlice.com, according to the Whois. Also, it appears the ownership of lowestpriceclothing.com may have changed hands.)
Dotster continued tasting even after the lawsuit, but put a stop to it in November and has no plans to resume the practice, Page said.