Posts on this blog represent my opinion. It may be my considered opinion on the basis of my formal study of law and technology. But it is not legal advice. It must not be treated as, or acted upon as, legal advice and no liability is accepted for doing so.

Wednesday, 17 September 2008

Why Not To Buy

This BBC report notes how the sudden round of shotgun marriages in the banking and investment world has led some crafty individuals to register domains such as and, presumably in the expectation that the post-merger banks - assuming that they are called that - will then have no choice but to pay whatever is asked in order to have a suitable domain name.

Funnily enough, this has been tried before. Many, many times; indeed, this particular scam predates the spread of the Internet. In Glaxo plc v Glaxowellcome Ltd [1996] FSR 388, a couple of company registration agents noted the announced merger of Glaxo and Wellcome and registered 'Glaxowellcome Ltd' as a company name, which they then offered to sell to Glaxo. Glaxo were unamused and sued successfully for passing off. As Lightman J put it:

"The court will not countenance any such pre-emptive strike of registering companies with names where others have the goodwill in those names, and the registering party then demanding a price for changing the names. It is an abuse of the system of registration of companies' names. The right to choose the name with which a company is registered is not given for that purpose."

The concept that such an abusive registration was an 'instrument of fraud' was seized on with enthusiasm by courts when looking at domain name hijacking, as in the leading case of British Telecom v One In A Million [1998] 4 All ER 476. Moreover, as resolution of domain name disputes has shifted from courts to ICANN-mandated resolution panels, such tribunals have readily adopted the doctrine that such pre-emptive registrations are abusive, as in America Online v Chris Hoffman, where the announced merger of Time Warner and AOL led the defendant to register and other such domains.

Indeed, since the terms of service of domain name registrars invariably include a condition that any dispute is resolved under the ICANN Uniform Domain Name Dispute Resolution Policy, anyone trying this trick is unlikely to even have the chance to argue in court. Instead, they'll have to go to an ICANN-approved tribunal that is, on the evidence of AOL and similar decisions, likely to take such registration as prima facie abusive.

So, I wouldn't bid on if I were you. It's likely to be an even worse investment than Lehman stock turned out to be...

EDIT: I commented on this on BoingBoing when it linked to a similar story. I am indebted to BB user Tubman for pointing out that the value of such speculative sites these days rests on the advertising opportunities they provide. Even if (for example) is doomed to be taken down, it might generate a lot of ad revenue on the way. So maybe such sites are a better bet than I thought - especially now that shorting bank stocks has been banned! In broader terms, this is an excellent example of how the dynamics of e-commerce can change, with measures aimed at protecting the long-term value of a domain becoming irrelevant in the face of its short-term earning potential.


vicarage said...

And lloydstsbhbos is about the nasiest domain name going. I wonder what they will cause the combined company

Kathryn Cramer said...

One could buy them and then forward everything to