At a Glance
On April 1, 2009, the Internet Corporation for Assigned Names and Numbers (“ICANN”) took its first major step to curtail so called “domain name tasting,” the disruptive practice where domainers have been registering millions of domain names each month--for free--just to see which ones generated the highest keyword advertising revenue. Domain name tasting has drastically limited the availability of domain names for other businesses, including legitimate businesses having some of the domain name as their actual name, as well as increased domain name trademark infringement, and resulted in confusion and frustration on the part of Internet users. To prevent these harms, ICANN adopted a new Add Grace Period Limits Policy (the “Policy”) for all .com, .net and .name generic, top-level domains (“gTLD”). The Add Grace Period (“AGP”) is a five-day period following a domain name registration, during which the registration may be deleted and the fees paid by the registrar to the gTLD registry refunded. Under the new Policy, refunds to any registrar are limited to just 10% of that registrar’s new domain name registrations. ICANN believes that the Policy will bring the practice of domain name tasting to an end, as registrars will lose money if they allow their registrants to register unlimited numbers of domain names without paying for them.
ICANN announced the Policy on December 17, 2008.3 According to the Policy, all gTLD registry operators (“Operator”) that have implemented an AGP must restrict the AGP as follows: during any given month, the Operator shall not offer any refund to a registrar for any domain name(s) deleted during the AGP that exceed: (i) 10% of that registrar’s net new registrations in that month, or (ii) fifty (50) domain names, whichever is greater, unless an exemption has been granted by the Operator.4 A registrar may seek an exemption from such restrictions in a specific month “upon the documented showing of extraordinary circumstances.”5 For any registrar requesting such an exemption, “the registrar must confirm in writing to the Operator how, at the time the names were deleted, these extraordinary circumstances were not known, reasonably could not have been known, and were outside the registrar’s control.”6 The Operator has discretion to allow the exemption, but cannot allow it if such “extraordinary circumstances” occur for the same registrar on a regular basis.7 The Operator must report the registrar requesting exemption to ICANN, and include in the report details of the extraordinary circumstances, and the action taken by the Operator.8
In 2007, ICANN began reviewing domain tasting upon requests by some of its members.9 Following a study, ICANN published initial and final reports for public comment on January 8, 200810 and February 8, 200811 respectively. The reports indicated that although there were some marginal benefits to the AGP procedure, such as the ability to delete inadvertent typographical errors and increases in registration revenues for registrars, these benefits were outweighed by disadvantages that include trademark infringement, criminal activity, and consumer confusion.12 Following a public comment period, ICANN announced the final version of the Policy on December 17, 2008.13
Verisign, Inc.—the operator for .com, .net and .name registries—implemented the Policy as of April 1, 200914, so we should see an immediate decrease in the amount of domain name tasting for the most popular gTLD’s.