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Infighting threatens Internet's commercial evolution

Legal and financial issues abound

By Rob Guth, IDG News Service, Tokyo Bureau

August  1996
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Tokyo -- The commercialization of the Internet has opened a rat's nest of legal and financial issues, resulting in calls for an overhaul of the global network's de facto resource-administration system, according to members of the Internet community and international treaty organizations.

Moves to change the way key resources such as domain names and Internet Protocol (IP) addresses should be allocated have sparked a rise in turf battles, which could hinder the Internet's growth as a global information infrastructure for business, Internet insiders report. The infighting -- played out at conferences, in position papers, and online by a variety of Internet-related organizations -- centers on who should control these resources.

For example, the European Commission's competition commission in late July received a complaint against a U.K.-based company that plans to charge fees for Internet domain names. Under the complaint, a U.K. attorney is attempting to block a new fee system by Nominet U.K. Ltd., a nonprofit company recently established to handle Britain's domain name system.

Historically, the allocation of Internet resources was handled informally, with little thought given to issues such as trademarks and ownership rights, note observers. In the narrow confines of the research and academic environments in which the Internet was born and raised, the informal methodologies for allocating Internet resources worked fine.

But the host of organizations that have historically overseen key Internet administrative duties are not equipped to handle the emerging legal and business issues, argue some Internet insiders.

"It's like the people who invented the telephone are administering the telephone network. That has simply got to change," said Glenn Kowak, vice president of the Commercial Internet Exchange (CIX), a trade association of Internet service providers.

These technically-oriented groups, such as the Internet Society (ISOC) and the Internet Assigned Numbers Authority (IANA) are trying to recast themselves as suitable caretakers of the Internet's legal framework, but not everyone agrees they are up for the task.

Fueling the debate are a host of intergovernmental organizations including the ITU, the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO). These groups, chartered to set international technical, legal and trade policies, are joining the fray to protect their interests and, in some cases, acting out of the fear of becoming "marginalized," said one observer.

Officials at these groups say that Internet technical organizations such as IANA and ISOC are ill-experienced and ill-equipped to handle the legal and business responsibilities.

"These guys are now finding themselves in a mine field...they are totally unprepared to deal with it," said Robert Shaw, advisor, global information infrastructure, information services department at the International Telecommunications Union (ITU).

At the center of the storm battering the traditional Internet technical organizations are domain names -- identifiers, such as or, of an entity on the Internet. The Internet equivalent of a telephone number, a domain name is often confused with an IP address, which is a unique number assigned to each machine on the Internet.

Organizations that control the domain name system, some observers argue, could reap substantial financial gains. Since September of last year, Network Solutions Inc. (NSI), in a cooperative agreement with the U.S. National Science Foundation, has charged registrants an annual fee for each com, org, and net domain name. By September of this year, the new fee system should earn NSI, of Herndon, Virginia, $60 million in revenues, the ITU's Shaw estimated.

While NSI and Nominet's monopoly status as caretakers of domain names allows them to reap financial rewards, it also gives them the power to affect Internet business, noted observers.


What's in a name? Everything!
Since many businesses are built around the strength of a company name, product names and other trademarks, the organization that manages those names on the Internet could have significant influence over how commerce will be transacted over the Net. If, for example the owner of a well- established brand name is not allowed to use that brand name as a domain name, or the implementation of the brand name as a domain name is delayed, the owner may lose some of its market clout, observers said.

Originally devised as simple mnemonic tags for an underlying numeric address, domain names recently have been the object of a rash of legal actions over who owns the domain names that contain globally known brands.

One recent example is Sun Microsystems, which earlier this year sent letters to users of domain names that contained the word Java -- the name of Sun's World Wide Web application-development language -- claiming that the users infringed on a trademarked name. Recipients of the letter including a family-owned electronics store in Nashville Tennessee called "Javanco."

Since July of last year, owners that have federally registered trademarks can claim a domain name that matches their trademark, but there are still many inconsistencies with existing trademark law, said David Maher of the International Trademark Association.

For example, in the non-Internet world multiple entities such as Acme Bicycles and Acme Buildings can share the same trademark, but on the Internet only be one "" can exist, he said.

In addition, though a domain name has to be a unique global address, existing trademark law is handled on a national basis and differs from country to country, he said.

"There is a need for a system of adjudication when disputes arise between trademark owners on the Internet," Maher said. "The cold, hard fact remains that this is an enormous undertaking."

Some argue that this undertaking can be handled only by an international body with significant immunity from litigation, such as the ITU, the WTO, or a yet-to-be formed organization.

And as the debate over Internet resources rages, concerns about the outcome could also prompt the U.S. government to intervene, adding more fuel to the fire, said Scott Bradner, an ISOC trustee and a consultant with Harvard University's Office of Information Technology.

"The FCC [Federal Communications Commission] will say `These children don't know what they're doing,' " said Bradner. "It's only a question of time, and this kind of chaos will reduce the time before they jump in."
--Rob Guth, IDG News Service, Tokyo Bureau

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