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The nonprofit group, called Internet Corp. for Assigned Names and Numbers (ICANN), approved the procedure in a meeting of its interim board in Santiago, Chile, where ICANN is holding its third general meeting this week, Esther Dyson, interim chairman of the group, said in an interview.
The procedure aims to deal with the problem of "cybersquatting," where one company or individual lays claim to an Internet address -- such as www.companyX.com -- that another entity also claims a right to use. Such instances have proved fairly common and often wind up in court, where there are few precedents for dealing with such cases.
Broadly speaking, the procedure approved today, which will be posted for public comment, prohibits "bad faith" or "abusive" attempts to lay claim to Internet addresses. It also provides a mechanism whereby Internet addresses can be cancelled or transferred to their proper owner where a blatant violation has taken place, according to information on ICANN's Web site.
The procedure adopted was proposed by a group of domain name registrars -- the companies that will register Internet addresses under a competitive system currently being introduced by ICANN -- and draws heavily on recommendations made by the World Intellectual Property Organization, Dyson said.
"The registrars have had a lot of experience with this, they've been doing it for a while, so it makes sense to go with their proposal," she said. Network Solutions Inc., the government contractor that until recently was the sole registrar for the top-level domains, has agreed to the proposal, Dyson added.
In a recent instance of alleged "cybersquatting," a small firm based in Greece that sells books online set up business with the Internet address http://www.amazon.com.gr. Online powerhouse Amazon.com Inc. sued the smaller firm, claiming a long list of legal violations. At the heart of the problem of such disputes is the need to balance the rights of large corporations subjected to such apparent cases of prospecting, against the rights of other small firms who may have a legitimate claim to those valuable names.
Mike Roberts, ICANN's interim president, will now hammer out the details of the procedure and write them up in a draft form, which will be made available for a period of public comment before being signed off on by the ICANN interim board. ICANN hopes to work fast enough to enable domain-name registrars to enact the policy in 45 days, Dyson said.
Public feedback is likely to be plentiful, and the policy approved by the board today hasn't passed without controversy. Critics have complained that it gives large corporations arbitrary power to protect their brand names. Others say ICANN, which was formed by the government last year and has yet to elect a permanent board, should have waited until its full membership is in place before it started making important Internet-policy decisions.
Still other critics have charged that non-U.S. countries are under-represented in ICANN's advisory groups and at-large membership. "There's a lot of outreach to be done," Dyson agreed. "We're trying really hard to make (international representation) broad. There was really good representation here from Latin America, Europe and Africa."
This is ICANN's third general meeting, and the first that it has made open to the public. Much of the proceedings are accessible via Webcasts from ICANN's Web site, at http://www.icann.org.
Dyson characterized the meeting so far as "a lot more cheerful than in the past. We're actually doing things now, while before we just talked about doing things."
The board today also provisionally admitted a group representing noncommercial domain name holders, such as libraries, to its Domain Name Supporting Organization, which advises ICANN on Internet policy matters. The noncommercial group will be recognized until ICANN considers the matter officially at its next annual meeting of the board in November, Dyson said.
--James Niccolai, IDG News Service
The controversy centers around a group called the Names Council, which is made up of representatives from seven groups that have an interest in domain name policy including ISPs (Internet service providers), trademark specialists and domain name registries, which are the firms and organizations that control the software and information needed to assign 'Net addresses.
Each of the groups gets to elect three representatives to the Names Council, which in turn advises the nonprofit Internet Corporation for Assigned Names and Numbers on policy matters related to the new domain name registration.
Because NSI is the only registry for the .com, .net, and .org generic top-level domains (gTLDs), the company holds all three seats on the Names Council assigned to gTLD registries. Other companies are acting as registrars, or distributors of Internet addresses, but NSI is the only gTLD registry, or entity that controls the databases used to allocate the addresses.
Therein lies the rub. The "Internet community" feels that for NSI to have three seats on the 21-member Names Council gives it too much influence over domain name policy matters, said Mike Roberts, interim president and chief executive officer of ICANN.
The issue of NSI's influence over domain name policy is particularly sensitive at a time when the company is yielding its government-appointed monopoly over domain name registration to competitors, observers noted.
To address the concerns, ICANN's board today voted to change its bylaws so that no single company can have more than one representative on the Names Council. This decision will cut NSI's representation on the 21-member Names Council from three to one, effective immediately, Roberts said.
ICANN said its decision represents the will of the Internet community, as voiced by attendees at a recent public meeting in Bern, Switzerland. The nonprofit group also posted its intention to cut back NSI's representation on the Names Council on its Web site a month ago, allowing interested parties to comment.
NSI said today it is unhappy with the decision. The company doesn't feel that the views expressed at the Bern meeting and on ICANN's Web site are representative of the community at large, said NSI spokesman Brian O'Shaughnessy.
"If they consider a handful of people who responded to their Web site and a few outspoken people at Bern a consensus of the millions of people using the Internet, then they have a different definition of 'consensus,'" O'Shaughnessy said.
ICANN's Roberts stood his ground.
"If you ask most people outside of NSI's circle about this, they'll agree (ICANN) did the right thing," Roberts said.
The spat is only the latest in a string of public disagreements between ICANN and NSI.
ICANN has accused NSI of dragging its feet in providing access to its registry databases so that competition can move forward, while NSI, joined by a few vocal politicians, say ICANN is not going about its work in a fair manner.
In the meantime, competition is inching ahead despite the disagreements. In a separate announcement yesterday, ICANN said it has given accreditation to seven more registrars to take part in a test-bed phase of the new domain registration system, bringing the total number of accredited registrars who will be able to offer domain name registration services to 64.
The testing period was delayed for a third time late last week, and is now expected to conclude Sept. 10. Meanwhile, four companies have already begun offering registration services to the public for the gTLDs: the Internet Council of Registrars (CORE), France Telecom SA subsidiary Oleane, register.com, and Melbourne IT. America Online Inc. is selling Internet addresses just to members of its CompuServe access service.
--James Niccolai, IDG News Service
Representative Tom Bliley, a Virginia Democrat and chairman of the House Commerce Committee, on Wednesday wrote White House counsel Charles Ruff, seeking to "gain a better understanding" of whether a senior White House official helped the Internet Corporation for Assigned Names and Numbers (ICANN) raise funds, and if he did whether those fund-raising activities were legal.
Bliley requested records "relating to each and every instance of activity" between ICANN and Tom Kalil, the White House National Economic council senior director, and any other White House official. In a July 2 hearing before the House Subcommittee on Oversight an Investigations, ICANN Interim President and Chief Executive Officer Mike Roberts testified that ICANN is US$800,000 in debt.
"Indeed, records produced to the committee by ICANN show that the body's financial situation may threaten its existence," Bliley wrote to Ruff. The letter further said that Bliley wants details about any fund-raising Kalil, or any other White House employee, might have done on ICANN's behalf and whether those actions followed federal law governing fund-raising by members of the Executive branch.
The White House has not yet issued a statement regarding Bliley's letter, according to a spokesman there today.
ICANN is the administrative body charged with overseeing the a privatized system of domain name registration and with ensuring competition and uniform standards. The registration process has been conducted by Network Solutions Inc. (NSI), which has had the sole government contract, creating what is widely recognized as a monopoly. The move from government control to privatization of the registration process is intended, in part, to make the system competitive and also to pull in broader global interests than have been previously represented.
NSI is currently under investigation for possible anticompetitive behavior by the US Department of Justice (DOJ) and the European Commission.
As such, ICANN has been hosting meetings at various spots around the world. Both ICANN and NSI have come under fire recently from lawmakers who contend that both have made the move to privatization more contentious than it has to be.
In recent weeks, the public dispute involving NSI, ICANN, various US lawmakers and government agencies has appeared to grow more heated. (See "Dyson enters political spat over domain names," below.) Bliley last week wrote ICANN Interim Chairwoman Esther Dyson asking for documents regarding what he termed "highly inappropriate" communications between ICANN top outside legal counsel Joe Sims and a DOJ official. Dyson responded that ICANN has a constitutionally-protected right to petition the US government and that Sim's job involves communicating with government officials and agencies.
Weighing in from the US Senate, two senators yesterday wrote Dyson, NSI chief James Rutt and Commerce Secretary William Daley, chastising ICANN and NSI for their public dispute and urging a resolution of the grievances between the two. (See "US senators chastise, ICANN, NSI," below.)
Meanwhile, the test-bed phase to develop the shared registration system for domain names was set to expire today, but was extended by the Commerce Department so that testing for performance and scalability can continue until September 10, a department spokeswoman said. More than 50 companies globally have been accredited as test registrars by ICANN to participate in the trial phase. The test period started in April and has been extended three times.
--Nancy Weil, IDG News Service
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The database bill, titled the "Consumer and Investor Access to Information Act of 1999," would give access to online information, especially stock quotes used in the burgeoning practice of investing over the Internet.
The legislation would protect private databases while providing access to public information, Committee Chairman Thomas Bliley, a Virginia Republican, said in a statement.
"These databases house information that is the currency of the Internet," Bliley said. "Consumers use the Internet to price shop, to compare mortgage rates, to buy stocks, and for a variety of other commercial activities. The underlying ingredient to all these transactions is information. Without it, electronic commerce would be a highway with no cars."
The bill had strong backing from the US Securities and Exchange Commission, online brokers and consumers groups. However, legal publishers and realtors voiced concerns that the bill would result in illegal appropriation and reselling of online data.
The legislation, passed unanimously by voice vote, must be reconciled with another version approved by the House Judiciary Committee, according to a House Commerce Committee spokesman. Staff from both committees will meet later this month to hash out a final version, said the spokesman, who asked not to be identified.
The Electronic Signature in Global and National Commerce Act, called the "E-Sign" bill, gives legal backing to Internet commerce by giving electronic signatures the same status as handwritten signatures, Bliley said.
"Millions of Americans buy everything from stocks to cars online," he said. "This bill will make shopping online more convenient, and give consumers greater peace of mind about their transactions."
The bill would provide a national standard of acceptance of e-signatures and records in interstate commerce and by securities industries.
Passed by unanimous voice vote, the bill was endorsed by the Information Technology Industry Council. The full House is scheduled to vote on the bill in September, said the House Commerce Committee spokesman.
--Jack McCarthy, IDG News Service
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The letter was sent by Mike DeWine, an Ohio Republican and chairman of the Senate's Antitrust Subcommittee, and Herb Kohl, a Wisconsin Democrat and ranking member of the subcommittee. They wrote Esther Dyson, interim chairwoman of ICANN, James Rutt, chief executive officer of NSI, and William Daley, secretary of the US Department of Commerce, which has overseen the current government domain-registration process and is involved in negotiations to turn the system over to private industry.
NSI has had the government domain registration contract, which some critics contend has created a monopoly. NSI is, in fact, being scrutinized for possible anticompetitive practices by the US Department of Justice (DOJ) as well as by the European Commission. ICANN was created to be the new administrative body overseeing the privatized system, ensuring competition and uniform standards.
"We have frankly been disturbed that both Network Solutions Inc. and the Internet Commission for Assigned Names and Numbers have been publicly engaged in a bitter dispute regarding the development of the new system for domain name registration," the senators wrote in the letter, made available by DeWine. "The feud has the potential to seriously damage the stability and proper functioning of the Internet, and to disrupt both an enormous amount of electronic commerce and the free flow of ideas."
The letter is the latest twist in what appears to be a worsening political spat between NSI and ICANN. Last week, US Representative Tom Bliley, a Virginia Republican, wrote Dyson requesting documents regarding what he called "highly inappropriate" communications between Joe Sims, ICANN's top outside legal counsel and a DOJ official. Dyson responded in a letter yesterday saying that the right to petition government is constitutionally protected in the US, and that it is Sims' job to communicate with government agencies and officials. (See "Dyson enters political spat over domain names," below.)
In the ongoing saga of dueling letters, DeWine and Kohl noted today that NSI has created its own Internet domain-name directory based on data it compiled as the exclusive domain-name registration company, but has been unwilling to open that database to competitors. Such behavior is contrary to an agreement NSI made with the government and "raises serious questions regarding whether NSI is attempting improperly to use its previous monopoly position to disadvantage competitors," the letter says.
ICANN's behavior has also led to "serious concerns," the letter said, adding that the group has failed to elect a permanent board of directors that represents the Internet community. ICANN only recently began to ensure open meetings of its interim board and unilaterally instituted a US$1 fee on all domain-name registrations. Although that fee was rescinded, such decisions "raised legitimate questions regarding the scope of ICANN's activities," which the senators wrote has got to stay focused on its core role.
The letter urges NSI and ICANN to settle their dispute "in a professional and respectful manner no later than October 1, so as to avert the threat of a disastrous disruption to the functionality of the Internet." The senators offer their assistance in helping to resolve lingering issues between NSI and ICANN and also encourage the two to seek assistance from the Commerce Department.
--Nancy Weil, IDG News Service
US Representative Tom Bliley, a Virginia Republican, wrote Dyson last week requesting documents related to what he characterized as "highly inappropriate" communications between the US Department of Justice (DOJ) and the Internet Corporation for Assigned Names and Numbers (ICANN). Dyson, well-known in computer-industry circles for her work in venture-capital endeavors and newsletter publishing, is interim chairwoman of ICANN. Domain name registration is being removed from the government's auspices and turned over to private industry, with ICANN established to oversee the transition.
In a response to Bliley dated yesterday and posted on ICANN's Web site, Dyson wrote that she finds Bliley's characterization "puzzling" and that it "appears to be based on a misunderstanding about the nature of the conversation... The right to petition government is constitutionally protected, and indeed is one of the freedoms that has distinguished the American form of government."
In his role as chairman of the House Committee on Commerce, Bliley wrote Dyson and US Attorney General Janet Reno, raising "significant questions about whether DOJ and ICANN are, or have been, improperly communicating or coordinating their activities" regarding Network Solutions Inc. (NSI). NSI has had a monopoly over domain-name registration, under a contract with the US government. The DOJ began an antitrust investigation of NSI in 1997, stopped the probe when an agreement was reached with NSI to open domain registration to competition, and then began pursuing the inquiry again in April.
ICANN has accused NSI of trying to delay the introduction of competition in the domain name registration market.
The "inappropriate" communications Bliley referred to in his letter was between Joe Sims, ICANN chief outside counsel, and Chris Kelly, a senior counsel to Joel Klein, the assistant attorney general of the antitrust division, "who would appear to be in a position to influence the department's antitrust investigation of NSI," according to Bliley's letter.
But Dyson opined in her letter that the conversation between Sims and Kelly did not involve the antitrust investigation, "but if it had that would certainly also have been completely appropriate" because ICANN "is entitled to express its views on such subjects, just as any other person or entity may."
Besides that, ICANN is charged with "replacing the current non-competitive domain name registration system with a competitive system, where price, quality of service and other important criteria relating to domain-name registrations are determined by the marketplace, not by a monopoly provider" and given that the DOJ is to charged with enforcing antitrust laws, it is not inappropriate for them to discuss NSI, Dyson wrote.
In an interview with IDG after Bliley's letter was released last week, the ICANN counsel said that he didn't ask the DOJ to investigate NSI, but that he urged that department "in their role to promote competition" to pressure the Commerce Department to speedily conclude transition issues between ICANN and NSI.
Dyson reiterated that point in her letter to Bliley and said that the ICANN board expects that Sims will communicate on its behalf with government agencies and lawmakers as the "ordinary course" of doing his job.
She closed her letter by noting that ICANN has offered to give periodic briefings to the Commerce Committee staff "in the hope of avoiding misunderstandings such as the one that apparently prompted this particular inquiry."
No word yet on whether such a briefing will be forthcoming.
--Nancy Weil, IDG News Service
The Sales Tax Safety and Teacher Funding Act was recently introduced by Senator Fritz Hollings, a Democrat from South Carolina. If approved, the bill would impose a retail and excise tax of 5 percent on goods sold over the telephone, through catalogues and over the Internet, said Maury Lane, a spokesman for Hollings.
According to the bill, which now goes to the Senate Finance Committee, funds generated from the new taxation would be used for teachers' salaries.
"The Net taxation bill is not as scary as everyone thinks it is," Lane said. The bill proposes a federal tax which will generate funds that will be funneled into state government. "Local governments are losing a lot of interstate tax," he said.
However, some industry advocates feel that the proposed Net taxation bill is unnecessary and an infringement of the country's Internet Freedom Act.
Signed into law last October, the Internet Freedom Act placed a three-year waiting period on federal, state, and local Internet taxes and established the Advisory Commission on Electronic Commerce in order to study the impact of such taxes.
Representatives from several Internet groups said they were opposed to the proposed tax legislation.
This is a real threat to consumers and companies that wish to transact business over the Internet, said Shari Steele, a spokeswoman for Electronic Frontier Foundation, a San Francisco-based consumer advocacy group.
"Net commerce is just picking up speed and people are getting used to buying goods over the Net; this is the time to encourage growth, not discourage it," Steele said, adding that imposing taxes online will slow down the adoption of online commerce.
"The federal government can't be imposing sales tax on something like this -- that would pose a constitutional problem," she added.
Martin Burack, a spokesman for the Internet Society, said more time is needed before the country should consider imposing taxes on Internet transactions -- maybe another year or two. "The market volume is just not there yet," he said.
In addition, the government has not built a strong enough case to show that the Internet has severely impacted local revenue, Burack said. Not taxing all mail-order sales is a much larger issue than taxing online sales, he added.
"Senator Hollings has done some good work; however, I feel that he may be jumping the gun on this issue," said Burack.
--Cheri Paquet, IDG News Service
The bill, called the "Domain Name Piracy Prevention Act of 1999," will next be addressed by the full Senate, said Jeanne LoPatto, a press secretary for the Judiciary Committee. The bill passed by a voice vote with no dissenters, she said.
The legislation was sponsored by a bipartisan group that included Judiciary Chairman Orrin Hatch, Republican of Utah, who strongly criticized the practice of registering names in hopes of selling them.
"In many cases, the domain name that takes consumers to the Internet site and the graphical interface that greets them when they get there are the only indications of source and authenticity, and legitimate and illegitimate sites may be indistinguishable in cyberspace," Hatch said in a statement.
"So if a bad actor is hiding behind a domain name bearing someone else's trademark, an online consumer is at serious risk of being defrauded," he said. "The result, as with other forms of trademark violations, is the erosion of consumer confidence in brand name identifiers and in electronic commerce generally."
Cybersquatters have used names such as "attphonecard.com" and "attcallingcard.com," purporting to sell calling cards, and "dellspares.com," apparently offering to sell Dell products without Dell Computer Corp.'s permission, Hatch said.
Other cybersquatters establish domain names similar to brand names solely to sell them to the brands, Hatch said.
The bill would give domain registries limited exemptions from liability if they cancel a name they believe infringes on another domain name. The bill would also allow trademark owners to recover damages in cybersquatting cases.
--Jack McCarthy, IDG News Service
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