July 10, 2000Auctioning Domain Names for the Common Good
Public Comment
on
ICANN
Yokohama Meeting Topic--Introduction of New Top-Level Domains
by
Anupam Chander
ICANN
At-Large Member and
Acting Professor of Law*
University of California at Davis
School
of Law
achander@ucdavis.edu
* The views expressed herein do not necessarily
represent those of the University of California or its Regents.
The following
comment responds to Question 9 in the ICANN report on the Yokohama Meeting Topic:
Introduction of New Top-Level Domains (posted 13 June 2000). The author expresses
his appreciation for the right to submit comments to be considered by the ICANN Board
of Directors in its important meeting in Yokohama.
1.0. Domain Names as Public
Lands
The oft-used metaphor of cyberspace as a new frontier serves usefully to
recall the young American republic’s experience with the disposition of its public
lands. That experience offers guidance as to the distribution of domain names
that become available with the introduction of a new top level domain. (An
excellent history of the disposition of public lands in the United States, from which
this Comment draws, can be found in George C. Coggins, Charles F. Wilkinson, and
John D. Leshy, Federal Public Land and Resources Law (3d ed., 1993).)
The inquiry
into the history of public land disposition is prompted by the recognition that domain
names serve a role in cyberspace similar to that of real property in the terrestrial
world. Three basic similarities can be identified to support the analogy of
domain names to real property: first, websites are founded on the domain name, much
like buildings are founded on real property; second, like land, a website’s value
derives in large part from its location, which for websites is its domain name; and
third, like land, domain names—at least mnemonic or otherwise useful ones—represent
a finite resource. Though domain names might be thought to be more closely
related to real world addresses, in cyberspace, the address serves as the location
on which improvements (read “websites”) are made. In cyberspace, the only firm
foundation, or terra firma, is the domain name itself.
A simple sketch of the early
history of the disposition of American public lands follows.
1.1. Public Land Auctions
In
1785, the Congress of Confederation enacted the Land Ordinance, under which surveyed
lands were auctioned to the highest bidder with a minimum price of one dollar an
acre. Land sales proved an important revenue source for the early republic,
the only other major revenue source being tariffs as income taxes became constitutional
only in 1913.
1.2. Land on Credit
With the Land Act of 1796, Congress
required bidders to put five percent of the purchase price down, with the balance
due in a year. The inevitable defaults on the credits resulted not in forfeiture
of the land, but rather in numerous Congressional relief acts, which only increased
speculation in new land auctions.
1.3. Homesteading
During the Nineteenth Century,
land policy became more explicitly directed towards transferring land into the hands
of the pioneers, the farming families who would settle the frontier and cultivate
the land. A public crusade in favor of quick land settlement, combined with
the legislative shift brought by the secession of the South, led to the adoption
in 1862 of the Homesteading Act. Under this Act, Congress awarded each settler
160 acres of land for free, with title to be issued five years later upon proof of
actual settlement and cultivation.
2.0. Auctioning Domain Names
The
varied American experience with the disposition of public land demonstrates the array
of possibilities available for distributing a scarce public resource.
2.1.
Critique of First Come/First Served System
The current first come/first served
system (modified to respect trademark rights) seems most akin to the homesteading
of the latter part of the Nineteenth Century—but without any requirement to show
actual development of the awarded space. But instead of homesteading, the system
that better reflects the commercial use of cyberspace is the original land auctions
conducted to raise revenue for the young nation. This Comment proposes that
new domain names be auctioned off to raise money to help bring poor people in the
world online.
The current system has two main beneficiaries: first, domain name
registrars and second, the persons who are first to register valuable domain names
and can thus sell or develop these names at great profit.
2.2. Reasons for
Auctioning Domain Names
Domain names, like public lands, constitute a valuable
finite resource initially held in the public domain. The disposition of domain
names, therefore, should be designed to benefit the world’s people, rather than to
benefit those sophisticated enough to obtain accreditation as a domain name register
or crafty enough to pounce on valuable names first. By auctioning domain names,
the value of a domain name would be captured by the public, rather than by private
entities that are rewarded too handsomely for their limited insights into the possible
value of a name or their work as registrars. Yet, a domain name auction would
not interfere with the exploitation and development of cyberspace, as new names would
be allocated by the auction system to those who valued them most highly. Indeed,
it would speed the transfer of a domain name to its highest valued use, short-circuiting
the current system that relies on privately negotiated sales to transfer the name
from its initial owner to its highest valued user.
By auctioning domain names,
rather than doling them out to the first applicant for a nominal sum, the public
resource that the domain name system represents works directly in the public interest.
The proceeds of the auctions should be distributed by an international treaty-based
body—perhaps the World Bank or the United Nations—to poor people throughout the world
to help bridge the digital divide.
To the extent that there are multiple persons
who claim trademark rights in a domain name, a simple general rule would award that
name to the trademark holder who is willing to pay the most for it. Since economic
strength often translates into public visibility, awarding the name to the entity
that is willing to pay the most for it will probably accord with individual web-surfers
expectations as to whom they will find at a website with that domain name.
2.3.
Structuring the Domain Name Auction
Because of practical constraints, domain name
auctions could not be structured as the simultaneous sale of all lexical combinations
of domain names available in the new TLD. Rather a controlled distribution
of names would prove more attractive, both in terms of logistics and revenue.
No particular auction mechanism is suggested here, and open outcry and sealed bid
methods should be considered. As in any auction, it would be important to guard
against collusion among the bidders to keep prices low. The auction, along
with notices and dispute settlement, should be conducted, of course, via the Internet.
The auction should proceed as follows:
First, two letter and then three and four
letter combinations should be auctioned off to the highest bidder. Single letter
domain names should be reserved for future use.
Second, all the words in the dictionaries
of major languages should be auctioned.
Third, individuals should be permitted
to propose the auction of any other domain name. The domain name management
authority should issue a public notice of its intention to auction the proposed name.
Trademark holders claiming a trademark in the proposed name (or illegitimate dilution
of their trademark) would have a short period of time within which to object to the
regular auction of the name. No trademark holders would be able to object to
the auction of a generic term, regardless of any secondary meaning acquired by such
generic term (instead, the trademark holder would be required to purchase that domain
name in the open market, where other legitimate uses for the generic term might exist).
Fourth,
if a trademark holder registered an objection, then the name would be pulled from
the general auction and consigned to a special auction open only to persons claiming
a trademark in that name.
Fifth, if no trademark holder objected, the name
should be sold through a general auction to the highest bidder. In order to
compensate the individual who recognized the possible value of the unallocated domain
name and initially proposed the sale of the name, that individual should receive
a certain percentage (between five and ten percent) of the winning bid amount (note
that that individual would not be compensated for “discovering” the value of a name
sold through the trademark holders-only auction).
Sixth, the proceeds of
the auctions should be disbursed by an international treaty-based fund (perhaps organized
through the World Bank or the United Nations) that seeks to bridge the digital divide
between the poor and rich in the world. In this way, the rich resource that
domain names represent would be harnessed to bring the benefits of the World Wide
Web to the poor communities of the world.
Respectfully submitted,
Anupam
Chander
Davis, California
July 10, 2000