NSI Cleared In Domain Name Lawsuit

A U.S Court of Appeals ruled yesterday that dominant domain name registrar Network Solutions Inc. (Nasdaq: NSOL) is not legally responsible when it approves a domain name that results in a trademark infringement.

The 9th U.S. Circuit ruled 3-0 in favor of NSI in a case first filed by aeronautics company Lockheed Martin in 1996. The suit accused NSI of failing to prevent the infringement of its trademark when it allowed at least a dozen infringements of its Skunk Works aircraft design laboratory name.

The company said that NSI allowed a number of variations of the name “Skunk Works” and then ignored repeated requests to cancel the registrations. A U.S District Court judge in Los Angeles originally dismissed the suit, and Lockheed Martin appealed his ruling.

The Court of Appeals said that NSI exercises no more control over the domain names it registers than the U.S Postal Service provides when it sends mail to a street address. The court added that a company accused of taking part in trademark infringement is responsible only if it knowingly did so. The ruling is consistent with other court findings on the practice of “cyber-squatting.”

An NSI spokesperson, who asked not to be identified, told theE-Commerce Times that the court’s decision affirms the company’s domain name dispute policy.

“It happens that this is the latest in a long line of case precedent that exempts NSI of screening domain names for possible trademark infringement,” she said. The spokesperson added that NSI has defended itself and won each of the approximately 40 trademark infringement suits brought against it.

Never Far From Controversy

Situated at the gate of the booming Internet economy, the Herndon, Virginia-based NSI has long been a magnet for controversy. Founded in 1979, the company has registered an estimated 5.3 million domain names since 1993. It booked first quarter revenues of $38.1 million (US$), up from $16.5 million for the same quarter in 1998.

After a feud which exploded out in the open and caused a public backlash by some proponents of a more accessible Internet domain name registration system, the company recently signed a tentative agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) and the U.S. Department of Commerce.

The agreement calls for NSI to recognize ICANN’s authority to regulate the domain name system and for NSI to partially open its domain name database to the public. In exchange, the company will receive $6 for every “dot-com,” “dot-net” and “dot-org” top-level domains it currently runs.

ICANN ‘s board is scheduled to vote whether to accept the agreement at its upcoming meeting in Los Angeles next month.