Paul D. McGrady, Jr. on the New .asia Auction Process
The .asia registry is trying a new auction-based system in an attempt to resolve conflict between applicants for the same domain name in which both applicants have trademark rights related to that name. (On March 13, 2008, the landrush period for .asia closed; the registry went live on March 26, 2008.) The new system stands in stark contract to the first-to-file system adopted by other generic Top Level Domains. This commentary by Paul D. McGrady, Jr. examines this new system and ramifications of its implementation. He writes:
The .asia registry is experimenting with an auction-based system designed to resolve contests between two brand owners who have applied to register the same domain name when both applicants have legitimate rights in the trademark represented in that name. Such a scenario is not uncommon. It is possible for two brand owners to both have legitimate rights in the same trademark, but for divergent goods and/or services. For example, the owners of the mark DELTA for air line travel services and the mark DELTA for faucets may have equally legitimate rights.
Previous gTLD registrars launching new extensions have adopted a first-to-file system. Under that system, the first party to file an application for registration of a domain name wins a “sunrise registration challenge,” provided that the filing party can prove legitimate rights to the domain name. In contrast, the .asia auction process seems designed to award the domain name to the party who (1) can show legitimate trademark rights and (2) will derive the most economic benefit from the domain name. This, of course, has the clever effect of diverting dollars to the registry and registrars who will be “selling” (or assisting in selling) the domain names at auction, and away from dispute processes (and therefore away from dispute process providers and lawyers, at least at this initial stage).
The question then arises: since at auction the domain name is sold for a price higher than the “rack rate” (the rate available if the domain name were to be purchased in the free-for-all market following the sunrise periods), are the registry and the registrar(s) “trafficking” in the domain name when they involve themselves in the auction process? At least in the , there seems to be little support for a theory holding the registry and registrars liable for trafficking in domain names.