–Dan Kelly, Attorney

A bomb exploded in the domain name aftermarket world on Wednesday.  A well-known domain name auction house called SnapNames.com announced that one of its (now former) employees had been bidding as a shill in many online domain name auctions run by the company since 2005.  SnapNames has an FAQ page on the matter here.

It is not difficult to decry the many abuses that have gone on in the domaining industry:  cybersquatting, typosquatting, domain name tasting, domain name kiting, pay-per-click fraud, and now shill bidding (to name a few).  As these abuses tend to make for the juciest news, it is not surprising that some (including trademark attorneys) accuse the whole domain name business (or “industry”) of being dirty.  But law, being a generally slow, blunt instrument, has so far caught up with only the first two of the abuses listed above.  What is less widely reported is that, for all of its wild-westness, the DN business has policed itself (e.g. cybersquatting, domain tasting) without resort to government intervention.  This is as it should be.

Even so, self-policing is also slow to catch up to opportunists, so caveat emptor is the rule of the day in domain name transactions, especially when bidding at an auction, especially an online auction.  I recommend reading any auction site’s rules, terms and conditions carefully before engaging in a transaction.  Some of these sites will readily represent both buyer and seller, which is a situation well-known to lawyers and real estate agents as a “conflict of interest.”  Caveat emptor, indeed.

Domaining is a buy low, sell high business.  While it has warts, and while some debate whether the business of domain name reselling is at all “legitimate,” I do not think that the answer, or even an answer, to any of its problems is that governments step in to regulate it.  One of the virtues of self-policing (and by this, I mean by such umbrella entities as ICANN) is that the rules and regulations developed tend to be transnational, obviating the need for an international potpourri of laws, regulations, and, ultimately, lawyers.  While it is against my self-interest to admit it, I think this is a good thing.