Solutions to Repugnant Domain Tasting
December 11, 2007
We group current proposals into before and after registration solutions. Taking revenue and risk
into consideration, our view is that registrants and registrars
prefer the former.
IP-related domain tasting is a repugnant act that also generates a negative externality. It is
beyond distasteful and inappropriate. The labeling is not a matter
of semantics, but has important implications for designing desirable
Why is the use of brands in domain name repugnant,
while infringing on IP has been ongoing in the patent world without
any public revulsion? In fact, under certain circumstances, it is
in the patent owner’s interest to allow infringement
One possibility is that people don’t know about
the legal structures that encourage patent infringements. Or people
may see patent infringements as a business matter and therefore
subject to recognized laws.
Those outraged by domain name infringement may
be feeling the pain of reduced bottom lines. Maybe it looks like
the violations are spreading everywhere, or that we’re headed on
a slippery slope toward large-scale infringements of personal names.
Analysis of Current Solutions
To determine preferences of domainers and registrars
for the currently proposed solutions, we group them based on whether
the solution’s full cost/revenue is known before or after a domain
registration is approved. For each group, we examine two proposed
Before Registration Solutions:
- Selling registration refund insurance
Each approach has its strengths. The clearinghouse
solution attacks repugnancy directly, resolves potential infringements
before a registration request is approved, and also has benefits
to IP-conscious registrants. The insurance refund helps dampen
tasting in general. But for either to work, we must eliminate
the registration grace period and provide cancellation insurance.
That in turn would (a) eliminate the subsidy domainers give tasters,
(b) avoid an uproar by registrants over their inability to get
refunds for unintended registration errors, and (c) create a revenue
incentive for ICANN to abolish the currently lucrative grace period.
After Registration Solutions:
Making the ICANN transaction fee (currently
$0.20 per year) nonrefundable to names deleted during the
registration grace period.
- Charging a fee for excessive deletions.
The non-refundable fee solution is simple but
not desirable, as the fee cannot be calibrated to deter repugnancy
and puts a burden on the registrars to discourage tasting even
when that tasting is outside their direct control.
Insurance pricing (a before solution) and fees
for excessive deletions (an after solution) might be worked into
a domain registration cost structure that deters repugnant tasting
and promotes registrar revenue. But then transaction cost uncertainty enters the picture.
Per unit of risk, a before regime yields a higher expected return
on a domain name registration. Thus, the average registrant will
take that, the reduced uncertainty, and willingly pay a bit more
in registration fee. This suits registrars too, and of course they
don’t mind getting their money up front.
 For an economic discussion, see Alvin E. Roth, “Repugnance
as a Constraint on Markets,” Journal of Economic Perspectives,
Vol. 21, 4 (Summer 2007): 37–58.
 An externality, like pollution, can be managed rather
than eliminated. For example, we have markets to buy and sell
pollution rights. Another remedy is to impose a tax on the resulting
 See Mark Schankerman and Suzanne Scotchmer, “Damages
and Inductions in Protecting Intellectual Property,” Rand
Journal of Economics, Vol. 32, 1 (Spring 2001): 199–220.
 Supra “Every Domainer
Is Subsidizing Tasting”
 .org PIR registry, available at http://www.pir.org/PDFs/PIR_2006-annual.pdf and ibid., p. 4.
Topic tags: domain
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