InsideCounsel » June 2008
Front-Running Fiends
A recent court case raises awareness of a new threat to domain names.
Online Exclusive: To learn how to report domain name front running, click here.
The practice of front running is nothing new.
In the world of securities, it’s a well-known illegal practice that occurs when a stock broker executes orders on his own account before filling orders previously submitted by his customers. Even before the stock market came into existence, American settlers in the late 19th century discovered ways to pre-emptively file a claim on a parcel of unoccupied, but desirable, territory.
Now front running seems to have leapt from the worlds of pioneers and stock brokers into the realm of the Internet as domain name front running, which is the practice whereby someone gets wind of demand for an unclaimed domain name and nabs it before the prospective buyer has a chance to purchase it.
The practice, which formerly was relegated to rumors on blogs and Internet message boards, came into the mainstream in October 2007 when the Internet Corporation for Assigned Names and Numbers (ICANN), the non-profit that administers the Internet, released a special advisory on the topic.
Although the advisory was fairly vague, stopping short of confirming that domain name front running truly exists, it gave legitimacy to the problem. This laid the groundwork for a class action lawsuit filed in late February against domain name registrar Network Solutions and ICANN on accusations of practicing and abetting domain name front running.
“There’s always been a conspiracy theory that registrars were monitoring and watching what domain names people were searching for,” says Eric Fingerhut, a partner in Howrey’s IP group. “Now it seems that there may be some truth to this.”
Domain Deviants
Even in its advisory, ICANN states it is unsure of how front running occurs. However, several theories have gained prominence in technology and trademark circles.
One of the main theories is that covert third-party software on a user’s computer enables front running. These types of applications, often called rootkits or malware, can infiltrate a computer without the user ever knowing about it. The software sits on the machine and can track and transmit various types of data, including searches and keystrokes. Experts believe that it’s possible some domain front runners deploy this software to track company domain name searches.
But the overriding theory on front running is that its perpetrators are actually the domain registrars themselves. When a company wants to register a domain name, such as insidecounsel.com, it typically goes through a domain name registrar. A registrar is a company that has earned accreditation from ICANN to register domain names.
Popular registrars include eNom Inc., GoDaddy.com and Network Solutions. Users of these sites can conduct a domain name availability search to see if the desired domain is already registered by another party.
The theory is that unscrupulous registrars are tracking these availability searches and are either registering these domain names themselves or
granting access to the search lists to third parties.
