UNITED STATES OF
AMERICA David Medine Direct
Dial: 202-326-3025 August 21, 1997 Mr. David M. Graves Re: Domain name <internic.com> Dear Mr. Graves: We recently received your request for a staff opinion on behalf of Network Solutions, Inc. ("Network Solutions") concerning the business practices of Internic Software, a firm that offers domain name registration services through its Internet Web site located at <http://www.internic.com>. Based on the facts set forth below, Federal Trade Commission (“Commission”) staff believe that use of the domain name <internic.com> in combination with the provision of domain name registration services at the site located at <http://www.internic.com> is likely to mislead consumers. I. FACTSYour letter (attached) describes the following facts that are critical to our analysis. Network Solutions through the Internet Network Information Center (“InterNIC”) has the sole authority, granted by the National Science Foundation, to register domain names within the top-level domains <.com>, <.org>, <.net>, <.edu>, and <.gov>. InterNIC is known to consumers as the “official” domain name registry. In fact, consumers who wish to register domain names directly through Network Solutions can do so online via Network Solutions’ InterNIC site located at <http://www.internic.net>. The cost of registering a domain name directly through Network Solutions is $100 for two years. Your letter states that consumers searching for Network Solutions’ InterNIC site often enter <internic> or <internic.com> into their browser which in turn calls up the domain name registration service operated by Internic Software, Inc. ("Internic Software") of Sunbury, Australia, not the service operated by Network Solutions at <internic.net>. (Emphasis added.) Internic Software operates as a broker, registering domain names for consumers through Network Solutions. Internic Software charges $250 for a two-year domain name registration and has processed over 2,000 domain name registrations. According to your letter, Network Solutions has received many complaints stating that the site operated by Internic Software misled consumers who believed that they were at the site operated by Network Solutions. Moreover, these consumers believed that they had registered their domain name directly through Network Solutions and not through a broker. You also stated that Network Solutions has not received payment from Internic Software for the majority of consumers who registered their domain names through Internic Software. II.APPLICABLE LAWThe Commission has statutory authority to prohibit unfair or deceptive acts or practices pursuant to the Federal Trade Commission Act, ("FTC Act"), 15 U.S.C. § 41 et seq. Under Section 5 of the FTC Act, 15 U.S.C. § 45, the Commission has determined that a representation, omission, or practice is deceptive if: (1) it is likely to mislead consumers acting reasonably under the circumstances; and (2) it is material--that is, likely to affect consumers' conduct or decisions with respect to the product at issue.(1) III.ANALYSIS AND CONCLUSIONIn staff’s opinion, advertising and providing Internet domain name registration services through the Internet site located at <http://www.internic.com> is likely to violate Section 5 of the FTC Act's prohibition against deceptive acts or practices. The use of a domain name <internic.com> virtually identical to that of the official domain registration site, combined with the provision of nearly identical domain registration services to those offered by Network Solutions, is likely to create a false impression that the site is owned and operated by Network Solutions, whose site is located at <http://www.internic.com>. The "disclaimer" that "Internic Software is not affiliated with, or part of Network Solutions, Inc., or its InterNIC operation which can be found at http://www.internic.net" that appears on certain pages of Internic Software’s site, to the extent that it is even seen by consumers during the registration process, is inadequate to cure this false impression. Staff also believes that it is likely to be deceptive within Section 5 of the FTC Act to offer to broker domain name registration services, accept payment for such services, and then fail to pay the official registry of domain names. If, as your letter alleges, Internic Software fails to provide payment to Network Solutions to secure domain name registrations, staff believes that Internic Software could face additional liability under Section 5 of the FTC Act. Consumers reasonably expect that their payment will result in a full registration of their domain name. Please be advised that the views expressed in this letter are those of the FTC staff. They are not binding upon the Commission. Yours truly, David Medine (1) Stouffer Foods Corporation, Docket No. 9250, at 3 (Sept. 26, 1994); Kraft, Inc., 114 F.T.C. 40, 120 (1991), affirmed and enforced, 970 F.2d 311 (7th Cir. 1992), cert. denied, 113 S. Ct. 1254 (1993); Removatron International Corp., 111 F.T.C. 206, 308-09 (1988), citing, e.g., Southwest Sunsites, Inc. v. FTC, 785 F.2d 1431, 1436 (9th Cir.), cert. denied, 107 S. Ct. 109 (1986); International Harvester Co., 104 F.T.C. 949, 1056 (1984); Cliffdale Associates, Inc., 103 F.T.C. 110, 164-65 (1984); see generally Federal Trade Commission Policy Statement on Deception, appended to Cliffdale Associates, Inc., 103 F.T.C. at 174 et seq. |