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National Internet Exchange of India proposes new rule to prohibit reselling of .IN domains at a premium

This proposal will ban domain investing, which refers to the practice of buying domains that contain common or popular words and then selling them for a premium.

If you’re the proud owner of a popular domain like “shopping.in” and are waiting to sell it and make a fortune, sorry to burst your bubble but this might soon not be possible and you will probably have to give the domain away for little to no profit.

The National Internet Exchange of India (NIXI), which operates the registry for domain names that end in .in, is proposing a new rule that will prohibit domain registrants from selling .in domain names at a premium.

Such a rule already applies to Registrars (companies that provide domain registration services like Namecheap, GoDaddy, and Bluehost), but NIXI wants the same to apply to Registrants (people like you and me who own or buy domain names) as well.

You can submit your feedback on this proposed rule to registry@nixi.in by 4 pm, July 17, 2023. Following the feedback process, NIXI will also hold an in-person consultation process.

Why does this matter: This proposal will ban domain investing, which refers to the practice of buying domains that contain common or popular words and then selling them for a premium. Since domain investing, which is different from domain squatting (more on this below), has been recognized as a legitimate activity in decisions made under the Uniform Domain-Name Dispute-Resolution Policy (UDRP),  NIXI’s proposal is likely to face resistance from domain investors as well as global internet organizations.

UDRP is the dispute resolution process established by the Internet Corporation for Assigned Names and Numbers (ICANN) for all domain name disputes involving top-level domains like .com, .net, .org, etc.

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The latest proposal follows a series of new policies introduced by NIXI that have all received flak such as the requirement to get the NIXI CEO’s approval to buy more than two .in domains and submitting KYC verification for registering .in domains.

What does the existing rule for Registrars state: As per clause 6.1 of the Registrar Accreditation Agreement:

“The Registrars will desist, at all times, from involving themselves, or through their resellers, in any way in the squatting, grabbing, hoarding, infringement, auctioning, drop catch or selling of the .IN domain names at a exceptionally higher price than the published MRP, they are regularly charging from the public. Any such involvement of the Registrar will lead to the termination of Accreditation, financial penalty and legal action as per the provisions of the Laws applicable in India”

NIXI wants to replace the word “Registrar” with “Registrar/ Registrant” and include this provision in the Registrar Accreditation Agreement and the Registrant Terms and Condition Policy to make the rule applicable to both Registrars and Registrants.

Why does NIXI want to introduce this rule for Registrants: “Since there is no restrictions placed on the Registrants, some Registrars are using Registrants as proxy and carry out illegal and unfair trade practices pertaining to sale/purchase of delegated/registered .IN/BHARAT domain names which affect the market environment,” the organization explained.

What’s the difference between domain investing and domain squatting (or cybersquatting): Domain investing refers to the practice of buying domains with common words like “shopping.in” or “movies.in” and reselling the same for a higher value. Domain squatting refers to the practice of buying domains that have trademarks like “jio.in” or names confusingly similar to trademarks and hoping to sell them to the company that owns the trademark at a premium.

Another difference lies in the intent. As per a March 2020 decision under NIXI’s .IN Domain Name Dispute Resolution Policy (INDRP) concenring the domain tickets.in:

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“In simple terms, there is a demarcation between Cybersquatting and Domain Investing. Because while former means a deliberate and mala fide action on the part of the domain registrant to try to make profits from someone else’s goodwill/trademark rights and is never allowed to anyone (under INDRP in such cases, costs can be imposed). While the latter is legitimate interest as laid down in various UDRP Precedents.”

Domain squatting is considered illegal in many jurisdictions and there are past Uniform Domain-Name Dispute-Resolution Policy (UDRP) decisions that have also held the same. Whereas, domain investing has been held as a legitimate activity under many UDRP decisions.

The World Intellectual Property Organization, which is a dispute resolution service provider under UDRP, has previously noted:

“Generally speaking, panels have found that the practice as such of registering a domain name for subsequent resale (including for a profit) would not by itself support a claim that the respondent registered the domain name in bad faith with the primary purpose of selling it to a trademark owner (or its competitor).”

.UK and .NZ Registries protect domain investing: Along with UDRP decisions recognizing domain investing, .UK and .NZ are two country code top-level domains (ccTLDs) that have specific provisions in protecting the interests of domain investors:

  • .UK: Clause 8.4 of the Nominet Dispute Resolution Service Policy states that “trading in domain names for profit, and holding a large portfolio of domain names, are of themselves lawful activities. The Expert will review each case on its merits.”
  • .NZ: Clause 6.4 of the Domain Name Commision’s Dispute Resolution Service policy also states the same.

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