Stevan Lieberman and Jothan Frakes
09/20/2006 - Monte Cahn
Monte welcomes Stevan Lieberman and Jothan Frakes to the show. Frakes was Vice President of Name Intelligence, the operator of Domain Tools and the producer of Domain Roundtable conferences. He has been instrumental in setting up relationships with major ICANN accredited registrars. Throughout his career, he has been involved in the oversight and operation of various top level domains on the internet, both from a business and technical administration perspective.
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Monte: Hello, everybody, another great week behind us. Had a great week in Jamaica with the WebMasterRadio.fm crew and a lot of the show hosts and supporters of the network. That was last weekend. Had a great time with all the folks. Had a great trip and thanks to WebMasterRadio.fm and all the crew there for putting on a great network gathering and party. It was a lot of fun.
Ah, tonight we’re going to get into some of the legal issues with domaining again. One of my guests we had on last year – Stevan Lieberman is a top domainer, ah, domain attorney and intellectual property and patent attorney as well. And we’re going to get into some detail about what’s been going on since we spoke in the legal world of domains. Should be pretty enlightening because there’s a lot of discussion in the legal community and the like with the proxy services, privacy protection, the Digital Millennium Act, the 1031 Exchanges for Assets and some of the rulings there, as well as, uhm, some of, uhm, new legal issues around key word buying of competitive products and services on Google and ad words and that kind of stuff and how those are being dealt with from the legal world. I think this will be very good for everybody that’s listening to hear what’s going on now and where some of the attorney’s think these types of issues are going. So over the next several weeks, we’re going to have the top domain attorneys on board, listeing to their opinions, giving their advice on how to protect yourself, what things to look out for and how to be better at what you do. Uhm, and then towards the end of the show tonight, I’m going to get a hold of Jothan Frakes, who’s now with Domain Sponsor. Jothan happens to be live at the Registrar Days out in Santa Monica, California with the .Com, .Net registry, which is Verisign. And he’ll be on the bus heading out to, I think, a boat trip, but he’s going to give us a live update of what happened today at the Registrar Days and there’s a bunch of registrars on the bus and we’ll probably get to say hello to some folks and hear about the Verisign/ccTLD initiative and some of the other things. So, we’re going to take a commercial break and be back on with Stevan Lieberman. Stay tuned.
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Monte: Master of my domain. Welcome back to Domain Masters. I’m Monte Cahn. And as I mentioned before, I have a good friend and an industry expert in terms of legal issues related to domain name, Stevan Lieberman. Stevan, welcome to Domain Masters.
Stevan: Thank you very much.
Monte: Stevan is a practicing attorney in the Virginia area, correct? In Maryland and Virginia?
Stevan: DC, Maryland and Virginia area.
Monte: Yeah. And you’ve been in the domain legal business for how long? How long have you been more of a domain attorney than a property attorney or is it all kind of mixed in?
Stevan: I think its all kind of mixed in, although we’ve been doing the main issues a little over a decade.
Monte: Oh, wow. So, a very seasoned domain attorney and of course, being right there next to the registry and also in a big populated community, I’m sure you see all kinds of stuff going back and forth.
Stevan: Well, yeah, of course. I mean, we get calls everyday pertaining to domains from our website and from, obviously, from DNJournal, people reading up there, and from referrals from clients. Some clients . . . I’ve had a couple of clients like Warren Wieseman’s been a client for more than 12 years and he’s a pretty well known domainer . . .
Monte: Yeah.
Stevan: And, uhm, obviously, many other people that are out there.
Monte: Okay, great. Well, as I’ve mentioned in my show opener, we’ve . . . we’re going to concentrate over the next 6-7 weeks on a lot of the domain legal issues that have sprung up since the last time you and I spoke, and I’ve had a few other attorneys on as well. I like to cover some of the new, evolving domain issues that are or should be important to people now and given what’s happened with ICANN, the registry, proxy services, privacy, all that kind of stuff. Why don’t you go in to right off the bat and let everyone know what the Top 3 mistakes you see domainers making in regards to trademark and intellectual property law.
Stevan: Uhm, I guess I’d start out with the point of view that domainers seem to buy into the concept that the large law firms try to push that because they’re using a domain that is a trademark of someone, that they’re doing something wrong. And, you know, I know I’m sort of pushing in the opposite direction that most people push that of course, domainers, they do a lot of bad things, that’s what a lot of people say and they have trademarked domains and that they’re making money off of it; but in reality, there’s very few domains out there that really can be said to have the exclusive to trademarks. Just because a company has a trademark on a name doesn’t mean that they have the exclusive right to that name. For instance, somebody has YabbaDabbaDo for clothing; that doesn’t mean that the domain name, TabbaDabbaDo.com or whatever, is infringing on that company’s trademark [inaudible] a famous mark. The only time that somebody has – or excuse me, an entity – has an exclusive right to a mark or an exclusive mark to every domain on every single TLD is if that mark is really, really famous. I mean, a good example would be Nike, McDonald’s, Coca-Cola; marks that like that where it’s not, you know, its not right, where you’re going to confuse the public.
Monte: Right. Let me ask you a question regarding that. There’s a lot of . . . there’s a lot of questions about what happens if Nike were to let Nike.com drop, and it was a mistake, it was an accident, but they let it drop. Isn’t it the right of any other domainer to pick that domain name up legitimately as long as they don’t use the domain name in a confusingly similar manner or misleading the public or holding it, or you know, maliciously registered it for the purpose of resale. Wouldn’t they really have the right to own that name at that point when Nike dropped it?
Stevan: Uhm, yes and no. In a vacuum, as long as they didn’t use it in a malicious or you know, all the reasons you just listed, then the answer is yes. However, they could never use the domain name in any way possible?
Monte: What if they decided not to use it but just wanted to own it then?
Stevan: Well, I think Nike would even have an argument that because they’re name was on the WhoIS that that would confuse the public.
Monte: Even though they dropped it . . .
Stevan: Even though they dropped it.
Monte: . . . like, by accident? So automatically, if a famous mark like that drops a name, they would, more or less, have the rights to get it back every time. Like, if it would happen five times in a row, and they let it drop and five different people registered it, they would have legal rights and claims to get it back, whatever the reason.
Stevan: That Aleutian Statute specifically states, you know, if a mark is that famous then they have the right to all uses of that mark. And I can think of a very easy argument that Nike could use and would probably win on that, that mark is theirs and the use of it in any way or even ownership by anybody else, is confusing enough to the public, if the public goes and looks at WhoIS and it’s a publicly accessible database, that that would be enough for it to be infringing.
Monte: Okay; now, here’s the other side of that question which people ask all the time. Wouldn’t that then allow Nike to never have to register their intellectual property because they have automatic rights and ownership of it? In other words, what gives them the right to not have to register it because they would have automatically rights to it once some one else registered it and just saved the money on the registration fees, because they have just such a blanket, you know, open and shut door case, that they would win the domain name anyway.
Stevan: Well, think about it this way: although Nike doesn’t have to – and its true, they don’t absolutely have to register every domain that pertains to Nike in every TLD – but they’ve probably spent millions and millions and millions of dollars promoting their mark and filing for registered trademark, I believe, in almost every single country in the world. So they’re not really saving any money. It’s extraordinarily expensive to become a famous mark. There aren’t that many marks out there that are considered famous. Ah, you know, I bet there’s less than 200. And for a company to be . . . to get to the point where they’re going to be able to say in a court of law that we’re famous and we can prove it, they’re going to have to do a survey; they survey’s going to cost them a few hundred thousand dollars; and even beyond that, they’re going to have to spend, you know, forty, fifty, a hundred million dollars in advertising that mark in many, many countries.
Monte: Right, right.
Stevan: So, the amounts and/or costs of registering two or three domains or even 236 domains, you know, in just about every TLD in minimus.
Monte: Right, right. Yeah, I understand it. It’s just kind of like . . . its as if famous marks like that have blanket coverage and technically, you know, based off some of the arguments you just mentioned, they really wouldn’t have to register even Nike.com and still be protected on their mark. Because as soon as somebody did, they’d be able to swipe it away.
Stevan: Absolutely.
Monte: Okay.
Stevan: There’s no question about it. But, you know, the use of those marks, I mean, people could talk about trademarks and I mean, you hear all of the parking services talking about how they make most of their money off of it and Google talking about it in the newspaper just a week ago, I think . . . they were talking about how they were trying to block trademarks and things like that. But Google’s got a real problem, as does Yahoo!, with their monetization in that there’s only 200 or 300 or so marks out there that are actually famous. Every single other mark that has a trademark doesn’t have an exclusive right . . .
Monte: Right.
Stevan: . . . to the domain, so if somebody is using it for something different, its going to be very hard for somebody to take it away, although, obviously, if you go to WIPO or you know, ICANN, you’re going to notice that if the other company has a trademark, its going to more likely than not going to side on the . . . you know, end up on the side of the corporation that actually owns the trademark, because I don’t think they fully understand trademark law and they’re going to just assume that if somebody registers a mark and they’re using it for monetization service purposes and you go on a landing page, that that’s it, which I don’t agree with.
Monte: Right. So what are . . . I don’t know if you got to your all three or couple of mistakes that people make. Was there anything else that the common domainer – or even the sophisticated domainer – some of the mistakes they make regarding trademark or intellectual property that we didn’t cover?
Stevan: Well, I mean, the only other point – and I don’t know if it’s three points or two points or anything like that – but the other point that I see that domainers seem to have a problem is they seem to want to register marks and I mean, you see all these people doing testing and their only goal is to make money now. And, I think that’s very short-sighted. I really believe that domainers should be creating their own intellectual property. You see some of the larger companies creating logos and associating them with admittedly generic marks and/or semi-generic marks so they can file trademarks for them and thereby have an equal capability of protecting themselves before ICANN. Which is the way to go. The other thing I feel a lot of people not doing is they’re not creating real websites in association with, uhm, the domains that they own. And clearly, if you have a real website, uhm, on a domain, its going to gather more traffic because its, you know, the search engines are going to pick it up and then they’re going to get copyrights associated with that. When they create the material for the website, they should be filing for copyrights. They should be filing for trademarks. And when they get new ideas, they should be filing for patents.
Monte: Right, right. Alright, well, good. Let’s talk a little bit about the trend that started, I guess, about 18 months ago when a ton of domainers, and companies in general, started incorporating offshores and overseas. I’m starting to see a slowdown in that today, but talk about some of the benefits of doing this and are there any pitfalls that people should consider or any kind of new rules and regulations that have come into the play over the last 12 months that people should know about?
Stevan: Uhm, well, domainers are doing it primarily to and I think primarily to hide. Which isn’t really the main purpose. Its really . . . the main purpose is not to hide; the main purpose is to protect assets and to diversify and admittedly if they’re going to get into litigation, to make the cost of the litigation for the opposing party much higher. It’s more expensive to file suit against somebody overseas and therefore, the company that is filing suit is more likely to settle. And, yeah, I’ve seen an awful lot of this. The other thing that I find somewhat amusing is that, you know, for a while there people were talking about how it was a great idea to go and file in India because the courts there were, you know, would take forever. However, yes, that was true, but that was true 4 years ago.
Monte: Right.
Stevan: And, even now, that rumor is still going around, even though reality is, ah, 3 ½ years ago, I believe (I’m not sure on exact timing) the Indian congress passed a new law which required a new case to get through the courts within 1 year, which is a heck of a lot faster than even the United States. That the pitfall with filing . . . one of the main pitfalls with filing overseas is that you have to follow all the rules overseas. And I guess the other main pitfall is if the overseas company is solely owned by a U.S. citizen or another U.S. corporation, that doesn’t mean that you don’t have to pay taxes. And, failure to pay those taxes is a major violation of the IRS and could be a real problem. So they should really make sure they talk to their accountant or bring in enough partners so that more than 51% of the company is owned by entities outside of the United States.
Monte: Right, right. Okay. Well, that’s good. Now, have you noticed, or am I just imagining, that this strategy has kind of tailed off a little bit in recent months? Is there a particular reason for that? Or am I . . . is this just something . . .are the same things in effect and in place today as they were 12 and 18 months ago in terms of legal structure and advantages? Or has there been a piercing of the veil, so to speak, of its not as big of an advantage as they used to be?
Stevan: It’s still an advantage. I believe there was a rule that was passed by the IRS that makes it much harder for people to get away with not paying taxes. So there’s one thing. Uhm, also, people have realized that the cost of doing it correctly is very expensive. It’s very easy to file overseas and you know, you can do it for $3,000 or $4,000. But, its not going to give you a major advantage unless you do it really correctly and doing it correctly means you’re spending $20,000 or $30,000. Uhm, so, I think some people were filing and everyone was pushing in that direction and then they started realizing how much it cost and you know, unless you’re trying to protect a, you know, $500,000, $600,000, maybe a million or more in assets, it just doesn’t make a lot of sense. It’s less expensive to just follow the rules. You know, avoid trademark domains. Try and go for the generic domains.
Monte: Right. And I know there’s some advantages for some of the adult companies, because of the 2-2-5-7 rules and working in that. But I’m not even hearing about the importance of this in the adult community as I did, again, when the 2-2-5-7 came into place either.
Stevan: I agree, although I think most of the adult communities have already filed outside the United States . . .
Monte: Yeah.
Stevan: . . . and I think for them it’s a great advantage. For them and also for gambling.
Monte: Folks. Right.
Stevan: For both of them, it’s a clear advantage because, you know, a lot of the stuff that they put out there is flat out illegal in the United States. I did a case for a domainer, God, back in ’94, ’95; and he was doing something that he didn’t realize was illegal and the only reason that he wasn’t getting shut down in the U.S. was because he was actually stealing copyrighted from some people overseas and the FBI wanted him to come into the country; they wanted to actually subpoena him to get him to come into the country. Uhm, you know, eventually we made a deal for them that we would cooperate and he wouldn’t get arrested. But, you know, overall the . . . there’s a whole division of the FBI that watches the domainers and watches what’s going on in the Internet. And when they see somebody that’s doing something, they really do swoop down pretty quickly.
Monte: Right, right.
Stevan: It’s a pretty good idea to avoid it, if possible. [laughs]
Monte: Now, on a related front, as you know and as you are aware both from defending domainers and probably going after some for your corporate clients, a lot of people are using WhoIS privacy proxy services, that kind of stuff; it’s something that we provide for our clients – more and more people are using it. Talk a little bit about privacy, its roles, when you can pierce the veil from a legal standpoint and what the new or what the Digital Millennium Act has to do with the impact of this.
Stevan: Uhm, first of all, I’d like to say there’s nothing wrong with the privacy. And, as long as the company that’s providing the privacy knows what they’re doing and protect themselves. A company that’s providing privacy is basically a service provider and they’re required to follow the Digital Millennium Privacy Act or become liable for all the acts of the client. Uhm, and that’s what we call the Safe Harbor Provision. And it basically says that if somebody says to the privacy entity, uhm, you need to turn over the information because we claim that this person has done something wrong, at that point they then have to notify their client that there is such a claim and that client gets 10 – 14 days to respond and if they can’t come up with a response that’s, you know, within the realm of reason, passes the last test, then the entity that’s providing the privacy has to unblock it or if the, on the other hand, if the person does come up with it, then the third party can then turn around and say, well, we want to file suit; at which point then the entity has to once again provide the information as to who the person is and if they turn around and file suit or file with ICANN, then, well, its obviously in the courts or ICANN’s baileywick and whatever they say is what goes. Uhm, privacy is, you know, it comes at you from all different points of views. I mean, you see in the newspaper at this point, with people stealing stuff and anyone who provides hosting services of any sort has to make sure they don’t get pulled in with their clients. At the same time, people who are, uhm, have websites and by definition, if you have a website you’re collecting information, they really are required to tell people what information they hold onto, what information they don’t hold onto, because of all this new electronic privacy and the spam rules that have just come out. For instance, if you turn around and you collect all the emails from everyone who goes to your website, and then you turn around and sell them and you didn’t tell people in your privacy that you were selling their email and then they get spammed because of it, you’re now liable under the spam rules.
Monte: Right, right.
Stevan: Which, so what does that last guy, they just recently they sent somebody to jail for seven years.
Monte: Yeah.
Stevan: Uhm, you know, that . . . there’s a lot of liability and its something that you have to be very, very careful about if you’re working on the Internet. The only people who sort of don’t have to worry about it are domainers who are just pointing at, you know, NameDrive, DomainSponsor, any of the monetization websites, because they’re not really, you know, collecting any information at all and there’s no privacy issues there.
Monte: Right, right. Now, I understand that you’ve done a lot of 1031 exchanges for like-kind assets. What does this entail and why would someone use this to transfer assets instead of selling their domains.
Stevan: Uhm, well, there’s . . . first of all, we’ve done most of our 1031 exchanges for real estate. And you should understand, less than 10% of our business is (of the whole lawfirm) domain name work. On the other hand, 1031 Stockard Exchanges clearly allow somebody to (and this is a strict reading of the rules) allows you to sell domain names and avoid capital gains and use it to within a six-month period to buy more domains. And I’ve seen a lot of domainers, you know, I’ve got this group of 200 domains or so and they want to sell in order to buy a single very good domain.
Monte: So, this is similar to the real estate version of this, where you take a profit from the sale of domains or a portfolio of domains and then you turn around and reinvest the same amount of money into like properties that will then appreciate and grow in value.
Stevan: It’s actually exactly the same. On the other hand, there’s been a number of articles in the real estate community where people are, instead of (backing up for one second) the one thing you have to remember about the 1031 exchanges is you have to have the 1031 contract set up before you do the contract. If you do it afterwards, it’s probably too late at that point. But what we’ve been seeing more and more within the real estate industry is people will uh put their money as an investment in to a corporation that will then issue them a chit, so to speak. And then someone else will do the same thing – they’ll invest instead of real estate some other type of asset into the corporation in exchange for chits. Now since they’re getting a 1-to-1 exchange and they’re not really selling it, so there’s no capital gains tax at that point, and then those two people who both have chits can do a like-kind exchange between one level of chits to some other chits. And thereby, exchange something that are not like-kind. And this is clearly a great tool for the domainer, because now he turns around (or she can turnaround) and take a certain amount of domain name assets and exchange them for, say, real property, without any capital gains.
Monte: Right. Got it. So, there are people utilizing 1031 exchange to avoid and get the benefits of tax relief when selling a domain name and so the rule is, just like for property, if you sell an asset like this you have to turn around and buy something of equal value, correct?
Stevan: Not of equal value; of the same type of thing.
Monte: Of the same price. So, if you make . . . if you bring in $300,000 in profit, you are . . . you have to spend $300,000 for the next purchase?
Stevan: No! No. Yes, you can spend more than $300,000.
Monte: No, no. Yes, you can spend more but you’re not going to get taxed . . . as you spend at least $300,000, that’s what I’m trying to say.
Stevan: As long as you spend at least $300,000, you ‘re not going to get any capital gains tax at all.
Monte: Oh, okay. Great.
Stevan: Really, all it is its just putting off. Eventually, you’re going to have to pay capital gains but you know, lets say you pay the capital gains when your 75 or 80 years old when you don’t have an income at that point, so your tax base is going to be much lower, so at that point you’re going to pay much lower taxes.
Monte: So, it’s a deferred tax strategy rather than a tax savings, in a way.
Stevan: Right.
Monte: And, a lot of people feel that capital gains tax is at the lowest, you know, its probably going to be at; the next administration that’s going to be in place, capital gains could then rise again. It’s at 15% now and so, it could go up.
Stevan: Well, that’s a bet.
Monte: That’s a bet, right.
Stevan: It’s clearly a bet. We obviously don’t know what’s going to happen. I mean, from that point of view, then its not logical to do a capital gains . . . to do a 1031 exchange. Uhm, you know, its just like playing the market. You know, when is . . . when are you going to get the best bang for your buck, so to speak.
Monte: Right.
Stevan: Who knows? You know, you play it as best that you can. Now, obviously, a lot of this doesn’t apply for people who are buying and selling domain names exclusively out of the United States; they have to follow the rules in the country where they’re doing it, or in the countries where they’re doing it.
Monte: Right. Right. Now, lets talk a little bit about Google, Yahoo!, uh, you know, soon-to-be-on-the-market Microsoft, Ask and those folks, uhm . . . you mentioned that Google and Yahoo! are cutting back on revenues for trademark-type domain names, that they’re definitely taking a stab at trying to protect some of the main brands. So let’s talk about how you think that will affect the industry. And then I want to ask you on the other side – the practice of competitors buying other competitors key words in a PPC or key word purchase place, you know, pay per position strategy for companies and what your real rights are and what your risks are in that.
Stevan: Very well. Two very different questions but okay. I . . . on for Googling, as I mentioned before, and MSN and anyone else who’s in that game, they’re between a rock and a hard place. They . . . they’re obviously (and everyone who does domain parking can see it) that revenues are dropping and they’re dropping because a lot of the revenues pertain to trademarks. Uhm, and Google and Yahoo! have to cut back because there’s a very good argument that they’re liable, uhm, for the infringement of these trademarks because they’re making a substantial amount of money from them, you know. And they have the other problem that they have the deep pocket. You know, when it comes to a small company, uhm, it just doesn’t matter but when it comes to a big company, I mean, we’ll go back to Nike because they’re a great example. Nike, if they turn around and they say, you know, all these domainers are using our trademark and yes, we could go after each one of them and spend, you know, $5 million or $10 million or we can turn around and just go after Google and Yahoo!, force them to not only stop every single mark that has our mark in it but we can also turn around and get them to pay for our attorney fees because they either know or should have known that they’re making money off of us. And, I think they, Google and Yahoo!, are in a terrible position from that point of view. That’s probably the reason behind the policy. Uhm, there’s, uhm, they have a real problem also when it comes to, uhm, they’re contracts with the parking services that they’ve promised to provide only the blocks of clicks that are false clicks of different sorts. And I’d be willing to best that if we could get our hands on some of their contracts, especially lately, and you’ll see that they’ve changed a lot lately allowing them a lot more leeway to, uhm, block domains, because they, at the way the old contracts were, I would think that they would only be able to block some of them and by doing that they’re going to be in a position to where they’re going to blocking domains of trademarks that aren’t really trademarked the way they’re being used. If that makes any sense.
Monte: Yeah, yeah, that makes sense.
Stevan: Uhm, the second question . . .
Monte: Now I want to ask you, which is starting to come up, uhm, you know, obviously, we’re starting as a registrar and have been for awhile, but starting to see more and more of it but a competitor of another competitor, you know, two competitors – one competitor’s bought key words and then they’re ads are showing up on PPC pages; those ads are competitive to the company that actually is advertising. So an example of this that came across our desk in the last six months is a hotel, was buying key words and then it actually brought up Best Western results based off the keyword purchase but the competitor to them, who had a big issue with a competitor showing up on the key words of that brand showing up instead of their brand. And, so they sent a legal cease-and-desist letter to us as a registrar, we notified them that we were not in control of that as the registrar, and that they needed to . . . its really the display that Google and Yahoo! are displaying Windows key words approach, because they’re, you know, linguistically driven but they’re also showing people that are in that industry, regardless of whether they’re competitors against each other, depending on who buys the keywords. What are the legal ramifications of that? Is there a case or claim on either side of this? And how do you protect yourself?
Stevan: Well, yes, there’s claim on both sides. [laughs] It’s an absolute quagmire and unless Google and Yahoo! a substantial greater control to the companies that are providing those services. For instance, if Google or Yahoo! provides them their HTML feed, then the entity that’s actually providing it doesn’t have any control. So they can actually argue that they’re not responsible but Google is. So there’s Point One, so I guess that’s called “passing the buck.” Uhm, on the other side, the entity that you mentioned that sent the cease-and-desist, they have a real gripe. You know, their mark is showing up in a place, and is being used in a way they don’t like, and they have the right to control that mark.
Monte: Yet, somebody spent money to buy that key word in that industry and they legitimately bought key words that were available to them to buy, right?
Stevan: Absolutely. You realize there’s no really good answer. I mean, this sort of jumps you back to the DMCA, in that the entity . . . at least the registrars have a way of protecting themselves and I think this is actually going to start a trend that I’m starting to see – that the registrars are in some ways the most protected of the entities, because they can claim they’re merely service providers; they can follow the Safe Harbor Act to the “t.”; and the statute is very clear that they are fully and absolutely not responsible. Uhm, I think you’re going to start seeing more and more companies setting up their own registrars for this exact reason, because they can hide behind the liability, they can set up sub-companies that have, uh, that are actually gaining some of the revenue and split up . . . I don’t know if you’ve seen the new Delaware, multiple LLC format?
Monte: No . . .
Stevan: Delaware just set up a new format where you can have . . . you can really . . . you pay to have a single LLC and then you can splice off 200, 300 other LLCs . . .
Monte: Off of one?
Stevan: Off of one.
Monte: What’s the advantage of that?
Stevan: [inaudible] . . . Excuse me?
Monte: What’s the advantage for doing that?
Stevan: Well, it means that you can block liability from domain to domain.
Monte: Oh . . .
Stevan: By using this, you can turn around and very inexpensively file 200 or 2,000 separate LLCs and the liability . . . even more. You can separate the liability from groups of domains or even domain to domain, if they’re decent domains, so that somebody could sue and yeah, they’re going to . . . the worse that’s going to happen is they’re going to get that single domain and that’s about it.
Monte: Now, does it cost for each LLC filing?
Stevan: I understand it’s a minor fee for each one, that its very, very inexpensive. One of my clients just did it, uhm, I’m just waiting for the paperwork to hit my office tomorrow or the day after. Uhm, but he’s setting up 1,800 LLCs, uhm, for basically this purpose.
Monte: Wow.
Stevan: And it means that his liability is just going to go away, and he’s actually in the process of buying a registrar as well, uhm, and once he has it set up this way, there’s no reason to go outside of the country because the protection here is in many ways far better.
Monte: Yeah. Yeah, definitely.
Stevan: You know . . . and I also see the cost of, uhm, registrars going down. One of my clients is in the process . . . they built out some software and they’re trying to provide inexpensive registrars to single entities. You know, and if they manage it and in a fashion that’s on a Windows box, they can just load registrar software, then it’s going to change the industry.
Monte: Yeah, yeah, for sure. For sure. Well, that was some really good points. Before we wrap up with you is there anything else that we missed that’s critical? Things that common or even the sophisticated domainer doesn’t know today that they should be aware of? Like that multiple LLC strategy is something new, right?
Stevan: Yeah, its brand new.
Monte: So, it’s brand new and that’s a ways for people to really protect themselves and to diversify, diversify their risk and diversify their holdings. Is there anything else that we missed that’s important and worth mentioning?
Stevan: Ah, you know, there’s probably about a thousand things that are worth mentioning. Uhm, I see enormous amount of stuff that comes across my desk and each person’s situation is different and has to be dealt with differently. Uhm, but there’s no situation out there that you really can’t get somebody out of, uhm, unless they’ve been incredibly stupid and went after Nike. [laughs] I can’t think of anything off the top of my head as pertaining to new rules. I guess there was that new rule that didn’t pass in Congress about giving tax breaks to foreign entities. But, you know, it didn’t pass.
Monte: Alright, well, where can folks get a hold of you, contract for your services, those types of things – what’s the best way to . . .?
Stevan: Well the website is the easiest (APLegal) A as in apple, P as in Patent, Legal. We provide not only domain name services, we obviously provide large amounts of intellectual property services, patents, trademarks, copy rights; we provide escrow services; we’ve been doing real estate escrow for many, many years and we’ve been doing domainer escrow. Uhm, and so, APLegal.com or we have a toll free number – 888-275-2757; and you know, check it out, look around the website and I’m happy to answer any questions if anybody happens to call.
Monte: Alright, well, great, Stevan. We really appreciate your time tonight and great to have you back on Domain Masters and on the show and I think as I’m looking in the chat room, quite a few people picked up a few things they didn’t know about before, so we really appreciate the insight and hopefully you’ll see some folks come your way when they need intellectual property and also some domain help.
Stevan: Monte, it was a pleasure and thank you for asking me on.
Monte: Good and I’ll see you . . . will you be at the TRAFFIC conference in October?
Stevan: Absolutely.
Monte: Okay, great. We’ll look forward to seeing you there.
Stevan: Ciao.
Monte: Okay, take care. Alright, thanks again to Stevan Lieberman. Great insight on some of the things that are going on in the domain industry that’s been different over the past 12 months. We’re going to do a short commercial break and then tap into Jothan Frakes, who’s in California at the Registrar Days Event and I think we’re going to catch him on the bus when the whole crew is on their way to some kind of event but we’ll get an insight into what happened today, maybe talk about some ccTLD stuff and find out what’s going on. Stay tuned; we’ll be on in a minute.
[Commercials]
Monte: Hello, welcome back to Domain Masters. And again, thanks to my first guest, Stevan Lieberman, for giving us some legal advice of what’s going on, on the Web. My next guest and very good friend is Jothan Frakes, who happens to be out in California at the Registrar Days. Jothan, welcome to Domain Masters.
Jothan: Hey, Monte. Thanks for having me on.
Monte: So, I heard you’re on a big bus with all my friends, competitors and foes and how’s it going over there?
Jothan: Well, you know, it’s all “co-opetition.” I’ll tell you what. I’ve got in my sights, I have Rob Hall from Pool.com; I can see Phema Olavitch from Network Solutions; I’m sitting next J. P. Vasquez with that company based out of Argentina; Rob Verker’s here from Host Way; sitting next to me is Chris Ambler; Michael Collins from AfterNick is here; and John Caine from Demand Media/e-Nom is here. I mean it’s just, ah, quite an event. And then of course Chris Sheridan sends his best regards from Verisign.
Monte: Yep, yep. And so give me a little bit of scoop – was today the first day of the Registrars Days?
Jothan: Well, yesterday was an engineering symposium, so it was a little more of the ones and zeroes tech stuff that some of us that hang out on the IRC enjoy. Today was a little more of the business overview. Like they went through and talked about the number of IDNs registered by country. They talked about the number of domains that they’ve gone through and reviewed – parked versus actual websites versus non-resolving. Pretty [inaudible] . . .
Monte: Can you recall some of the stats on some of that, because . . . .
Jothan: I can. They told us that there’s a 57.5 million .Coms registered, of which, ah, was it I think 86% are resolving and 26% of those are actually just parked pages. 50% . . . was it 50%, Chris? Are real websites. 60% are real websites. And the rest are just non-resolving. They’re either error codes or non-resolving domains.
Monte: So that’s a huge increase from years past and so the advantage of having a parked pages and also some websites because things have gotten a lot easier in terms of web development and propagation, I guess domains are becoming more valuable because they’re actually really coming to life on the Web.
Jothan: Domains are big. They said that globally, there’s over 105 million domain names registered, across all the ccTLDs and gTLDs and everything.
Monte: Right. And then . . .
Jothan: It’s an impressive stat. The thing that impressed me the most was the IDN talk, that, you know, with each of the IDN ware releases of the IE 7 browser, the IE browser has basically driven registrations of internationalized domain names.
Monte: And what . . . have they given some number, some of the recent numbers on the IDN registrations?
Jothan: Ah, the recent IDN registrations, I think that they’ve said, I think it’s 6% of registrations. [inaudible] . . .
Monte: So that’s a pretty significant number for IDN . . .
Jothan: I don’t remember the exact numbers, Monte.
Monte: Right.
Jothan: It was pretty strong. What they said was the biggest deal was of the domains that are registered that the retention rate and renewal rate and, ah, was much higher with IDN domains. That they’re actually getting used and actually getting developed.
Monte: Yeah, that’s great. And the IDNs are becoming more and more popular. We’re seeing a lot of . . . actually participated in a number of sales in the recent months on some IDN names for pretty decent dollars and are about to handle some significant portfolios of IDN names as well.
Jothan: Monte, its what you do and its what you do well.
Monte: [laughs] Great.
Jothan: I have a couple people here who would like to say hello. I have Chris Ambler; he works for eNom but he also is very notorious for operating IO Design and the original .Web proposal and he’s sitting right here.
Monte: Okay, let’s say hello to Chris.
Jothan: I’m going to have him say hello.
Monte: Okay.
Chris: How’s it going, Monte?
Monte: Hey, Chris, welcome to Domain Masters, and thanks for being on live. I know I’m catching you guys on the way to an event, but give us a little bit about your history in the domain business and some of the things that you’re seeing significantly change the industry today?
Chris: Ahm, well, my history goes back before there were domains, but I’ve been around pretty much since Day 1 and as Jothan said, I was the guy who proposed .Web in 2000 and I should plug that and say I’m looking forward to next year when it looks like ICANN’s going to have another round of generic TLDs and I plan on being first in line. In other words, I haven’t gone anywhere. But in the meantime, I’ve been working for eNom for about the past 3 or 4 years. Now, I should say Demand Media, and doing some really cool stuff. As far as what’s on the horizon, just all kinds of cool stuff on the horizon. Some of the stuff that we saw today that Verisign is working on was actually really eye-opening. They’re thinking in some pretty lateral spaces right now that we hadn’t really thought about or at least in terms of Verisign. Some research things that they’re doing; their acquisition of media feed information; being able to feed news and other articles; some of the identity services they’re working on – its actually pretty darn impressive.
Monte: Hey, ah, getting back to the .Web initiative you worked on – what’s entailed . . . give the audience a little bit of an idea of what’s entailed in presenting a new extension and some of the work you have to go through. If you could kind of wrap that up in kind of a little bit of a 30,000 foot overview. But there’s all kinds of new extensions proposed, you know, every year. What gives one justification? What kind of work and process do you have to go through to try to get that through ICANN and the domain community?
Chris: Uhm, well, the easiest way to answer that is it’s a moving target. Uhm, in 2000, it was pretty much a beauty contest. It was something that had never been done before, so everybody just threw out their proposals and you had things from incredibly technically well laid out proposals through seat-of-the-pants-we-just-want-to-do-this-and-see-what-happens. In, ah, . . . a year-and-a-half/two years ago, when they did the sponsored round, it was a little different. You know, you had to be sponsored; you had to have community buy in. In the next round, it looks like they’re going to learn from everything that’s gone past and they’re going to say anybody can proprose pretty much anything and you have to meet some strict, clear objective criteria. And then that seems to be the way its going. So the 30,000 foot view is you have to show that you are technically competent; that you have a business behind you, you know, you’re not going to go out of business tomorrow; that you can actually run a registry and of course, the catch phrase always has been, security and stability. You have to show that you’re not going to break anything.
Monte: Right, right. Now, in your opinion, what’s been the best, new extension that you’ve seen come out in recent years and what’s been one of the ones that’s been more of a failure, if you could speak to that?
Chris: Uhm, well, as far as best goes, its hard to say because its hard to quantify. What do you consider best? If you’re coming from the standpoint of a domainer, I hear them saying, you know, COM is king and the rest are just kind of also-rans. Uhm, but you know, if you’re coming from the standpoint of mom and pop store, you could say BIZ and INFO are fantastic, because you could get the name that you wanted that you couldn’t get in .Com. So it really depends on what you consider best.
Monte: Well, what’s you’re personal take on the .Mobi initiative?
Chris: Uhm, I think it’s a good idea technically. I think that they should be able to do it. I have no problem . . . I mean, you know me; I’m a [inaudible] Capitalist Libertarian; I think everybody should be able to do any business they want as long as they’re not hurting anybody else. So, if they want to come out with MOBI and do mobile services and put together a technical for that, more power to them. Personally, I thought it should have been .M, simply because if you’re doing mobile, you want it to be as small as possible. But, getting a single letter TLD through ICANN was something that I’m sure was not going to happen.
Monte: [laughs] Yeah, I would say so. I would say so. Well, great, Chris; it was great having you on Domain Masters and thanks for the update on what’s been going on there.
Chris: Sure thing!
Jothan: Monte!
Monte: Alright, let’s get one more person on board . . .
Jothan: Monte, I had Chris on but before you let me off . . .
Monte: Yes?
Jothan: I did want to talk about Domain [inaudible] LA, which is going on right now.
Monte: The what?
Jothan: Domain Fast(?) LA.
Monte: Yeah?
Jothan: It’s a small little gathering of domainers that’s going on in Marina Del Ray from . . . it starts out this evening and it goes clear through Friday afternoon. [inaudible] . . .
Monte: Ah, Domain Sponsor’s putting on that event, correct?
Jothan: Ah, no. We got contacted by some domainers and you know, domainers are wonderful people; I love them. They’re some of my best friends and yet we seem to be a nation of procratinators and disorganized people in some cases. I know that you really strive to bridge a lot of those that’s out there for your customers. And, anyway, we just got behind it and we support it like we do with any sort of domain based event. Domain Sponsors’ there; we got them to support this gathering. Its going to be a great little event. MOBI’s there to talk about what they’re doing. They’re launching on the 26th. Tina Downe’s actually, from ICANN, is going to come out and talk about IDN level domains . . .
Monte: Right.
Jothan: And, AfterNick’s there; we also have Name.com; Revenue.net – there’s quite a few people coming out to speak and talk about what they’re doing in the space. We even have Affiliates come in. So it’s going to be a really good . . . a good event.
Monte: Well, great. Well, we’re basically at the end of our show. Jothan, thanks for the update and thanks for getting Chris on board. And it sounds like Registrar Days is pretty exciting and some of the new things that Verisign’s doing. Something we have a lot of look forward to, both as registrars and also for our customers.
Jothan: Oh, yeah. They have a lot of neat registrar things as Chris alluded to. And they’ll be publishing some of the [inaudible] things that they were presenting here up on Verisign’s website, which is Verisign-grs.com or Verisign.com.
Monte: Right. I understand there’s going to be some nice advancements and some of the ccTLDs through NameStore as well.
Jothan: They’re announcing quite a few.
Monte: Great.
Jothan: The thing I didn’t want us to talk about – I was going to play a joke on you and tell you Sidewinder was coming back, but I don’t think I’ll do that.
Monte: [laughs].
Jothan: They did not announce anything like that.
Monte: I wouldn’t believe that anyway. [laughs] Well, great. Am I going to see you at TRAFFIC in October?
Jothan: Yes. I look forward to seeing you there. I may be moderating a panel there at the TRAFFIC show and I definitely look forward to seeing you, Monte. It’s always a pleasure. You do quite a job there.
Monte: Well, thank you very much. Thanks for being on the air and giving us a live update on the bus. Where are you guys headed tonight?
Jothan: Ah, Verisign is nice enough to be taking us out on a little cruise on the San Francicso Bay. We got a chance to get a look at . . . they did tours of their network operations center, which is, I’d say, beyond world-class here in Mountain View. I definitely have a high confidence in their ability to operate such a technical infrastructure. They showed a lot of flashing LEDs, basically. Good stuff.
Monte: Great. Alright, well, take care and thanks again for giving us a live update, Jothan. I’ll talk to you soon and see you at TRAFFIC.
Jothan: Nice to talk to you, Monte.
Monte: Great. Alright, folks, that wraps up another great week. Just a couple reminders. There’s a huge domain conference coming up at the TRAFFIC East conference, you know, for those interested in attending and there’s some limited room available still and I think the hotel, the first hotel sold out but they’re getting a block of hotel rooms at the alternate hotel. Go to TargetedTraffic.com . . . TargetedTraffic.com. Sign up for the event. It’s the largest gathering of domainers in the entire world. There’s going to be 500 to 700 domainers there and foundation companies and the people that are responsible for what’s going on in the domain world today. And of course, yours truly and our company is sponsoring and conducting the largest domain live auction in history. We’re going to sell more than $5 million worth of domain names (that’s my prediction) and its going to be a great event with a live auctioneer and tons of great names selling. We got all kinds of great names coming in to the hopper right now and even are going to be able to present some key .Mobi names that are on their premier list and we’re going to be able to sell those at the auction as well. So, stay tuned and go to the TRAFFIC event, if you can make it. It’s in Miami on the 24th of October through the 28th. It’s actually at the Diplomat Hotel in Hollywood.
With that, I’ll let everybody go. Have a great week. For those of you that are celebrating the Jewish New Year, Happy New Year to you, for Rosh Hoshana and we’ll be back on Wednesday with another live show. Be the master of your domain. Talk to you next week. Bye.
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