Imagine you have inside knowledge on the best widgets in the world. Eventually, you’ll want to create an ecommerce website to sell those widgets. Not right now, but soon.

So, when you’re finally ready to embark on your ecommerce mission, you hope to have “widgetworld.com” as your domain name. Let’s say you found a domain registrar and found that the domain name you want, “widgetworld.com,” is available. You pay for the domain name, knowing that “widgetworld.com” is yours to do with as you please.

But that’s not the end of the story.

One common practice employed by some domain registrars is known as domain parking or domain name squatting. Even though you registered, “widgetworld.com,” for your ecommerce business, you haven’t assigned the domain to a web hosting service website. The protocol for the name server remains under the control of the registrar who can use your domain name and park it.

Principled domain registrars either post a “Coming Soon” page or simply do nothing with the registered domain. Then the party who registered the domain can see they have control of the domain and not the registrar.
Unscrupulous registrars, on the other hand, have the dubious distinction of making a profit from people by creating webpages that your URL triggers and selling advertising on the pages. Some registrars now offer domain parking as a service to domain owners in a shared revenue agreement.

The basic legal issue is whether or not a domain name constitutes a property right. In the 2003 case of Zurakov v. Register.com, the New York trial court which heard the original case ruled that a domain name is not a property right. The decision was overturned in the appellate court, saying a domain name is a property right.

The plaintiff in Zurakov v. Register.com found out the domain name registered by the plaintiff with the defendant was used to redirect net-surfers to a “Coming Soon” page filled with all sorts of advertising for Register.com as well as their associates.

Filing a civil complaint, the plaintiff alleged that Register.com neither acted in good faith nor did they use fair practices based on the contractual agreement that stated he has exclusive control over the domain name he purchased.
Register.com, the defendant — claimed otherwise, saying the term “control” was not in the verbiage of the contract the plaintiff agreed to when he registered his domain. On top of that, the defendant pointed to a disclaimer on the “Coming Soon” page and consequently moved for the case to be dismissed because the plaintiff failed to demonstrate a cause of action.

It turns out the court ruled in favor of the defendant. The court noted that the term “control” doesn’t appear in the contract. Furthermore, the contract did not have an express definition of the word “register.” There was a clause in the contract that made it possible for Register.com to modify, suspend, transfer, or cancel the contract at any time.

When the plaintiff took his case to appellate court, the court of appeals overturned the lower court’s ruling. A good sign for ecommerce on into the future. The court of appeals held the opinion that good faith required that “register,” used with the Internet serving as its context, step outside of the dictionary meaning to fall in line with custom and prevailing use within that specific context. Moreover, even though the wording of the contract perhaps did not grant Mr. Zurakov sole control in explicit terms, there’s no actual benefit regarding a contract merely granting him the exclusive right to possess a domain name joined attached to his own domain name in an official document. The court of appeals did not render an opinion regarding whether or not a reasonable consumer might pay attention to the disclosures on the “Coming Soon” page found on Register.com’s web page.

If you’re thinking about launching an ecommerce site, even if it’s something simple like domain registration, take the time to talk with an Internet attorney who has experience in this area of the law. An Internet attorney can review any contracts you need to sign so your website fall victim to domain name squatting or other unseemly practices.