Decentralized domain names: the necessary consultation between operators and holders of intellectual property rights


The following domain names are for sale, among thousands of others:

They are called “blockchain domain names”, “Web3 domain names”, “crypto domains”, “NFT domain names” and “decentralized domain names“. Given the legal orientation of this article, “decentralized domain names” will be preferred. Indeed, the adjective “decentralized” rightly evokes the break with the institutionalized legal order since the birth of the Internet Corporation for Assigned Names and Numbers (ICANN).

Patents are filed, “top-level domains” are active (including .888, BITCOIN, .BIT, .COIN, .CRYPTO, .ETH, .NFT, .WALLET or .X), operators issue domain names (e.g. Unstoppable Domains, Ethereum Naming Service, RIF Name Service and Stacks) and secondary market platforms act as matchmakers (OpenSea, Rarible and RIFOS, among others). An ecosystem is born.

The legacy domain name system is administered by ICANN and the Internet Assigned Numbers Authority (IANA). Without going into details, remember that the technical architecture corresponds to a legal architecture. Pyramidal and centralized, this “icannocentric” legal system gives ICANN the legitimate authority to impose, through a top-down approach, harmonized and predictable contractual conditions on gTLD registries and registrars (given their attachment to a sovereign territory, ccTLD registries have more freedom) . Among the numerous and complex contractual clauses, two principles should be remembered. First of all, each domain name holder must provide the data necessary for his identification (these are the WhoIs data). Secondly, any holder of a domain name accepts the competence of a third-party decision maker who is vested with the power to decide on the ownership of a domain name, the execution of said decision being almost automatic. This ingenious (though imperfect: iptwins.com, 2022-06-29) judicial system is an effective alternative to state justice.

What about decentralized domain names? Remember that these do not belong to the naming system administered by ICANN. Consequently, they escape the legal order of the latter and form, at best, a nebula of heterogeneous contractual elements. In short, ICANN offers intellectual property rights holders legal predictability which, at this stage, is not found in the alternative system in development.

A common argument among operators of the alternative naming system based on blockchain technology is that decentralized domain names are censorship resistant. In effect, the issuer issues the end user with a private key on a proprietary basis (such as a house key, car key, or safe). In other words, unlike a DNS domain name registrar, the decentralized domain name issuer does not have the power to dispossess the end user of such a domain name. Moreover, unlike a DNS registrar, the decentralized operator is not accountable to ICANN. Nor can it be the subject of a UDRP-type decision that would require the transfer or cancellation of a decentralized domain name.

The proposed system is certainly sympathetic to freedom of expression. We must also salute this new paradigm that promises everyone secure ownership of their own data. It should also be remembered that the issuance of decentralized domain names constitutes, in principle, a lawful and legitimate commercial activity.

However, this legal orientation seems utopian and illusory. Indeed, this would amount to providing end users with the means to commit offenses or infringe the rights of third parties with complete impunity. The law of civil liability, the pillar of democracies, does not flinch in the face of disruptive innovations. In the 1990s, a libertarian ideology advocated that cyberspace, supposedly capable of self-regulation, was and should remain outside state legal systems. However, in the face of recurring breaches of the law and the infringement of the rights of third parties, the legislator has constantly given judges the means to require operators to identify their co-contractors, perpetrators of reprehensible acts. in cyberspace, regardless of the era, web1 or web2. How could it be otherwise in web3? Failing to equip themselves with techniques securing the identification and conviction of offenders, web3 operators will see their liability engaged through the principles of contributory infringement. Moreover, judges do not like companies which, although sitting on the “a mountain of resources“, do not devote any of these resources to protecting the intellectual property of others (iptwins.com, 2018-06-27). Under pressure from holders of intellectual property rights, investors and even insurers, the first legal decisions against first and second market operators would inevitably push them to rethink their legal models.

It must be recognized that some operators offer solutions to limit infringements of intellectual property rights. However, the actors are numerous and the models discordant. A core harmonization would be welcome. It would be in the greatest interest of the operators of the metaverse to collaborate loyally with the associations representing the holders of intellectual property rights in general since these questions also concern the holders of trademarks, designs and copyrights. Wouldn’t it be wise for all stakeholders to offer intellectual property right holders, at the very least, a an immediately visible notice or take down process and legal procedure providing for the removal of domain names or other non-fungible tokens (NFTs) that violate intellectual property laws? Such a regulatory model could be attached to the “Icanian” system. Alternatively, non-DNS operators could invent a new legal model outside of ICANN’s.

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