Massive Risk Environment Shift in China for Brand Owners

China's Internet address registration agency, China Internet Network Information Center (CNNIC), has announced that it is drastically reducing the cost of English language domain names in the .CN extension for registrations submitted before May 31, 2007. The cost will be one yuan (13 US cents) for the first year of registration, making .CN domains available to more applicants both inside and outside of China. This creates an enormous opportunity for cybersquatters to stockpile domains.

NeuLevel, which handles registrations from registrars located outside of China, provided confirmation of this story to FairWinds. It should be noted that NeuLevel will also benefit from the discounts and should pass additional savings to their registrar partners through May 31, 2007.

This shift in pricing is likely a response to the disruption of the overseas server-backed .COM service during the last week of December when earthquakes off the coast of Taiwan severed undersea cables. Aimed at promoting Chinese nationalism and stability (by making China less reliant on root servers outside of China), CNNIC's move stands to create ideal conditions for cybersquatting and brand infringement.

Brand owners can mitigate the heightened risk by moving quickly to proactively register names most likely to be infringed. Companies should review their brands and domains and register as practicable permutations such as misspellings, brand derivatives, and brand and generic combinations. Any domain names that are registered during this period of time should be reevaluated next year at their renewal, since renewal costs will most likely be back to their normal levels.

FairWinds hopes that corporate services domain name registrars will offer their corporate customers discounts during this short-term window.

Scams targeting multi-national trademark owners are on the rise in Asia and CNNIC's move has lowered the barrier to entry for registration potentially spelling disaster for brand owners worldwide over the course of the next few weeks.

This new .CN cybersquatting opportunity is similar to what tasting has offered cybersquatters in other registry TLD-spaces such as .COM. For $100, a registrant can register over 750 .CN domains, measure traffic and click fees that are generated over the course of one year, and then decide to keep only the most lucrative names. No doubt, trafficsquatting and typosquatting individuals, and professional domain name investors (domainers) will taste thousands of .CN domains at virtually no cost.

If you have any questions about this newsflash or would like to learn more about FairWinds, please feel free to contact us.

Thank you,

Josh Bourne & Phil Lodico
Managing Partners, FairWinds Partners LLC
Directors, The Coalition Against Domain Name Abuse