Eu Won't Believe It

Were you aware there are registered companies in Europe with such ambrosial names like ‘Rus & Sia’ and ‘Ser & Bia’? Well, there weren’t until internet touts used loopholes in the European Union’s shambolic registration process to acquire thousands of the continent’s most desirable internet addresses.

European domain names ending in .eu were initially touted to be released as far back as 2004, but, in classic EU style, the launch kept being delayed. The one consolation eager webmasters had was that, with so many delays and thousands of man hours being spent into the launch of the address, the application process would surely be handled in a professional manner.

The European Union boasted that the new .eu would give Europeans an opportunity to obtain short international addresses (Americans, first to adopt the internet in large numbers, owned the best .coms). They made it a condition of registration that applicants had to be EU citizens or businesses. To determine the validity of the latter and judge which company would have priority over trademarked names, they spent several million Euros recruiting PricewaterhouseCoopers Belgium to audit the process.

In an attempt to avoid cyber squatting, the EU’s authorised body, EURid, announced a ‘sunrise phase’ running from 7 December 2005 to 7 April 2006. This would allow public bodies and holders of prior rights to obtain the .eu domain names relevant to their organisation.

What was supposed to be a straightforward process of companies registering addresses based on their business names and trademarks has turned into a fiasco that even the world’s most incompetent organisations would have had difficulties conjuring up if they wanted to.

Failing to learn from recent releases of other TLDs (top level domains) such as .info and .biz, and surpassing the mismanagement involved in their launch, PricewaterhouseCoopers has allowed fraudsters to register domain names they have no entitlement to.

The rules to prohibit crooked entities registering domain names were so badly thought-out they have been easily circumvented by creative ‘domainers,’ people who buy and sell domain names as a profession and sometimes make vast sums of money from it. The stipulation that, for instance, only European entities could register a .eu domain name was satisfied by large numbers of Americans setting up limited companies in the UK and elsewhere. Many .eu registrars even went as far as linking to limited company formation websites and encourage their non-EU customers to pay as little as £30 to set up a European based company.

Honesty Doesn't Pay EU Gary Gloc, who has owned vyh.com, vyh.net, vyh.biz and vyh.info for years found he was unable to claim prior rights on vyh.eu. He could only claim if he had a trademark or a solictor signed a complicated affidavit that the prior right claimed is protected using references to relevant legal provisions, case law and scholarly works. "EURid were using language only fit for a lawyer", says Gary Gloc. "And the cost to obtain an affidavit from a solicitor in the UK is prohibitive". When we contacted three solictors to ask how much a basic affidavit would cost, the costs ranged from £600 ($1,400) to a jaw-dropping £5,000 ($8,700) requested by a legal firm in Bristol. However, prior rights for vyh.eu were claimed in the sunrise 2 phase by Parknet BV. Parknet made hundreds of prior rights claims using Benelux trademarks. "They were not even specifically using vyh but v&y," argues Gary Gloc. "The whole .eu domain name registration process was weighted heavily in favour of poorly-regulated Benelux countries and against the UK. That is why only 1.5% of UK businesses claimed their .eu".

Americans Bob Martin, Stuart Rabin, Marc Ostrofsky who are part of the notorious Internet REIT, Inc. gang grabbed some of the greatest .EU domains from Europeans themselves by using a phantom company with a London address called ‘First Internet Technology Ltd.’ They claimed to have Netherlands domiciled European trademarks and managed to buy hundreds of the juiciest domain names ranging from art.eu and ask.eu to york.eu

One of the most prolific claimers of prior rights is 'Traffic Web Holding B V'. Despite claiming to be a legitimate business, they use a free gmail address. The American Embassy applied for usa.eu. Their application was rejected. The next applicant, Traffic Web Holding B V, was accepted. The American Embassy applied for unitedstates.eu. Their application was rejected. The next applicant, Traffic Web Holding B V, was accepted. The American Embassy also applied for america.eu but lost out to… you can guess who. Traffic Web Holding B V were also gifted washington.eu, lasvegas.eu and hollywood.eu by PWC.

In the low countries, trademarks can be registered for as little as £100 and approved within 24 hours. Companies like Safenames.net still advertise on their homepage that a Benelux trademark can be registered easily and used as pretext to acquire a .eu domain. EURid was aware that domainers could use the lax trademark rules in certain European countries to acquire .eu domain names and even told Azam.biz that “extensive consultations” had taken place, but displaying the kind of incompetency which has become the hallmark of European Union organizations, they failed to act on the warnings. A simple way to ensure people did not register a trademark simply to acquire a domain name would have been to insist on a minimum period of time the trademark had to be owned or insist on additional documentation.

The loophole has been exploited by companies using absurd trademarks. In the manner in which Steptoe & Sons may refer to their business as S&S, a Dutchman, M. Roos, set up ‘c&h&a&m&b&e&r&o&f&c&o&m&m&e&r&c&e’ in the Netherlands to claim ownership of chamberofcommerce.eu. A wily German, Sebastian Dieterle, set up ‘Áćďéĝĥíĵķļñóŕśţúÿź & Àçđèģĥįĵķľńõřşťûýż’ to try to grab yl.eu and other domain names, probably thinking that if he had every letter of the alphabet in his trademark, twice, he could claim rights on any name two-letter name he liked.

That EURid and PWC allowed thousands of domain names to be obtained using patently absurd trademarks has left many people fuming. “I don’t know whether to laugh or cry when I see all the trademarks domainers have registered to buy .eu names,” says Jonathan, a webmaster from Leeds, UK. “Millions of pounds of European Union citizens’ taxes were paid to PricewaterhouseCoopers to audit the applications and, for them to allow such blatant fraud to take place, leaves me in disbelief. The EU would have been better off recruiting a bunch of monkeys to check the applications.”

350,000 domains were applied for during the sunrise phase and 55,000 allocated so far. Many have been straight up for auction with one brokerage website trying to offload more than 3,000 .eu domains.

The shenanigans taking place in the sunrise period have been matched by the way the much-hyped landrush phase which started at 10am GMT on 7 April was handled. Set up in a lottery-like fashion, it was supposed to allow everyone a fair chance to obtain any .eu which hadn’t been applied for in the sunrise phase for as little as 10 Euros. All you had to was pick a registrar to submit your application and hope you were first in line for whatever.eu

To ensure the EURid servers could handle the avalanche of applications expected when the landrush phase started, each registrar would only be allowed to submit one application per second. To circumvent this restriction companies like Pool and Snapnames set up hundreds of separate entities so they could apply for hundreds of domains a second. When 400 applications came within two days of each other a few weeks before the landrush started, EURid approved all of them even though they had the same address and phone numbers and had company names no registrar would use such as bollywoodbabes.info LLC, bollywoodgirls.info LLC and bollywoodadult.info LLC. Bizarrely none of these registrars had a site: imagine a domain name registrar not having a website!

It has come to light that EURid even allowed its accredited registrars to "opt out" of being listed on their website. All a registrar had to do was click a box and their name would not appear on the EURid site. As Bob Parsons, former CEO of GoDaddy pointed out "legitimate registrars would never do this".

Most registries publish what is called a 'zone file' and make it available to their accredited registrars. By studying the 'zone file' it is possible to see which registrars have registered which names. EURid elected not to release its zone file. Once again, they made it as easy as possible for crooks to go undetected.

The attempt by some registrars to slyly multiply their chance of acquiring domain names by hundreds of times generated a great deal of angry debate on domain name discussion boards and led to hundreds of people writing to EURid for an explanation. The answer to each complaint was the Eurojargon-plated equivalent of “sorry guv’ we ain't doing nothin’ about it”. Marco Rinaudo, CEO of the domain name registration company Internet.bs, emailed EURid on 29 March and the response two days later was “it is nothing that EURid can have an opinion about”.

The cost to set up as a registrar with EURid is €10,000 and one can possibly understand why EURid staff may not have an opinion about a company registering 400 times over when it resulted in them lapping up a payment of €4 Million from Pool.com. The sum would more than suffice for a Brussels party or two.

When the landrush started on Friday morning a staggering 1.1 million .eu domain names were registered in the first day. Unsurprisingly, Pool.com grabbed a significant chunk of them and left most applicants disappointed. In a gloating email to customers that evening, they announced “we successfully acquired nearly 60% of our customers’ .EU orders!”

Pool.com launched auctions on Monday, 10 April for the domain names they managed to grab. This is despite the EURid website discouraging registrars from setting up auctions and inflating prices. It warns people to “beware of schemes which invite them to participate in auctions”.

The auctions were set up to milk as much as possible out of people: many of them went on for weeks and, if a bid is placed just before the end, the auction was extended! Pool.com made millions out of them as people bid thousands of Euros for the most valuable domains; con.eu sold for €3100 and gel.eu for €3500.

Landrush II took place on 7 June, 2006, in which domain names which people applied for in Sunrise but were rejected, became available. As these domains had had previous applicants, they were even hotter than those in Landrush I. Incredibly, this release proved to be even more rife with monkey business than the previous stages. Ovidio Limited swiped thousands of domain names that became available on that day. They decimated the opposition, grabbed assets worth millions of Euros, and domain name forums were flooded with people complaining they did even get one domain name

It has subsequently come to light that Ovidio Limited were behind the 400+ fake New York registrars. They suffered a technical hitch in Landrush I which stopped them putting their 400 registrars into action, but they did the business in Landrush II and, within a few seconds of the domain names becoming available, snapped up almost every single one.

Ovidio Limited is registered in the name of two Romanians, Christian Macsim and Oviidu Sarpe. Despite being a British-registered company, neither of these two men are on the UK Electoral Roll.

Update: Over 74,000 .eu domains have been suspended and 400 registering companies sued by EURid. It has taken legal action after a barrage of complaints about a small number of companies having registered several hundred phantom companies in order to manipulate the system.

EURid stressed, however, that this legal action was only the start of its review and it will continue to investigate other complaints about phoney registrars. It has already suspended an unspecified number of other domains because the owner was unable to prove they lived within the EU.

Since EURid's computer system worked by creating a virtual queue of accredited companies who then took it in turns to try to register a particular .eu domain, the €10,000 registration fee for each company made it worthwhile for a few large US companies to flood the system with front companies and then profit from selling valuable .eu domains later.

The result was that a large number of domains were taken by companies unknown in the registrar industry, causing an immediate outcry from more established companies. Despite the controversy, the .eu top-level domain has been an unexpected success with EURid announcing in early July that it has sold its two millionth .eu domain in just three months.

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