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Ten reasons why NIXI’s proposal to prohibit reselling of .in domains at a premium is a bad idea

Internet Commerce Association in a letter to NIXI has strongly criticized its proposal and has presented arguments as to how this move will kill “a vibrant secondary market”.

The Internet Commerce Association (ICA), a group representing the domain name industry, has strongly criticized the proposal made by the National Internet Exchange of India (NIXI) to prohibit reselling of .in domain names at a premium.

NIXI, which operates the registry for domain names that end in .in, has proposed an amendment that will prohibit “squatting, grabbing, hoarding, infringement, auctioning, drop catch or selling of the .IN domain names at an exceptionally higher price than the published MRP.” This could effectively end domain investing, which is the practice of buying domains that contain common or popular words and then selling them later for a higher value.

“The ICA urges NIXI, in the strongest possible terms, to immediately reconsider this proposed ill-advised course of action which threatens the Indian free market and will make India stand out as a country that has uniquely abandoned the rights of lawful registrants and which has constrained the growth of its vibrant domain name space,” the association stated in its letter dated July 11.

NIXI has invited feedback on its proposal and interested stakeholders can submit their feedback to registry@nixi.in by 4 pm, July 17, 2023.

Why ICA is against this proposal

1. It could impact a large number of people who bought domains relying on the existing policy: Over the years, NIXI has extensively encouraged the purchase of .IN and .Bharat domain names, without having any restrictions on resale. “Today there are over 3 million .IN and .Bharat domain names registered and many of these registrations were purchased by registrants for investment and resale with encouragement by NIXI and its registrars. These registrants relied on NIXI’s policies of permitting registrations for resale and accordingly now NIXI purports to pull the rug from under them causing untold financial harm. The number of affected registrations could potentially be in the hundreds of thousands or millions,” ICA pointed out.

2. Loss of revenue for NIXI: “NIXI will potentially face a dramatic loss of revenue as a result of its purported policy change as affected registrants will be compelled to drop their domain names and thereby not remit any renewal fees or fees for new registrations. In effect, NIXI will be going backward in time by greatly reducing the number of registrations and its associated revenue thereby possibly having to rely upon new government funding for its operations,” ICA explained.

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3. Rationale for the proposed rule is not supported by evidence: Registrars (companies that provide domain registration services like Namecheap, GoDaddy, and Bluehost) are already prohibited from selling .in domains at a premium, but NIXI wants the same rule to apply to registrants because “some Registrars are using Registrants as proxy and carry out illegal and unfair trade practices pertaining to sale/purchase of delegated/registered .IN/BHARAT domain names which affect the market environment,” NIXI reasoned.

ICA complained that this rationale is not supported by any evidence. “What evidence do you have of this occurring and how often? It is impossible to even meaningfully comment upon such unsupported allegations which are provided without any examples or evidence. Moreover, what do you consider ‘unfair trade practices’ or ‘illegality’? India has well-developed criminal and commercial laws which already would address such instances and therefore there is no basis to revise the registration agreement to prevent what is already unlawful,” the association elaborated.

4. Target Registrars without targeting Registrants: As for NIXI’s reasoning (quoted in the previous point) that some Registrars are using Registrants as a proxy to engage in prohibited activities, ICA suggested that NIXI can amend the Registrar Accreditation Agreement (RAA) to prevent such breaches without any changes to registrants.

5. How do you implement this rule practically? “If a company purchased a domain name for a lot of money and no longer requires it, must it give it away for an amount no greater than the registration fee? Will a bankruptcy trustee be prohibited from selling a domain name belonging to a defunct company at auction? […] What is even an ‘exceptionally higher price than the published MRP’? Is there a formula for calculating this? Is selling a domain name that was registered for 15 years at 15X the registration and renewal fees ‘exceptionally high’ even though the registrant paid that in total? […] It is crucial that you seriously consider these issues which make your proposed amendments impractical and unenforceable,” ICA remarked.

6. Where does the proposed change stand legally? The proposed rule can run into legal troubles because it could be seen as a “restraint of lawful trade which may violate existing Indian law” and if it applies retroactively NIXI could “become liable for damages from all registrants who have had their rights taken away from them,” ICA highlighted.

7. No other jurisdiction has such a prohibitive policy: ICA pointed out that it is “unaware of any jurisdiction which has adopted such a prohibitive policy,” which would make India the country that “not only unlawfully took away registrant rights but also destroyed a vibrant secondary market.”

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8. Strangles the growth of .IN name space: Domain name investors “contribute substantial resources into the .IN ecosystem and thereby contribute to the adoption and popularity of .IN domain names, build domain name tools and marketplaces, and engage in promotional efforts to encourage adoption of .IN domain names throughout the world, including by companies who want to do business in India. By targeting domain name reselling, you are strangling the growth of the .IN name space,” ICA remarked.

9. Deprives citizens of a living: “Many thousands of Indians make their living and provide for their family by investing and reselling .IN domain names. Not only does your proposed course of action threaten to destroy their existing investments but they will have also lost their future means of making a living,” ICA stated.

10. How will this rule be reflected in the Registrant Terms and Conditions? NIXI wants to modify the existing rule that applies to Registrars under clause 6.1 of the Registrar Accreditation Agreement (RAA) to include Registrants. Additionally, it wants to take this modified clause 6.1 from the RAA and include it in the Registrant Terms and Conditions. But clause 6.1 includes many provisions that clearly only apply to Registrars. For example, violation of the clause can lead to termination of Accreditation, which only applies to Registrars cause Registrants are not accredited by NIXI.  “Accordingly, we request that you publish for comment, the actual proposed text,” ICA submitted.

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