To the company assigned the top-level domain of .biz, NeuLevel of Sterling, Va., it seemed like a good idea at the time. If competing names were submitted for approval, NeuLevel planned to randomly to assign the names and keep the typical $5 submission fees ($2 to NeuLevel, $3 to the registrar) of the losers. The words "illegal" and lottery" never came up in the original business plan.

Until October, that is, when a lawsuit was filed against NeuLevel claiming the company was running what amounted to a lottery since it was charging a fee for a chance to win a name without guaranteeing anything for the fee.

NeuLevel's original plan, in fact, encouraged multiple submissions by domain name registrants because the applicants did not know if their submission was uncontested or it there were multiple submissions for the same name. Business prudence dictated backup name applications, usually with a typical $5 submission fee. By October, almost 40,000 of the half million names submitted were duplicates. In the past, the typical procedure for registrars was to assign names on a first come, first serve basis.

Now NeuLevel has devised another plan that it hopes will pre-empt the lawsuit: the company plans to return the fees for all contested names and hold another round in February where applicants won't be charged a fee unless they get the .biz name they want. NeuLevel hopes the new names can be put into use by March.

Last November, the Internet Corporation for Assigned Names and Numbers (ICANN) added seven new domains to existing pool of .com, .org and .gov designations: .info, .aero, .name, .coop, .pro, .museum, and .biz. ICANN accredited NeuLevel to be the official administrator of .biz.