The internet industry's naming body is meeting this week to give its seal of approval to new top-level domain names - but one of its preferred options is already facing a legal challenge.

Last week US registrar Economic Solutions Inc (ESI) filed a lawsuit seeking to prohibit the Internet Corporation for Assigned Names and Numbers (Icann) from establishing a .biz or .ebiz TLD.

ESI, which claims it has a commercial agreement with Belize to sell the country's .bz domain name, said Icann's proposal would infringe its intellectual property rights.

Icann opposes the lawsuit, and both sides are filling supporting papers today in the court of St Louis, Missouri. In a statement Icann said the lawsuit is "without merit".

Leading internet lawyer David Flint, a partner at law firm MacRoberts, said it is unlikely that ESI can stop Icann going ahead with .biz. "I don't think that they [ESI] could get an injunction. You could make a similar claim about virtually any TLD on the internet," he said.

Lesley Cowley, operations director at UK registrar Nominet, which controls all .uk domain names, said the lawsuit needs to be sorted out quickly. "The crucial thing with any new TLD is to avoid confusion," she warned.

Cowley said she is concerned about the similarity between .biz and .bz when both could be used by commercial companies anywhere in the world. She said Icann is likely to choose a mixture of general purpose and vertical market TLDs, and that the first could be available to users as early as January.

ESI's lawsuit follows a legal challenge to Icann earlier this month from another US registrar, RegLand. RegLand claimed Icann was guilty of "torturous interference" in warning customers not to pre-register any domain names using TLDs that had not yet been approved.