On June 20, the Internet Corporation for Assigned Names and Numbers (ICANN) approved the launch of new generic top-level domain names (gTLDs). Examples of currently available gTLDs are .com, .net, and .org. New gTLDs could include brand-type extensions (e.g., .coke). Potentially limitless extensions present new opportunities for trademark infringement and consumer confusion and jeopardize the security and stability of the domain-name system. Applications for new gTLDs will be accepted from January 12, 2012 to April 12, 2012.
What concerns should your business have about the introduction of new gTLDs as a trademark owner? What are some best practices that your business should implement to protect itself with the introduction of new gTLDs?
History of New gTLDs
ICANN has posted a series of drafts of its Applicant Guidebook. The Guidebook is a comprehensive guide for applicants of new gTLDs describing the program’s requirements and evaluation process. On May 30, ICANN posted its latest version of the Guidebook. This version of the Guidebook has not yet been approved.
Concerns for Trademark Owners
There are currently 21 gTLDs (sunrise registration for the newest gTLD, .xxx, will launch in September 2011). Internet activity is dominated by a small number of registries: .com has more than 95 million registered domains while .net has roughly14 million. Conversely, .museum has less than 500 registrations.
The addition of new gTLDs may harm consumer welfare by creating confusion among consumers and imposing costs on trademark holders by necessitating inefficient “defensive” registration of domain names on new gTLDs. Further, new gTLDs will create new opportunities for others to infringe, phish, and engage in other deceptive practices. Monitoring for abuse will now have to be extended to a much wider universe. As a result, brand owners and consumers will be net losers.
Trademark owners already have to register the actual trademark, alternative spellings, misspellings and other variations (e.g., dashes), all in different generic and country-code TLDs. The potential for unlimited new extensions means these defensive efforts will multiply.
Should Your Business Apply for a New gTLD?
Buying a new gTLD will be expensive. Notable costs include an initial evaluation fee of $185,000 and annual fees of $25,000 with long-term contracts. Other potential costs include legal fees for potential challenges and complying with business, operational, and technical requirements. Further, new gTLDs will have limited benefits, particularly in the short run. We live in a .com world, where your business’s consumers are trained to navigate the tried and true existing top-level domain names. New gTLDs are slow to catch on. Consider these questions:
Does your business own any domain names outside of .com, .net, or .org? If so, were they acquired for marketing purposes or as defensive registrations? Are your consumers ready to locate your business by using the extension .trademark? To take full advantage of a brand-type gTLD, your business may have to undertake significant training and education efforts. As the internet-using public becomes more comfortable with new gTLDs, brand-type gTLDs will become feasible for businesses, but this may take years.
Best Practices for Businesses
It is not too early to develop your business’s top- and second-level domain-name strategy. Timing of applications for, or opposition against, new gTLDs will be critical.
Top-Level Domain Names
ICANN will post portions of applications within two weeks of the close of the application submission period. This will begin a comment period, allowing time for the community to review and submit comments on posted application materials. Comments received within a 60-day period from the posting of the application materials will be available to the ICANN evaluation panels performing the initial review.
The objection filing period will begin after ICANN posts the list of complete applications and will last for approximately seven months. Dispute-resolution proceedings are expected to be completed for all applications within a five-month timeframe.
Dispute-resolution filing fees are expected to range from $1,000 to $5,000 per party per proceeding, depending on the dispute-resolution services provider. However, this does not include the costs of the proceeding which are estimated by ICANN to be as high as $122,000 or more.
Second-Level Domain Names
Your business should participate in the rights-protection mechanisms expected to be available under the new gTLD program.
Submit your trademark to the Trademark Clearinghouse. This is a central repository that authenticates and validates trademarks and serves as a database to provide information to new gTLD registries. One submission is sufficient to cover all new gTLDs. New gTLD operators are required to give registrants notice of your rights and alert you when someone else registers a domain name using your trademark. Participate in sunrise registration periods. A sunrise is an exclusive registration period prior to general registration when trademark owners may register desired second-level domains within new gTLDs, thereby preventing cybersquatters from registering the domains. Taking advantage of this prelaunch protection measure would be particularly useful in relevant gTLDs, e.g., sony.music. Submission to the Trademarks Clearinghouse is a prerequisite to participating in sunrise registration periods.
If you learn of an infringing second-level domain name, consider filing a proceeding under the Uniform Rapid Suspension System (URS), intended to be a quicker and cheaper alternative to the Uniform Domain Name Dispute Resolution Policy (UDRP) currently available for existing gTLDs. The URS would be limited to situations involving a clearly abusive domain-name registration, and the sole remedy is suspension of the domain name. The introduction of new gTLDs has the potential to drastically change the internet in negative ways. The time is now for your business to consider how these new gTLDs will help or harm it.