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Trademark Thoughts - Is Your Company Ready for ".Anything"?

December 14, 2011

Newsletters

Trademark Thoughts - Is Your Company Ready for ".Anything"?

December 14, 2011

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Is Your Company Ready for “.Anything”?

The Internet as we know it may soon be changing forever. From January 12, 2012, to April 12, 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) is expected to accept applications for new generic top-level domain names (gTLDs) to the right of the dot, where .com is now.

New top-level domains can be generic names (such as .shoe), geographic names (such as .nyc), or even trademarks (commonly referred to collectively as “.brand” domains). The new system will permit companies to own domain names that consist of just their trademarks, without the .com or other gTLD. These new gTLDs also will be available in non-Roman scripts, such as Cyrillic, Chinese, or Arabic.

Such new top-level domain names won’t be cheap. The filing fee alone is $185,000, with no guarantee the name will be awarded. The operating costs of running the registry for the new top-level domains may also be substantial, depending in part on whether the public will be allowed to register “second level” domains (such as nike.shoe) or if the domain name space will be restricted to use by only one company (such as .nike). Running a registry requires extensive technical capability and the costs of outsourcing this responsibility over the ten-year commitment could reach into millions of dollars. New top-level domains are not for everyone.

What Is ICANN?

ICANN was formed in 1998 in an effort to privatize the management of certain Internet resources and technical functions, shifting responsibility away from the United States government. ICANN operates without direct government control, taking input from numerous “constituencies,” including domain name registrars (retail sellers), registries (who maintain and run the computers that manage the addressing of second-level domains within the particular top-level domain), Internet service providers, commercial and business owners, intellectual property owners, and noncommercial users.

Since its formation, ICANN has overseen the addition of more than a dozen new top-level domains, such as .biz, .info, .travel, .mobi, and .asia. Most recently, .xxx was adopted after years of controversy and objections from the U.S. government and other organizations. Litigation is currently pending against both ICANN and the .xxx registry, alleging antitrust violations regarding issues such as the absence of price controls to register a domain in the .xxx gTLD and the registry renewal provisions following the initial ten-year term.

The new gTLD program ICANN is now embarking on represents a dramatically ambitious expansion of the Internet domain name space. ICANN says that it expects perhaps as many as 1,000 applications during the January 12, 2012 through April 12, 2012 filing window. Following the initial round of applications, ICANN will conduct a review of the process before continuing with a second round. ICANN has also announced that it intends to introduce no more than 1,000 new gTLDs per year once the program is fully operational.

Why Is ICANN Expanding the Domain Name Space?

According to ICANN, expansion of the Internet domain name space will relieve domain name shortage problems, spur innovation, and create economic growth. Critics charge that ICANN, like the scientists who brought the dinosaurs back to life in Jurassic Park, has been too busy figuring out if it could be done without thinking enough about whether it should be done. Critics also point to the existing and largely unsuccessful gTLDs like .biz and .info as proof that there is no need for yet more gTLDs.

Organizations like the International Trademark Association (INTA) and the Intellectual Property Owners Association (IPO) have argued for years— and continue to argue—that there is insufficient evidence that the speculative benefits of expanding the domain name space will outweigh the inevitable and real costs to trademark owners. Trademark owners will not only need to protect their brands in the vastly expanded Internet universe, but they will also need to deal with potential consumer confusion. At this late stage, however, it is highly doubtful that anything other than a court order or extraordinary government pressure will stop ICANN from administering the final injection of DNA into the system.

Should You File for “.Brand”?

The decision to file for a “.brand” gTLD cannot be taken lightly, considering the high cost and significant responsibilities involved. Before rushing to file, companies should consider whether they have the financial resources to operate a registry for the new gTLD. Companies should also consider the “opportunity costs” of filing– in other words, what else could that money and effort be devoted to that might be more beneficial to the business? In addition, if a company loses interest in running the gTLD after a few years, there is the risk that ICANN will “redelegate” the gTLD to another company, reducing the mark owner’s control over the brand.

Perhaps most important, companies should consider how they will use a “.brand” gTLD differently from how they use their existing domain name. Most companies that have the financial resources to file for a “.brand” gTLD probably already have the .com versions of their trademarks as domain names. As Facebook and other companies have demonstrated, there is a lot one can do with a .com domain name with respect to giving individuals their own space on the Internet. Is the “totally branded” experience of visiting a “.brand” domain website substantively different than visiting the brand.com website?

How Can You Protect Your Trademarks Without Filing for a New gTLD?

Even if a company chooses not to file for a “.brand” gTLD, it must still be concerned about who else might file an application for a new gTLD that is confusingly similar to its trademarks and, perhaps more likely, who might file for a second-level domain within one of the potentially hundreds of new gTLDs. For example, Nike needs to be concerned not only about someone else filing for .nike, but also about who might seek to obtain nike.shoes, nike.sports, and nike.store.

The new gTLD program does offer some protections for trademark owners, both prior to and after launch. Trademark owners will be able to enter certain marks in a new Trademark Clearinghouse. The owner of a mark that has been entered in the Trademark Clearinghouse and that is in current use will be eligible for preferential rights to an identical secondlevel domain during a “sunrise” period required of each new gTLD prior to general availability of domains to the public. In addition, for the first 60 days after general availability, the owner of a mark that has been entered in the Trademark Clearinghouse will receive a notice if someone else registers a secondlevel domain that is identical to the mark.

Finally, a new Uniform Rapid Suspension system will be implemented for all new gTLDs. This system will be an alternative to, but does not replace, the Uniform Dispute Resolution Policy (UDRP) that has existed since 1999 for resolving domain name disputes. Unlike the current UDRP, which transfers ownership of the domain, the URS will allow trademark owners to suspend the offending domain for the remainder of the domain name registration period (plus one optional year upon payment of a fee). Ideally the process will be quick and relatively inexpensive.

Conclusion

Trademark owners need to be ready for the almost certain arrival of new gTLDs in 2012 and beyond. Whether the new gTLD program turns out to be a manageable and useful expansion of Internet domain name options or wreaks havoc on the existing domain name system remains to be seen.

For more information and updates on the new gTLD program, visit www.fr.com/domain-names.

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