Internet Domains, Trademark

BEGINNING OF THE END OR JUST A NEW BEGINNING: The expansion of the gTLD space and the revised Draft Application Guidebook

The end is near, or at least nearer, for those who have been following ICANN’s proposal to expand the generic top level domain (“gTLD”) space.  On June 1, 2010, ICANN released the fourth version of the Draft Applicant Guidebook [available at http://www.icann.org/en/topics/new-gtlds/dag-en.htm] setting forth the procedures and requirement for applying for a unique gTLD.  Public comment on the revised Guidebook can be made through July 21, 2010.  Judging from the number and substance of the changes made between versions three and four of the Draft Applicant Guidebook, we may be entering the endgame of this process and trademark owners need to decide how they plan to address the challenges presented by an expanded domain space.

If this is a new topic for you, ICANN, the organization responsible for the creation and implementation of domain names, agreed in principal in 2008 to allow any entity that can demonstrate the organizational, financial and technical capability, to apply for a unique generic top level domain, i.e. .yourbrand; .retail; .berlin etc.  Since that time, ICANN has been working with its various constituencies to create the process for establishing these new extensions.

The privilege of having a unique top level domain will not come cheap.  Under the current Guidelines, there is $185,000 application fee for each proposed extension.  Additional fees may be incurred if an extended review of the application is required or if a third-party files an objection to the application.  If an application is successful, in addition to the costs of operating the gTLD, there will be an annual fee of $25,000 paid to ICANN as well as transactional fees if a certain number of domains are registered or renewed with the new extension.  By the time everything is added up, companies can estimate that it may cost between $400,000-$500,000 to secure a new gTLD.  Despite these costs, a number of entities have already declared an interest in securing a new gTLD.  See http://www.newtlds.tv/newtlds/.

The implications of the proposed expansion for trademark owners are quite significant.  Trademark owners will now need to protect their brands not only at the second level, (to the left of the dot, i.e. “brand.store”) but also at the top level (to the right of the dot i.e. “.brand”).  With potentially hundreds of new gTLDs, the avenues for cybersquatting, phishing and other malicious conduct will expand exponentially.  While it seems unlikely that a cybersquatter would attempt to register a gTLD with an unassociated brand name given the costs associated with a gTLD application and the ability of a trademark owner to object to such an application, it is probable that someone will attempt to register second level domain names under the new extensions in bad faith.

There may also be significant benefits for securing a unique gTLD.  A unique gTLD may permit a business to consolidate all of its electronic and Internet communications under a single extension.  For instance, all websites associated with a brand could carry the .brand extension.  All e-mail communications from the business would have an @email.brand address.  Inasmuch as the business would control the registration of all domain names using the gTLD, this strategy should allow the entity to prevent cybersquatting utilizing the extension and may reduce the effectiveness of other forms of cybersquatting as customers come to expect all electronic interactions with the business to come from its unique gTLD.  The owner of the gTLD will also have greater control over the security of its domains and information.  That being said, given the initial and ongoing costs of running a gTLD, these benefits may be difficult to justify unless the gTLD also creates a new and sustainable revenue stream (i.e. through second level registrations from vendors, associated services provides, associated companies, etc.).

Inasmuch as the procedures for registering new generic top level domains is still being decided, companies should use this time to formulate a strategy for what appears to be the inevitable launch of new gTLDs.  Any entity with significant trademarks will need to consider monitoring the applications filed for new gTLDs so that an objection can be filed against an application if need be.  It may also be advisable to monitor domain name registrations at the second level of the new gTLDs to take advantage of the mechanisms being put in place by ICANN to combat bad faith registrations.  See http://www.icann.org/en/topics/new-gtlds/draft-urs-clean-15feb10-en.pdf and http://www.icann.org/en/topics/new-gtlds/draft-trademark-pddrp-clean-15feb10-en.pdf.   Companies should also consider consulting internally amongst its business, legal, marketing and IT departments to determine if it makes sense to file an application for a new gTLD during the first round of applications to reduce the risks that another entity will adopt a gTLD that will preclude them from securing the desired gTLD(s) in the future or if it is better to wait and see whether any of the new gTLDs are widely used and accepted by consumers before committing to filing an application.

No matter what strategy is adopted, one thing is certain, once ICANN’s deliberations end, the work of trademark owners in protecting their brands in the expanded top level domain space, has only just begun.

Trevor Schmidt

About Trevor Schmidt

Trevor Schmidt is an associate in the Triangle office practicing in the Intellectual Property group. Prior to joining Moore & Van Allen in 2007, he was an associate with a Raleigh-based, intellectual property litigation law firm, where he participated in intellectual property and products liability litigation. Since joining the firm, Mr. Schmidt focuses his practice in the areas of domestic and international trademark prosecution and protection, trademark opposition and cancellation, copyright, intellectual property licensing and transactional work.

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