New generic Top Level Domains: what you need to know

New generic Top Level Domains: what you need to know

New generic Top Level Domains: what you need to know

The ubiquitous .com web suffix might soon be joined by thousands of others if a proposal recently approved by one of the internet’s governing bodies is implemented. Michael Wolnizer and Kimberley Evans explain these changes, and potential opportunities and risks they present. This article first appeared in the October 2010 issue of Keeping good companies. Reproduced here with permission.

Summary

  • Advantages and disadvantages to establishing generic Top Level Domains which each organisation will have to consider
  • Important to allow sufficient time to identify major brands to enable relevant applications to be filed and brands to be protected
  • Consider implementing domain name watching service

Background to the changes

The Internet Corporation for Assigned Names and Numbers (ICANN) is an international not-for-profit public benefit corporation responsible for governance of the global Domain Name System (DNS). Decisions on global DNS issues are a matter for ICANN and not national governments.

On 26 June 2008, ICANN approved a proposal to allow organisations to introduce their own generic top level domains (gTLD).1 There are currently 21 gTLDs in operation, the most common of which is .com.2

What does this mean? Essentially, domain name registry operators and large companies with the ability to operate a domain name registry will soon be able to apply to run their own domain space, such as .sport or .movies, .melbourne or .microsoft. Although operating a gTLD will not be possible for most small to medium enterprises, companies and individuals need to be aware of the coming changes.

This article briefly examines:

  • the process for securing a new gTLD and
  • some strategy considerations for brand owners for registering domain names in new gTLDs once they become available, and what watching and enforcement strategies may be appropriate.

Who is going to apply?

A broad range of organisations have announced an intention to apply for a gTLD. These fall in various categories including:

  • brand owners. Currently only three brand owners have announced an intention to bid for a new gTLD, namely Canon (.canon), Deloitte (.deloitte) and UNICEF (.unicef)
  • geographic and linguistic communities (for example, .cym)
  • cities (for example,. .paris, .berlin, .nyc)
  • entrepreneurial organisations seeking generic registrations (for example, .sport, .movies, .food).

Currently over 120 new gTLD bids have been announced. A summary of proposed new gTLDs may be found at www.newtlds.tv/newtlds/ [13 September 2010].

Requirements to register a new gTLD

Applicants for a new gTLD must be an established corporation, organisation or institution in good standing. Individuals and sole proprietors will not be able to apply. To achieve registration of a new gTLD, applicants must demonstrate they have sufficient financial, technical and operational capabilities to operate a domain name registry. Each application for a new gTLD will attract a fee of US$185,000 and may take eight to 19 months to process.

It is also important to remember that registering a gTLD is very different and more onerous than merely owning a domain name registration. A gTLD owner must operate a registry and set up eligibility and dispute policies as well as agreements with ICANN.

ICANN has published a Draft Applicant Guidebook which sets out the rules, requirements and mechanism for the release of new gTLDs. The latest version of the Guidebook (DAG4) was published by ICANN in May 2010 and may be found at www.icann.org/en/topics/new-gtlds/dag-en.htm [13 September 2010]. It is expected that a final version of the Guidebook will be released early next year.

Can you object to a new gTLD?

Yes, it will be possible to object to a new gTLD. Following filing of a gTLD application, the application will be open to a public comment and objection period. An objection may be filed on grounds of:

  • confusion — the gTLD is too similar to an existing TLD or another applied-for TLD
  • legal rights — the gTLD infringes existing legal rights, including trade mark rights
  • morality and public order — the gTLD is contrary to legal norms of morality and public order or
  • community objection — a significant portion of the community to which the gTLD may be targeted objects to its registration.

If an objection is raised against a new gTLD application, the application is subject to an extended evaluation and dispute resolution period before entering the transition to a delegation period.

Trade mark protection

The DAG4 provides a number of avenues to protect intellectual property, even if the brand owner has not applied to register a new gTLD. Such measures include:

  • a ‘clearing house’ database of verified registered intellectual property rights, including trade marks
  • a rapid suspension scheme designed to tackle clear cases of cybersquatting. Successful complaints under this scheme will result in the domain name being locked until its renewal date
  • a dispute resolution procedure designed to combat registry operators who act in bad faith or with an intent to profit from registering infringing domain names, and owners who use their gTLD for an improper purpose and
  • a requirement that operators of new gTLDs provide rights protection measures for brand owners, including a priority registration phase (or sunrise phase) once each new gTLD is open for domain name registration.

However, each of these protection measures requires that the brand owner be aware of what is happening in the new gTLD registration process and be ready to act quickly once they become aware of an infringement or an abusive or confusing registration.

Time frame

Although ICANN has not yet released a final timetable, commentators are predicting that applications will open in late 2011 or early 2012. ICANN is expecting to receive approximately 500 applications for new gTLDs, and is predicting a 90 per cent success rate for applications. To apply or not to apply?

For those companies interested in registering a new gTLD, there are a number of factors to take into account. Some of these considerations are set out below.

Factors in favour of applying

  • Security and stability — Third party registries are vulnerable to attacks from many sources and will rarely turn away a court order or enforcement inquiry from a national agency. If brand owners establish their own domain name registry, the brand owner can implement and control any security measures as desired.
  • Marketing — A brand owner can use their own gTLD as a trusted means of communication with consumers. The brand domain extension will act as a sign of validity or authenticity among the copious scammers and phishers in the marketplace today.
  • Risk of not applying — If a brand owner’s brand domain extension is secured by a third party, there are limited means of recovering the gTLD. It is not a simple process to buy a gTLD registry.

Possible negative factors

  • Consumers’ reactions — No independent research has been undertaken into what consumers think about new gTLDs.
  • Cost — One new gTLD may not be sufficient for brand owners with multiple brands or the brand is marketed in local scripts. At a basic cost of US$185,000 per gTLD plus the cost of running a registry, it is expensive to register one gTLD, let alone numerous gTLDs.
  • Enforceability — In most jurisdictions today, everything on the right hand side of the dot in a domain name is considered generic. What effect does putting a brand name on the right side of the dot do to the enforceability of your brand?
  • Last-minute applications won’t work — These applications are not domain names or trade marks and considerable time and investment is required to prepare an application, including gaining any required permissions.

What to do now?

If your company is considering registering a new gTLD, you need to identify your company’s major brand or brands so that the application(s) can be filed. Although a final date has not been set, start working on the application as soon as possible so that you are ready when deadlines are announced.

Strategy for new domain name registrations once new gTLDs are launched

The release of an unrestricted number of gTLDs is unprecedented. The strategies which trade mark owners have adopted in previous new gTLD releases are unlikely to be appropriate for the new proposed release. In this regard, when seven new gTLDs were released in 2001 (including .biz, .info, .name and .pro), most large trade mark owners secured defensive registrations for their house mark and other major brands in each new gTLD. Many of these registrations are now dormant or have been allowed to lapse. A similar experience was encountered in 2003 with the release of the .asia, .mobi and .tel domains.

ICANN estimates that there may be up to 500 applications for new gTLDs. Assuming a trade mark owner registers only their house mark in each new gTLD, the cost to secure one registration in each new domain is $150,000 (assuming a conservative base cost of $300 per registration). Most companies would have multiple brands that they wish to protect and some will also protect major brands with hyphenation or common misspellings or phonetic variations. Accordingly, a blanket approach to defensive registrations is unlikely to be financially viable for most companies.

In view of the above, in preparation for the launch of new gTLDs, brand owners should identify their major trade marks which they wish to protect in the new domain name spaces and then devise a strategy for deciding in which gTLDs they will seek registration. For example, a brand owner may seek registrations in a generic gTLD which is associated with an industry in which the brand owner traders (for example, MGM may register mgm.movies). A brand owner may also wish to seek registration in geographic gTLDs where it has a commercial presence (for example, bhp.london).

For the time being, trade mark owners should look out for any announcements concerning applications for new gTLDs and closely monitor all deadlines in the new gTLD process.

In the meantime, if the trade mark owners do not have a domain name watching service in place, then this is an opportune time to implement one so that this is running effectively before the new gTLDs are released. It will be important for trade mark owners to be aware of domain name registrations in the new gTLDs which incorporate its major brands so that the trade mark owner can act quickly to protect its rights and also protect consumers from misleading or deceptive practices which are leveraged on the owner’s trade marks.

Conclusion

There is no doubt that the new ICANN reforms present a significant challenge to brand owners. The key will be for brand owners and advisers to be well-informed on the latest developments and to have a well-defined strategy in place before the new system goes live.

Endnotes

  1. See also McLeod C and Cox D, 2008, ‘Business easier for cybersquatters and traders, so take action now’, Keeping good companies, Vol 60 No 8, pp 494–496
  2. These gTLDs should not be confused with country code Top Level Domains (ccTLDs) which are a twoletter country code allocation to each country under an international standard, for example .au