On December 14, 2011, The United States House of Representatives’ Energy & Commerce Committee’s Subcommittee on Communications and Technology held a hearing entitled “ICANN’s Top-Level Domain Name Program.” Witnesses included Kurt Pritz, Senior Vice President of ICANN; Fiona Alexander, Associate Administrator, Office of International Affairs, National Telecommunications and Information Administration, US Department of Commerce; Dan Jaffe, Executive Vice President, Government Relations of Association of National Advertisers and representing the Coalition for Responsible Internet Domain Oversight; Joshua S. Bourne, President, The Coalition Against Domain Name Abuse (“CADNA”); Anjali Hansen, Intellectual Property Attorney, Council of Better Business Bureaus (“BBB”); and Mr. Thomas Embrescia, CEO, Employ Media. The hearing examined the merits and implications of the New gTLD Program and ICANN’s continuing efforts to address concerns raised by the Internet community.
Discussion of Cost Concerns
Similar to last week’s Senate hearing, much of the testimony and questioning centered on the costs associated with applying for new gTLDs and registering defensive second level domain names in the new gTLDs. Indeed, Chairman Greg Walden opened the hearing by registering his concern that ICANN’s expansions of gTLDs might force businesses to spend “extraordinary sums to guard against fraud, trademark abuse, or dilution of their brands.” Mr. Jaffe and the BBB testified that many small businesses and non-profit organizations could be shut out of the new program due to the significant resources required to apply for and run a registry for ten years. Much was also made of the application fee of $185,000, the yearly $25,000 fees, whether these were really cost-based fees, and in light of ICANN’s likely reserve funds, whether the fees could be reduced. Moreover, with the possibility of hundreds of new gTLDs entering the root as soon as 2013, both for-profit and non-profit witnesses testified that they would potentially feel compelled to defensively register their marks in the Trademark Clearinghouse, as well as defensively register numerous second-level domains across the new gTLDs to protect their many brands. ICANN, however, remained steadfast that its fees were necessary to implement the program, and again highlighted ICANN’s financial assistance program. All told, witnesses testified that registering and enforcing their brands in the new gTLD space will potentially require additional funds and possibly increased staffing to monitor the new gTLD spaces and manage their expanded domain name portfolio. Accordingly, brand owners should take note and begin immediately planning their own strategy with regard to the new gTLD program for both defensive and offensive purposes.
Discussion of Timing and Rights Protection
Concerns about rampant cybersquatting and online fraud in the current Internet space led to a discussion about the whether the new gTLD program has adequate rights protection mechanisms in place to support the imminent January 12, 2012 launch date, or whether the Program should be delayed. For example, Mr. Jaffe chided ICANN for its failure to incorporate any of a consortium of law enforcement groups’ recent recommendations for reducing cybercrime—an omission that Mr. Jaffe testified will “hinder law enforcement’s ability to enforce existing cyberlaws.” ICANN stressed, however, that law enforcement’s specific concerns were currently being negotiated with registrars and that the introduction of a Trademark Clearinghouse and the implementation of a rapid takedown system that enables registries to quickly disable infringing or malicious websites, which both augment the current enforcement rights of trademark holders, will strongly decrease rather than increase cybersquatting and the need for defensive registrations. Similarly, ICANN touted the criminal background check embedded in the application process as a powerful tool to deter bad-faith gTLD applicants. Finally, ICANN emphasized that security, as well as innovation, will increase as closed .brand gTLDs will provide an Internet space that users can trust. While it is true that increased rights protection mechanisms will be in place for trademark holders, tracking down cybersquatters and fraudsters will likely be an ongoing issue and underscores the desirability for brand owners to take advantage of the Trademark Clearinghouse, including the Trademark Claims Service and Sunrise mechanisms, in order to protect their brands.
Other Program Updates
ICANN announced more details regarding its applicant support program where the fee for financially needy applicants will be decreased from the standard $185,000 application fee to $47,000. For example, it was revealed that besides paying the reduced fee up front and successfully answering all of the questions in the new gTLD application process, successful financial support applicants will have to demonstrate that they: (1) are providing service in the public interest; (2) have financial need; and (3) have minimum financial capabilities. It was also learned that applicants cannot be a governmental entity, and that their strings cannot consist of a trademark or a geographic name as described in the Applicant Guidebook. Accordingly, it is unclear what entities or organizations will meet these criteria.
Next Steps for Congress
With ICANN set to accept applications on January 12, 2012, several members of the Subcommittee stated that they thought the new gTLD program “was not ready for prime time” and asked ICANN to delay the program. ICANN, however, remained steadfast that its multi-stakeholder approach had sufficiently addressed the raised issues and made no indication that delay was a possibility. While there are currently no future hearings scheduled on the issue, Chairman Walden suggested that he had not ruled out the possibility of scheduling further hearings before the January launch date. While a future hearing is possible, there is no indication that a delay in the new gTLD program will take place without other intervention.
Though unlikely to affect the planned January 12, 2012 launch of the new gTLD application window, this hearing is a firm indication that brand owners, trademark holders, and other stakeholders are becoming increasingly aware of the fact that the Internet landscape is about to change. Indeed, the hearing has provided ICANN with a renewed call to consider the timing of its launch, while ensuring that the costs and security concerns of all Internet stakeholders are sufficiently considered. In addition, the House hearing should also serve to remind trademark owners that they should be taking preliminary steps to protect their rights in the new gTLD space by developing a strategy and budget for defensive domain registrations, planning to participate in the Trademark Clearinghouse, and taking advantage of the other new rights protection mechanisms. Accordingly, all interested trademark and Internet stakeholders should pay close attention to the unfolding of the new gTLD program over the coming months.