1. Background

ICANN recently began accepting applications for new generic top-level domains (“gTLDs”). Top-level domains are the letters that come after the “dot” in a domain name (e.g. “.com”). This means that almost any word can serve as a generic top-level domain — including brands such as “.nike” or generic terms like “.basketball”. To help determine whether it makes sense for your company to apply, we have provided a summary of the advantages and disadvantages from our newest partner, Paul McGrady, author of McGrady on Domain Names and McGrady on Social Media (published by LexisNexis).

Time is of the essence — the application process takes many weeks and initial filings must be made by March 29, 2012.

  1. Advantages of Registration
  • Registering a gTLD affords you additional counterfeit protection. Consumers can buy from your re-sellers with confidence that the websites have genuine product and safe vendors.
  • Registering a generic term gTLD could afford you a competitive edge. For example, a shoe company that registers .shoes opens up a new online markespace for their products that their competitors may not be able to take advantage of.
  • Even if you don’t have current plans to use one, registering a gTLD will allow you to preserve the right to be creative with your own brand in the future. Marketing plans evolve and change and if you have your .brand registered this will be one more option for your marketing department to use in the event that consumers embrace the new gTLDs.
  • Registering a gTLD will keep third parties from owning it. This may be particularly important for a major brand because there may be other businesses operating under the same brand name that could have a legitimate claim to ownership of the gTLD. If an entity with a legitimate claim to use the brand as a gTLd applies, your company will not be able to successfully challenge the application using its trademark rights.
  • Registering a gTLD now will reduce the risk of losing out later. Inaction now could result in permanent string preclusion (meaning your brand will never get to use .yourbrand) and dilution of the brand. ICANN will wait two weeks after the application submission period closes to post a list of the applied-for gTLDs. In addition, while ICANN has suggested that there will be future rounds during which businesses can apply, there is no current time table for such future rounds.  
  1. Disadvantages of Registration
  • High costs. The five–year costs associated with applying for a gTLD and running a registry could easily exceed $500,000 per string. ICANN’s application fee alone is $185,000. There is a risk that the costs of the registry application, delegation, and launch will outweigh the business benefits of owning a registry.
  • Administrative burdens and uncertainty. This includes the need to disclose significant information about the company to ICANN.
  • Legal risks. This includes potential claims from third parties related to the operation of the gTLD (including trademark infringement claims, data security claims, etc).