Update – Public Comment Period Open on New gTLD Draft Applicant Guidebook

Are you concerned about how the upcoming expansion of the world’s domain name system will impact your brand and your budget? Do you have questions about how to apply for your own generic top-level domain name (“gTLD”) or how to object if someone applies to register your trademark as a gTLD? If so, now is the time to ask your questions and voice your concerns. The draft implementation plan for the new gTLD regime is available online for public comment at the Internet Corporation for Assigned Names and Numbers (“ICANN”) website until December 8. If you are a trademark owner, you should act quickly to decide whether to register your own gTLD, to develop strategies for protecting your brands in the new digital frontier, and to submit your comments on the draft implementation plan.

gTLD Overview

In June 2008, ICANN approved a plan to introduce an indefinite number of new gTLDs to the 21 existing gTLDs (.com, .org., .biz, .coop, etc.) and the over 250 existing country code top-level domain names (“ccTLDs”). ICANN claims that it hopes to foster diversity, innovation, competition and new business opportunities in the domain name space and intends to allow qualified applicants to self-select domain strings and operate as their own registries. For the first time ever, applicants will be able to stake out their own private space on the Internet. At present, at least 50 applications are rumored to be in the works, including applications for .deloitte, .sport, .car, .nyc, .paris, and .berlin. Currently, ICANN estimates the root system can handle as many as 5,000 new gTLDs.

On October 23, 2008, ICANN released the Draft Applicant Guidebook (“Draft RFP”), a 97-page draft of the procedures for new gTLD applications. The Draft RFP along with several accompanying explanatory memoranda, provide detailed information on the proposed gTLD application process, addressing applicant and string criteria requirements, dispute resolution procedures, and anticipated application, evaluation and maintenance fees.

New Timeline

The public comment period for the Draft RFP opened on October 24, 2008 and will last for 45 days, closing on December 8, 2008. Application filing dates have not been set (but are currently predicted to begin in June or July 2009), and a number of portions of the application process remain under development. ICANN claims it will release additional information for public comment in the near future. The final RFP is expected to be released in the middle of the first quarter of 2009.

At its 33rd International Meeting in Cairo from November 2-7, 2008, ICANN received mixed reviews when it indicated it would not open the application period until four months after the release of the final RFP. The effort to provide applicants with additional time to review the new gTLD procedures was not welcomed by those applicants who have been ready for years and are eagerly awaiting the opportunity to own and operate their own gTLD. Accordingly, although still subject to change, the first application round is expected to begin late in the second quarter or early in the third quarter of 2009 - just in time to coincide with summer holidays in much of the world. To avoid being caught off guard, we recommend that you establish your strategies and monitoring systems early and stay informed as new gTLD developments, dates, and procedures are announced.

Applications for new gTLDs will be assessed in rounds until ICANN determines the demand for the new “Internet real estate.” ICANN will accept as many applications as are timely submitted within each respective round. Once the first round of applications have been evaluated for completeness and the application period has closed, ICANN will publish a list of the applications on its website. It will also announce the launch date for the next application round, which will likely begin within one year. ICANN will also update the status of each pending application as developments occur in the evaluation process.

Draft RFP Roadmap – How does the Application Process Work?

The Draft RFP is separated into six different modules:

Module 1: Introduction to New gTLDs Application Process, which explains the application fees and the various routes an application may take through the process;

Module 2: Evaluation Procedures, including evaluation criteria, e.g. gTLDs must have at least 3 characters;

Module 3: Dispute Resolution Procedures;

Model 4: String Contention, which describes the procedures for addressing different applications for the same or similar domain names;

Module 5: Transition to Delegation, which covers operational registry requirements and annual maintenance fees; and

Module 6: Terms and Conditions (of the Agreement an applicant must enter with ICANN).

In addition to paying a significant application fee, Applicants are required to meet a set of strict technical, operational and financial criteria to successfully apply for and register a new gTLD. New gTLD applicants should prepare themselves for a lengthy and complicated process. Both applicants and brand owners who do not intend to apply for new gTLDs should familiarize themselves with the following information.

Costs Involved

ICANN wants the cost of developing and implementing the new gTLD policy to be borne entirely by the applicants. Accordingly, it will determine the final application fee for a single gTLD based on the number of anticipated applications. ICANN’s current estimate of a $185,000 application fee is based on its expectation that it will receive approximately 500 gTLD applications in the first round. Before submitting an application, an applicant must pay $100 to become a registered user of ICANN’s online application system. Applicants must also provide financial guarantees indicating that they have the resources to operate a registry for at least three years.

Should an applicant’s technical or operational submissions require additional evaluation, ICANN may request what is called an Extended Review, costing the applicant an estimated additional $50,000. If two applicants apply for the same or a similar gTLD, (as is likely to be the case with .sport) or if an application draws an objection (as is likely to be the case with .XXX), applicants may be forced to make significant payments (some estimated at over $200,000) in addition to the application fee. For the applicants who survive the evaluation process and register their new gTLD, ICANN estimates that they will be required to pay an annual registry renewal fee of either $75,000 or 5% of their registration revenue, whichever is higher. Details regarding ICANN’s refund policy and when the annual registry fee must be paid (upon registration? at the time of public launch?) remain to be determined.

Open vs. Community-Based Applications

ICANN has divided the new gTLDs into two types: open gTLDs, which are available to all applicants; and community-based gTLDs, which are available only to those applicants connected with an identifiable pre-existing group, who are able to demonstrate a clear nexus between the group and the applied-for string. Examples include:

  •  Vanity (.dorsey) – open
  •  Generic (.sport) - open
  •  Geographic (.berlin) – community

Applicants for geographic strings with a country or capital city name must submit documentation with their application confirming they have received the permission of the national government. Applicants for other city names must obtain approval from local authorities.

  •  Internationalized Domain Names (“IDNs”)

IDNs are non-ASCII domain names represented by local language characters. IDNs could contain characters from non-Latin scripts (Arabic, Chinese, Hindi, etc.) or characters with diacritical marks used by many European languages (German, French, Spanish, etc.). IDNs are expected to be applied for in the new gTLD application process. However, ICANN has also published a separate draft RFP addressing IDN ccTLDs. ICANN’s Draft Implementation Plan for IDN ccTLD Fast Track Process was released on October 23, 2008 and is available for public comment on ICANN’s website now.

Dispute Resolution Procedures

Under the Draft RFP, third parties wishing to challenge the registration of a new gTLD have four grounds upon which to base their objection:

1. String confusion objection (based on an existing TLD – Ex: owner of ccTLD .jp objects to application for .japan, or based on another new gTLD application – Ex: applicant for .car objects to application for .auto)

2. Legal Rights objection (based on trademark rights or other legal rights of objector);

3. Morality and public order objection (section under construction but intended to be based upon “international legal principles”); and

4. Community objection (granting application will cause detriment to community on which gTLD is focused).

Competing gTLD Applications

If two or more applications for identical or confusingly-similar gTLDs pass ICANN’s basic evaluation, only one will be granted. ICANN is still in the process of determining the means for deciding which application will be granted in this situation. Community-based applications may enter a process called comparative evaluation, in which each competing application is ranked on a number of factors related to its connection with the community, and the application with the highest rank succeeds.

ICANN suggests that parties plan to resolve other cases of competing applications through negotiated settlements but is also exploring hosting an auction as a means of choosing the winning application.

What You can do to Prepare Now

  •  Analyze your marketing plan and current domain name policies and practices in light of upcoming gTLD changes;
  •  Identify your most valuable intellectual property;
  •  Identify and discuss opportunities with different groups in your company – Is registering a gTLD for your key brand appealing to your marketing group? Would it significantly improve your trademark clearance process in the future to know that all potential product names are available in your own gTLD? Does the value of your existing domain name in the .com domain eliminate the need to register a gTLD? What are others in your industry doing in regard to the new gTLDs? Do you need to budget for the application fees and other costs associated with the new gTLDs?
  •  Participate in the public comment period;
  •  Set up a monitoring system for tracking new gTLD applications and watching channels of trade and competitors; and
  •  If you decide to apply for a new gTLD, identify and evaluate potential business partners – back-end registries, auction providers, etc.