In brief

  • We can soon expect to see a fundamental shift in the way domain names are registered and enforced around the world. 
  • On 20 June 2011, ICANN, the international body responsible for allocating domain names, formally launched the generic top-level domain name (gTLD) program. The gTLD program will exponentially increase the pool of available top-level domain names.
  • With the program’s launch no longer a theoretical possibility, more controversy is attending ICANN than ever before. Brand owners are concerned that the perceived advantages of the program will be outweighed by increased risks of cyber-squatting and trade mark dilution, as well as the financial burdens associated with monitoring the web under the new gTLD system. ICANN is also attracting criticism for ignoring stakeholder interests.

Basic concepts

Every computer in the world with access to the Internet has a unique identifying number or ‘IP address’, which looks something like this:

299.493.593.134

Your computer asks you for an IP address whenever you direct it to visit a website or send an email.

Because humans aren’t adept at remembering numerical strings, domain names were developed. So instead of typing ‘199.239.137.217’ into your web browser’s location bar, you can simply type ‘www.newyorktimes.com.’

Every domain name ends in either a generic top level domain (gTLD) like .com, .org and .net, or a country-code TLD such as .au, .uk and .cn. The number of gTLDs has always remained relatively low (it’s now sitting at 22). This is set to change.

What is the new gTLD program?

ICANN’s new gTLD program will see the release of an unlimited number of gTLDs. The stated objective of the program is to promote competition in the domain name market. ICANN plans to stagger the rollout of the program, with a limit of 1000 new gTLDs available for allocation each year.

Under the new scheme, an applicant may apply to register the gTLD ‘.music’. If successful, that applicant (now known as a ‘Registry’) can then license out domain names such as www.sony.music, www.mushroomrecords.music, or even www.guitarlessonsaustralia.music.

Many have questioned the value of the new gTLD program to those whom it was designed to assist—in particular, to brand owners. The costs associated with registering a gTLD are so high that many brand owners are likely to be priced out of the scheme altogether.

How does it work?

Application

The applicant submits an application with ICANN to register a particular gTLD. Applicants are subject to a rigorous evaluation process lasting a minimum of eight months, beginning with background screening. Background screening covers general business diligence and criminal history as well as any history of cyber-squatting behaviour. Then follows further evaluation stages, including a review of the proposed gTLD (is it confusingly similar to another gTLD? Is it potentially unsecure? Is it offensive?) as well as a review of the Applicant (does it have the operational, technical and financial capacity to run a registry business?)

The proposed gTLD is then scrutinised by an evaluation panel to ensure that it does not pose any security or stability concerns, and that it is not confusingly similar to an existing (or applied-for) TLD.

Opposition

Third parties may oppose an application on numerous grounds, including that the gTLD infringes the opponent’s trade mark rights. The fees associated with the oppositions process have not yet been determined.

Registration

If ICANN accepts the application, the Registry will be responsible for licensing gTLD domain names to individuals, government organisations, brand owners, and the like.

ICANN fees

  • All applicants must pay an initial evaluation fee of US$185,000. This fee is partly refundable if the application is rejected.
  • If an application requires extended review, an additional fee of US$50,000 is payable. 
  • The cost of filing an opposition to an application will range from US$1,000 to $5,000. 
  • The cost of conducting a dispute resolution hearing will range from US$32,000 to $122,000 or more. 
  • The ongoing registration costs are US$6,250 per quarter.

Accordingly, the official ICANN fees associated with securing a gTLD could run into several hundreds of thousands of dollars (particularly if a dispute arises between the applicant and a third party). Once legal fees are added, the actual costs may even run into the millions.

Advantages and disadvantages

Proponents of the gTLD program point out the following advantages:

  1. Control. If you purchase a gTLD, you acquire a monopoly over that domain. This can be useful for brand owners wishing to stamp out online advertising and sale of counterfeit goods. They can direct their consumers only to purchase their goods through a particular gTLD such as ‘.realsoftsox.’
  2. Brand strengthening. A gTLD may help brand owners strengthen the association between their brand and their location on the internet.

Brand owners have raised the following concerns:

  1. Cyber-squatting. The problem of cyber-squatting is endemic, and will be infinitely increased by the release of a potentially unlimited number of gTLDs. Whether this is a realistic possibility in light of the cost of registering a gTLD remains to be seen.
  2. Consumer confusion. The release of an unlimited number of gTLDs brings with it the risk of an exponential growth in the number of confusing parking pages, websites offering grey or counterfeit goods for sale etc. This places an immense burden on brand owners, who will now have to be more vigilant than ever in monitoring the use of their trade marks online. Added to that is the danger of trade marks becoming diluted or non-distinctive online, a position which may not reflect marketplace reality.
  3. Cost. The costs of applying for and registering a gTLD are so high that they are likely to price most brand owners out of the scheme entirely. Cost is arguably the greatest impediment to generalised uptake of new gTLDs.

How can I protect my trade marks?

Theoretically, brand owners could defensively register gTLDs corresponding with their trade marks (eg. .myer, .chevrolet). However, given the costs of securing and maintaining a gTLD, this is not realistic option for many brand owners.

More practicable options include opposing problematic gTLD applications and lodging disputes under the Uniform Domain Name Dispute Resolution Policy (UDRP). In addition, a Uniform Rapid Suspension process will allow gTLDs which clearly infringe to be immediately suspended.

These mechanisms will be supported by ICANN’s Trademark Clearinghouse, a centralised depository of trade mark information.

What next?

On 20 June 2011, a majority of the ICANN Board of Directors voted in favour of finalising the Applicant Guide Book—a milestone equating to the formal launch of the new gTLD program. The first round of applications for new gTLDs will run from 12 January 2012 to 12 April 2012.