The Internet Corporation for Assigned Names and Numbers (ICANN) announced earlier in 2011 a change to the domain name system that will allow the introduction of thousands of new generic Top-Level Domains (gTLDs) (see "ICANN Approves gTLD Expansion; Applications Accepted From Early 2012" [25 WIPR 31, 8/1/11]).  Among these changes is also included a facility for non-English international domain names, known as "IDNs".  So, as well as .com and .net in future there may be .music, .paris, and .hitachi™ amongst many others.

The first round of applications opens in January 2012 (closing April 12, 2012) and a number of proposed applications for gTLDs have already been made public.  Those interested in the possibility of securing a gTLD therefore have relatively little time to decide whether to apply and to prepare themselves for the process involved.

Application Process

The application process is complex and includes a "substance" test.  ICANN requires a number of technical and financial assurances to be given by the applicant, one of which includes showing that they will be technically able to run and administer the gTLD as a registry operator of the site.  This will require the applicant to enter into a registry agreement with ICANN whereby the applicant also commits to providing technical support services in accordance with ICANN policy and regulation.  This ability needs to be shown at the application stage, but the reality is that many applicants will outsource this function to third party, ICANN-approved registry operators.  The key here will be in the drafting of the service contract in terms of ensuring that the commitments required by ICANN are properly inherited by the service provider under the terms of the service agreement.

Once applications are received, ICANN will consider them and reject applicants who have not met the "substance" criteria they require to operate the gTLD.  There is also a publication period after the application is submitted, which is likely to be several months, where the applications are made public so that objections can potentially be filed by parties who may claim registration of the gTLD would infringe on their legal rights.  An uncontested applicant who meets the criteria will in due course be granted their gTLD, after which it will become active on the internet.

Bidding Among Competing Applicants

Where two or more applicants have applied for the same or similar gTLDs and each meets the ICANN "substance" test, then a bid process will be initiated by ICANN for the gTLD in question.  It is not yet clear exactly how that auction process will be run, but it is likely that applicants will have some visibility at this stage on competing bids and a negotiation process may well ensue between applicants, whereby one or more may withdraw from the process or a deal is struck.  ICANN will review competing bids and announce the successful applicant, granting them the gTLD in question.  It is likely that the "substance" criteria will need to be met in the initial application process so that in the event of a bid, the decision is an objective one based purely on price. 

High Application Fee

The application fee is currently set at US$185,000, a level which takes into consideration the technical specification ICANN require from the applicant to run and operate the gTLD and the potential for the applicant to commercially exploit the gTLD in future by the addition of any prefix of choice to the gTLD applied for, effectively widening its scope within the space.

The initial application fee coupled with the seemingly complex application process has prompted some to question whether an application for a new gTLD is worth the potential cost and effort required to secure it.  For many, and particularly for international entities, the simple answer is yes.  This is principally because ownership of the gTLD offers in practical terms the inherent opportunity, through use, to globally protect certain intellectual property rights within a regulated domain space indefinitely (or so long as the owner wishes).  This is particularly the case where the gTLD itself includes a trademark and/or a business or product name.

The key to this is the fact that the gTLD operates on a global platform.  The end of the domain name will always be the same, irrespective of country or jurisdiction.  It is not therefore necessary to make "protective" country specific registrations.  The new gTLD owner can, if it so wishes add a prefix to its gTLD for specific countries or for specific purposes enabling it to register for example ".brand" but have multiple sites such as "uk.brand" or "usa.brand" all under the same gTLD.  This arguably places the owner of the gTLD back in control of its rights through its official domain space.

The level of the application fee may act as a deterrent against the opportunistic cybersquatting that emerged with the previous issue of top level domains (such as .com or .org etc).  At that time application fees were modest and the internet space was still a developing concept.  It was relatively straightforward and inexpensive for cybersquatters to simply monitor for example a ".com" registration and simultaneously register a host of country specific names (such as .co.uk or .fr etc) for that registration.  The net result was a disconnect between the ownership of certain of the top level domains and their associated trademarks and the owners of some country specific domains.  One or more countries or geographic regions important for trading purposes could in this manner fall outside of an intended global portfolio of intellectual property rights.

Strategic Importance

The internet has developed since then and domain names are recognised as valuable intellectual property on their own merits.  The new gTLDs can arguably be seen as more important in this context as the era of global internet trade and communication has become very much the norm.  The potential of securing indefinitely an official gTLD worldwide is commercially important and will give the gTLD owner the opportunity of enforcing its trademark and brand within that space.

Historically, disputes arising in relation to the registration and use of domain names have been based on trademark infringement or passing off actions.  The inherent  problem with trademarks is that they are territorial both in terms of geographic registration and in terms of class as regards the trade use, meaning that a legitimate business in a different field could validly maintain and retain a domain name similar to one a brand owner seeks to roll out internationally (provided the other party gets there first).  The new gTLDs may help international entities consolidate their internet presence under one roof, but again early registration is key to securing the gTLD of choice.

The opportunities for applicants include:

  • The ability to protect rights globally with one gTLD registration (which can potentially include a trademark or business name);
  • The potential to protect against internet fraud, passing off and/or cybersquatting by owning a global gTLD designated as the official site for users, consumers and customers worldwide; and
  • The ability to commercially market the gTLD as intellectual property with a global reach and which includes using any prefix of choice before the registered gTLD or even licensing such "sub-domains" to other users.

Time will tell to what extent the new gTLD space develops.  However it seems clear already that applications are being made by parties who have an international outlook and who see benefits of securing the gTLD in that context.  Those benefits are largely commercial in terms of intellectual property protection (i.e. trademarks, business/product names and the domain name itself) but also in terms of reputation and consumer confidence.  They also operate on a practical level to consolidate domain space globally under one gTLD, which can be exploited in different ways for the benefit of the owner.

It will be interesting to see how uptake and use of the new gTLDs impact other aspects of intellectual property law and in particular international trademark protections.  The question will be whether these would need to be modernised to deal with the commercial and practical reality of global trade and communication via the internet domain space which is not so restricted by class or geography.

This article was first published in  the 11 November 2011 edition of World Intellectual Property Report.