By the time Paul Twomey, President of ICANN, walked out of his office on January 7, 2009, he had received over 300 comments on his organization’s new generic top level domain name (gTLD) plan, many from angry representatives of the world’s top companies and some from the U.S. government, including the Departments of Commerce and Justice.

Since then, ICANN has released a report from economics Professor Dennis Carlton of the University of Chicago claiming, predictably, that the planned unprecedented expansion of the domain name system will help consumers “realize significant benefits from new gTLDs due to increased competition for new registrants and increased innovation that would likely be fostered by entry.”

Game on.

Even the Vatican has weighed in. In a February 20, 2009 letter to Dr. Twomey, the Holy See expressed its concerns about the bitter disputes that might arise and “the perils connected with the assignment of new gTLDs with reference to religious traditions (.catholic, .anglican, .orthodox, .hindu, .islam, .muslim, .buddhist, etc.),” especially if ICANN plans ultimately to decide which particular group is THE representative of a particular religious tradition.

The brand owner comments focused mainly on concerns that the costs of obtaining defensive domain name registrations and enforcing trademarks in hundreds of new gTLDs would outweigh the benefits to consumers. The high application fees, the dispute resolution process, the process for deciding between competing applicants, and proposals for including trademarks on the Reserved Names List were also commonly raised. Some of the most thorough comments were from: Microsoft, AT&T, International Trademark Association, and MarkMonitor (on behalf of 70 large companies).

The comments from the U.S. Departments of Justice and Commerce focused on consumer welfare and competition, going so far as to say “ICANN’s approach to TLD management demonstrates that it has adopted an ineffective approach with respect to its obligation to promote competition at the registry level.” See http://www.icann.org/correspondence/baker-to-dengate-thrush-18dec08-en.pdf.

Since ICANN received the first round of comments, it has released a second draft of the plan and opened a second comment period that runs through April 13, 2009. At its meeting in Mexico during the first week of March, ICANN agreed to form an Implementation Recommendation Team to address trademark issues. The team will consist of people who submitted comments on the first draft plan and will submit its final report by May 24, 2009.

Several commenters complained that ICANN had not made an economic case for how the new plan would increase consumer welfare. Professor Carlton’s report, commissioned by ICANN, was intended to make such a case. While admitting that the gTLDs introduced in the last ten years have achieved only limited success and have not taken significant market power from .com, Professor Carlton’s report claims that consumers will benefit from innovation in new gTLDs. As an example, Professor Carlton states that a new gTLD such as .cars may facilitate the ability of consumers to obtain information about cars. Professor Carlton seemingly ignores the fact that people find information in ways other than typing a domain name into a browser, most notably through using search engines (i.e., typing “cars” as a Google search term, rather than guessing at and typing in domain names such as chevy.cars, prices.cars, etc.). He does not address the idea that the biggest source of competition for .com domain names might be search engines, rather than the introduction of hundreds or thousands of new gTLDs.

To his credit, Professor Carlton suggests a “loser pays” dispute resolution system, which would likely help reduce the burden on brand owners when compared to the existing Uniform Dispute Resolution Policy, under which official costs are paid for by the party who objects to a domain name and each party bears its own legal fees.

ICANN has pushed back the timeline for the new domain name plan, saying now that applications are likely to be delayed until December 2009 or into 2010. It is hard to say where this is headed, but ICANN has not suggested that it is considering scrapping the basic plan of introducing an indefinite number of new gTLDs. Thus, to minimize the negative impact of this plan, brand owners should remain vigilant and continue to make their voices heard as the planning process continues.

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