The Internet will soon undergo a vast transformation. Entities of all kinds around the world will be able to create customized top-level domains, moving from familiar domain names that end in “.com” to bespoke names that end in well-known monikers such as “.cocacola” or “.mcdonalds” or “[your trademark here].” Entirely new categories such as “.baby” will force marketers to contemplate registrations in multiple domains. This change promises both opportunities and nightmares for brand owners and will force many to reconsider long-held global web strategies.
Cyberspace currently consists of only two types of domain suffixes: gTLDs, or generic top-level domains, and ccTLDs, or country code top-level domains. Generic top-level domains include the popular .com, .net and .org suffixes, and are usually subject-matter oriented. Country code top-level domains, such as .uk, .us and .it (British, American and Italian domains, respectively), focus on the matters of the registrants in a particular country. Usage traditions vary: most American companies use gTLDs (www.nytimes.com, for example) – whereas in the United Kingdom, many equivalent organizations use ccTLDs (e.g., www.telegraph.co.uk). Since the inception of the World Wide Web, this template has been the only one in place. Although top-level domains such as .biz have occasionally been added, the underlying top-level domain structure did not change.
In June 2008, the Internet Corporation for Assigned Names and Numbers (ICANN) approved a wholesale expansion of top-level domains beyond the 21 current gTLDs. ICANN – an agency many non-web professionals have never heard of – is responsible for managing the directory functions of the Internet. But this time, instead of merely adding a handful of predetermined generic top-level domains to the mix, ICANN plans to open the top-level domain field to a variety of applicants, licensing new domains to any number of entities or even individuals if they meet the requirements.
ICANN believes that this expansion will increase competition and innovation, and streamline the organization and dissemination of online information. For example, the American Bar Association could form pages for all the groups within the organization –“intellectualpropertysection.aba” and “antitrustsection.aba.” Businesses could build domains around their franchise names, such as .mcdonalds and .subway. Drug companies might seek to register domains consisting of generic disease names, such as .cancer, and consumer products companies might focus on product types, such as .vacuum or .cereal. Companies in foreign jurisdictions will be able to register domains in different character sets like Chinese, Cyrillic, and Greek.
This scenario has set off alarm bells among existing trademark owners. Will this new process give rise to widespread new forms of cybersquatting? Will existing companies be forced to spend millions of dollars to claim consumer mind-space that they believed to be already well in hand? Supporters argue that the proposed expansion plan has sufficient safeguards against abuse, while others remain skeptical.
As an initial matter, the gTLD registration process will not be easy or cheap. To pass ICANN’s initial examination, gTLD applicants must document that they are established organizations in good standing, and that they have the financial wherewithal to fund domain name registry operations for a period of no less than three years. Applicants must also demonstrate that they have the technical capabilities to operate the proposed gTLD. Finally, all applicants must pay ICANN an evaluation fee of at least $185,000, plus a fee of $25,000 per year after the gTLD is in place. The hope is that these high fees and the extensive examination process will deter cybersquatters from registering new gTLDs that incorporate the marks and names of others.
The current draft guidelines also set forth procedures designed to guard against confusion. ICANN will review all new gTLD applications for “string confusion” – that is, each new gTLD will be compared with other gTLD applications and existing TLDs in an effort to avoid security and network stability problems. Applicants competing for the same TLD will have an opportunity to settle the dispute. Alternatively, for a fee, trademark owners can ask an independent service provider to evaluate the parties’ claims to the gTLD.
This will hardly be comforting for many companies whose marks do not enjoy broad protection. For example, multiple companies may own the trademark JONES for completely different goods and services. A company that uses the trademark JONES in connection with industrial products and another company that uses JONES for soap might both seek to register the gTLD “.jones.” If both companies have legitimate claims to the mark worldwide, and if both companies want the gTLD, it is not yet clear who will prevail. The newest proposal indicates that the gTLD may be awarded to the highest bidder in an auction.
The ICANN guidelines also enable trademark owners to object to the registration of a new gTLD. ICANN will post a notice on its website listing the proposed gTLDs. Trademark owners will then have the opportunity to initiate dispute resolution proceedings. There will be an initial filing fee for the dispute resolution proceeding, currently estimated at between $1,000 and $5,000. It will also be necessary to pay a dispute resolution service provider – most likely the Arbitration and Mediation Center of the World Intellectual Property Organization – to hear the case. The parties involved in the dispute will be required to prepay the service provider’s fees. The provider will refund the prevailing party’s fees, but not the losing party’s fees. While it is difficult to predict the total cost of this process, aggressively contested cases could easily cost tens of thousands of dollars.
There is also no procedure that would allow parties to notify ICANN of their rights in existing marks before third parties attempt to register the corresponding gTLD. At present, the only options for mark holders are to register the gTLDs themselves or to object if someone else applies to register them. Trademark owners will be forced to monitor the gTLD registration process to avoid unpleasant and costly surprises.
ICANN will accept comments on its latest guidelines until April 13, 2009. On March 6, ICANN promised that it would also generate an additional report on trademark issues, to be discussed at ICANN’s meeting in June. But these promises of further study do not necessarily imply wholesale changes to the structure that has been proposed. Instead, these efforts are likely to lead to more specifics – especially as to the implementation of trademark protection for second-level domains (e.g. www.cocacola.sodapop) – rather than a radical re-tooling of the existing proposals.
ICANN’s next draft of the guidelines may yet provide mark owners with more comfort and guidance regarding the process and how it may play out over the next few years. In the meantime, all mark owners are advised to consider the ways in which this new approach may harbor opportunities or pitfalls for their existing brands and their global trademark strategy. Some of the points to consider include:
- Are there subject-matter domains that may be attractive to your organization? Would registering “.antacid” support your marketing efforts?
- Are others planning to register subject-matter domains such as “.hospital” where you might want to establish a presence? The upcoming domain name paradigm may provide consumers with brand new ways to search for information. The new gTLD plan could create opportunities for many organizations, either as registrars for new gTLDs or as mere registrants of domain names associated with new gTLDs.
- Is your brand name used by other companies in connection with unrelated products or services?
- Do you sell your goods in other countries where a different character set is used and where a custom gTLD would further leverage your brand?
- Would you want to acquire a new gTLD to stake out an online presence for a family of marks? Could you use a new gTLD to create new associations or strengthen existing associations between a strong house brand and related secondary marks?
Change can bring new concerns, but it can also present opportunities. ICANN’s proposed transformation of the Internet entails both. While this new regime will provide advantages, trademark owners who ignore what could be the birth of a new way of doing business over the web will do so at their peril.