The Internet Corporation for Assigned Names and Numbers (ICANN) recently voted in favour of accepting applications for new top-level domain (TLD) extensions beginning January 12, 2012.  There are currently 22 generic TLD extensions (including .com, .net, and most recently, .xxx), but ICANN’s announcement means that TLDs may eventually number in the hundreds as cities, corporations, industry groups and others apply for custom extensions, such as .toronto or .tech.

The expected explosion of TLDs will have important implications for brand owners, not only in terms of providing businesses with new opportunities for branding online, but also in terms of providing cyber squatters with new opportunities to commandeer the trademarks of others as domain names.  Here are the basics as currently envisioned by ICANN…

WWW . STORE . BRAND — Your brand on the top level

  1. Choice of TLD:  ICANN’s announcement means that businesses will soon be able to create TLDs incorporating their brand names.  However, the new TLDs will not have to be trademarks.  There will be few limits placed on an organization’s choice of extension, the main exception being that no two TLDs can be so similar that they risk confusion.  If two or more applied-for TLDs are deemed confusing by ICANN, the conflict will be resolved by way of auction if necessary. 
  2. Eligibility:  Corporations and organizations will be able to apply for a new TLD (individual and sole proprietorships will not be eligible).  However, applicants will have to demonstrate the technical and financial capability to operate a TLD.  Applying for a TLD will also be a complex and expensive process, meaning that eligibility will be narrowed in practice.
  3. The Cost:  The initial filing fee for a new TLD will be USD $185,000.  Additional fees will arise over the course of the application process, with the total cost for a new extension potentially reaching USD $500,000 or more by some estimates.
  4. The Timeline:  Applications will be accepted from January 12, 2012 to April 12, 2012.  The new TLDs are not expected to go live, however, until the end of 2012.  In the event that a business misses this initial application period, ICANN hopes to launch a subsequent round of applications by April 2013. 
  5. Preserving Trademark Rights:  Applications for new extensions (as opposed to domain names applications, discussed below) will be opposable on a number of grounds, including that the applied-for TLD infringes on the objector’s registered or unregistered trademark.  Dispute resolution service providers (to be named) will consider several factors in assessing trademark objections, including whether the proposed TLD is likely to create confusion, and whether the applicant was aware of the opponent’s mark.  If a confusingly similar TLD does launch and its operators engage in abusive conduct, brand owners will also be able to file complaints resulting in penalties up to the termination of the TLD.

WWW . BRAND . STORE — Your brand on the second level

  1. Implications for All Brand Owners:  A major implication of ICANN’s decision to allow custom TLDs is that every time a new TLD is created, unscrupulous parties will have another opportunity to register domain names incorporating the trademarks of others (e.g. brand.entertainment; brand.toronto;
  2. Sunrise Periods:  In order to combat infringement, all new TLD operators will be obliged to conduct sunrise periods, giving brand owners an opportunity to register marks as domain names before a given TLD goes live.  Eligible participants will include registered trademark owners providing proof of use.  If a brand owner wishes to exclude its mark from all new TLDs, it will have to participate in each new sunrise period.  
  3. The Trademark Clearinghouse:  To help brand owners participate in multiple sunrise periods, ICANN plans on establishing a trademarks clearinghouse that will authenticate brand owners’ registrations and act as a repository for their proof of use.  TLD operators will be able to refer to this database when conducting their respective sunrise periods.  Brand owners who file claims with the clearinghouse will also receive notice whenever a domain identical to their mark is registered during the launch of a new TLD.
  4. Trademark Rights Post-Launch:  Following the launch of a new TLD, ICANN is planning to implement an expedited complaint procedure to suspend identical or confusingly similar domain names.  The owners of registered trademarks that have filed evidence of use with the trademarks clearinghouse will be among those able to avail themselves of this procedure.  A complaint mechanism will also be available whereby brand owners will be able to report TLD operators that consistently permit third parties to register infringing second-level domain names.