In our March 2013 IP Focus on Protecting Trade-marks in the New gTLDs, we reported that the Internet Corporation for Assigned Names and Numbers (ICANN) had created a centralized trade-mark rights repository to assist trade-mark owners in protecting their marks in the many new gTLDs that will be available beginning later this year. This centralized repository is called the “Trademark Clearinghouse,” and it opened for business ona March 26, 2013. Brand owners must now consider which marks, if any, they will register with the Clearinghouse.

The Clearinghouse offers two separate services to trade-mark owners. The first gives a trade-mark owner the ability to register domain names in a new gTLD before the rest of the public (Sunrise Service). The second service provides domain name applicants with notice of a trade-mark owner’s rights, and it advises the trade-mark owner when someone registers a domain name consisting of their mark (Trademark Claims Service). Each service has benefits and shortfalls that must be considered in devising an effective Clearinghouse registration strategy.

Sunrise Service

As noted, the Sunrise Service gives trade-mark owners advance notice of the launch of new gTLDs and the opportunity to register domain names consisting of identical matches to their registered marks. One of the main benefits of this service is that it shifts the work of monitoring the release of new gTLDs from the trade-mark owner to the new gTLD provider, who is required to give notice of their Sunrise period to all trade-mark owners registered with the Clearinghouse. Another benefit is that registering with the Clearinghouse gives a trade-mark owner the opportunity to register domain names consisting of identical matches to their marks in that new gTLD at least 30-days before the gTLD is open to the general public. In this sense, the Sunrise Service could prevent the worst cases of cyber-squatting (i.e., where a party registers a domain name consisting of a mark and tries to sell it to the mark owner at an inflated cost, or they register the domain name consisting of a mark and try to use that domain name to divert traffic from the mark owner’s website).

There are a number of factors that will impact the effectiveness of the Sunrise Service on brand protection online. One factor is that the Sunrise Service does not guarantee that a trade-mark owner can register identical match domain names in all new gTLDs. Many new gTLDs will be for private use or for specific communities of users. A trade-mark owner, while receiving notice of the launch of each new gTLD will still have to qualify for registration under the gTLD’s rules. Further, in the case of multiple mark owners who are eligible to register a single domain name during a Sunrise period, the rules of the gTLD will determine which owner can secure the domain name registration. In previous cases, this has operated by auction, which can be costly to the participants.

We believe that the biggest impact on the ability of a mark owner to use the Sunrise Service to its fullest potential will be the owner’s internal budget. Each domain name registration, regardless of whether registered during a Sunrise period, will cost money and the amount will be determined by each new gTLD operator. It will likely not be financially possible for a mark owner to register identical match domain names in every new publicly available gTLD, and as such, a selective evaluation will need to be conducted based on factors such as the nature of the gTLD, the markets served and the likelihood that the gTLD will be attractive to cyber-squatters.

Overall, the Sunrise Services can really only be considered an opportunity for mark owners to take further steps. To effectively use the service, additional evaluation and funds will need to be expended.

Trademark Claims Service

The Trademark Claims Service provides domain name applicants with notice of an identical trade-mark owner’s rights, and if they still go ahead with the domain name registration, it provides the trade-mark owner with notice of the domain name registration. It is important to note that the Trademark Claims Service does not prevent someone from registering a domain name. If a trade-mark owner objects to the domain name registration, they must pursue alternative means of having the registration transferred or inactivated for the term of the registration (e.g., UDRP or URS proceedings).

Another potentially important drawback to the Trademark Claims Service is that a gTLD operator is only required to offer this service for the first 90 days after the gTLD launch. While many gTLD applicants have stated that they will offer the Trademark Claims Service for a longer or an indefinite period, the fact is, the service will not protect trade-mark owners in all gTLDs. As such, trade-mark owners would be wise to supplement this service with ongoing domain name watch services.Given this potential gap in protection, the Trademark Claims Service should not be a brand owner’s sole or primary reason to register marks with the Clearinghouse, as equivalent protection can likely be obtained in a more economical fashion. Rather, the primary reason to register with the Clearinghouse should be the owner’s intention to register domain names during the Sunrise periods of new gTLDs, and for no added cost, the owner can also take advantage of the limited protection offered by the Trademark Claims Service. The determination of which marks to register with the Clearinghouse must take these purposes into consideration, and registration with the Clearinghouse should follow a clear strategy.