ICANN, the Internet Corporation for Assign­ed Names and Numbers, coordinates the domain names and addresses that help computers worldwide reach each other over the Internet. ICANN has long recognized that the Internet would one day have to evolve beyond the Western world's A–Z alphabet and 0–9 number­ing system, which are known in cyberspace as part of the American Stand­ard Code for Information Inter­change (ASCII) charac­ter set.

The result of this evolution is the internationalized domain name ("IDN"), which can contain letters with diacritics such as é, ΕΎ, ü, and ç, or letters from non-Latin alphabets such as Arabic and Chinese. Presently, in order for these IDNs to function on current web browsers and applications, IDNs must be converted into ASCII form.

In October 2007, ICANN created "wiki pages" with the domain name "example.test," supporting 11 test languages: Arabic, Persian, Chinese, Russian, Hindi, Greek, Korean, Yiddish, Japanese and Tamil. In March 2008, Hebrew and Amharic were added as well. ICANN and the Internet community are looking at these IDNs to evaluate how they operate and how current computer software handles these domain names in different scripts. These tests are evaluating internationalized domain name top level domains ("TLDs"), specifically country code TLDs ("ccTLDs") such as .ca (Canada), .uk (United Kingdom), and .es (Spain). Internationalized domain name ccTLDs are expected to be launched before Fall 2008.

ICANN has already established a list of general standards for IDN registration policies and practices, designed to mini­mize the risk of cybersquatting and consumer confusion, and respect the interests of local languages and character sets. ICANN is currently setting out implementation practices and guidelines for restricting or managing mixed-character-set domain name registrations, to ease the transition to the successful use of IDNs. As well, ICANN, UNESCO, and the Inter­national Tele­­communi­cation Union are working towards an agreement on universal standards regarding multilingual issues and the Internet. These issues go beyond just IDNs, extending to questions of fonts and character size, text encoding, and automatic translation software.

Once IDNs become widespread, they will lead to new challenges for companies with a portfolio of domain names, which often consist of trade-marks spelled out in the A–Z alphabet, and the corresponding websites.

For example, IDNs will make it easier to create "spoofed" websites, designed to look exactly like well-known sites through the use of different characters and fonts in various languages that can resemble each other. For example, the Cyrillic alphabet's "a" can look identical to the Latin alphabet's "a," although the differences in their code are significant to a computer locating a web site or validating a certificate.

It may also become more difficult to protect trade-marks used in domain names, since ICANN's current dispute resolution mechanisms require a complainant to prove that a domain name is identical or confusingly similar to its trade-mark. Meet­ing this requirement will be challeng­ing when disputes involve domain names and trade-marks registered in different languages or scripts. If a trade-mark is registered and protected only in English, and a translation or trans­literation of it is registered as a domain name, the trade-mark owner would have to prove that the transliterated or translated version of the trade-mark is identical or confusingly similar to the original trade-mark.

Furthermore, the phonetic similarity of trade-marks and domain names will add another dimension to trade-mark infringement actions dealing with IDNs. Protection against "cybersquatting" will also be affected by the introduction of IDNs.

Trade-mark owners must now consider the challenges that they will face as a result of the creation of IDNs, particularly for trade-marks that require international protection. In order to combat these challenges, trade-mark owners may need to acquire expertise in the new IDN languages which could affect their trade-marks and the markets in which they operate. This expertise should include not only knowledge of the written language and its similarities to Latin based letters (i.e. to protect against spoofing), but also an understanding of the subtleties of interpretation and how this affects trade-mark protection (i.e. what could be confusingly similar or identical).

Despite any added challenges, the creation of IDNs is a positive development for many organizations in that it will open the doors to markets that previously may have been inaccessible. Trade-mark owners must now begin to incorporate IDNs into their trade-mark strategies and planning in order to evolve with the ever-expanding international on-line community, as the unilingual western-centric Inter­net will soon be ancient history.