The Internet Corporation for Assigned Names and Numbers (ICANN) is facing controversy over its plan to create new, generic top-level domain names.

In an attempt to increase Internet address endings, ICANN approved a plan that would allow entities to purchase domains like “.starbucks” or “.ford.” The entity could then expand the domain with pages like “frappucino.starbucks” or “mustang.ford.” An application fee costs $5,000, which would be credited toward the evaluation fee of $185,000.

While proponents claim that more domains are needed, critics argue that the new domains could be costly for trademark holders who will be forced to spend money to purchase the new names to protect their intellectual property rights. The Association of National Advertisers (ANA), with the support of the American Association of Advertising Agencies, has strongly objected to the plan. The organization recently sent a letter to ICANN’s president Rod Beckstrom, stating that the new domains would have “potentially disastrous consequences” for marketers if implemented as proposed. As any third party can apply for the domain names, “legal rights of brand owners” and “safety of consumers” will be jeopardized.

The ANA explained, “By introducing confusion into the marketplace and increasing the likelihood of cybersquatting and other malicious conduct, the program diminishes the power of trademarks to serve as strong, accurate and reliable symbols of source and quality in the marketplace. Brand confusion, dilution, and other abuse also poses risks of cyber predator harms, consumer privacy violations, identity theft, and cyber security breaches.” The ANA called the new program a “Hobson’s choice” for brands: “expend precious and limited resources to monitor and police their brands over the second level of many new channels or risk brand dilution.”

The Interactive Advertising Bureau (IAB) also raised questions in a recent press release, warning that new domain names would “cause incalculable financial damage to brand owners.” The IAB called on ICANN to withdraw its plan, which it said could be “disastrous” and “would come at an extremely high cost to publishers and advertisers, and would also offer ‘cyber squatters’ an opportunity to harm a brand’s integrity and/or profit greatly from their bad-faith domain registrations.”

To read the ANA’s letter to the president of ICANN, click here.

To read the IAB’s press release, click here.

Why it matters: The ANA emphasized the underlying economics of purchasing – or defending – a brand “in the middle of the worst economic crisis since the Great Depression.” Brand owners are "essentially being forced to buy their own brands from ICANN at an initial price of $185,000. For companies with robust trademark portfolios considering multiple [domain names], the application costs can be exorbitant because a separate application must be filed (and paid for) for each separate name. At the end of this name-selling application process, if there are two applicants seeking [domain names] with confusingly similar strings, ICANN determines the winner by auction, at costs to brand owners that could be staggering,” the ANA cautioned.