Update - New gTLDs

What's that distant sound you hear? It's the sound of the swarm coming your way. In less than a year, the Internet Corporation for Assigned Names and Numbers (“ICANN”) plans to begin accepting applications for a "swarm" of new top level domain names and granting them by the hundreds. This move will likely usher in a new world on the web. Web 3.0 is fast approaching and brand owners should beware – it is not designed with you in mind.

What's Happening

In late June, at its 32nd International Public Meeting, ICANN accepted recommendations on a plan to expand the world’s Domain Name System by introducing an indefinite number of new generic top-level domains (“gTLDs”). Currently 21 TLDs exist including .com, .net, .org, .info, .biz, .coop, and others. ICANN claims that it hopes to foster diversity, innovation, competition and new business opportunities in the domain name space by allowing applicants to self-select domain strings and operate as their own registries. ICANN’s plan will permit new gTLD owners to open their domain space for sale to third parties through registrars, or to secure a domain for their exclusive use.

Timeline & Procedure

Although a number of details are still undecided, ICANN intends to implement an open application approach by inviting any public or private established entity from anywhere in the world to submit an application during a limited application period (currently projected to be in second quarter 2009). Initially, applications for new gTLDs will be assessed in rounds until ICANN is able to determine the demand for the new “Internet real estate.” A request for proposal (“RFP”) will be published prior to the application period detailing the applicant and string criteria requirements. The first round of applications will then be evaluated and also posted online. An “objection-based” mechanism will be available to provide trademark owners with an opportunity to protect their marks from applicants attempting to become registries for identical or confusingly-similar gTLDs.

As for objecting to the registration of domain names once the new gTLDs have been approved, the standard rights protection mechanisms and dispute resolution procedures may not apply. Each registry will have control over whether and to what extent it will offer safeguards to intellectual property owners.

The new gTLD implementation plan is in development and must be approved by the ICANN Board before the new gTLD program is launched. A draft of the application is expected to be available for public comment on ICANN’s website in early November, and the first application round is likely to begin in the second quarter of 2009. Trademark owners will likely want to stay informed as new developments, dates, and procedures are announced. Meeting with intellectual property counsel early and monitoring new gTLD applications for infringement will be imperative for owners who wish to protect existing brands.

Some Opportunities

So what’s in it for you? ICANN’s new gTLD program provides brand owners with an opportunity to create a global presence and control their “own island” on the Internet. For instance, in theory, Dorsey & Whitney LLP could operate a registry for the gTLD .dorsey or .dw and own all domain names in the registry. Applicants could restrict registration in accordance with their own business models or enhance their brand by creating online communities for their customers, partners, subsidiaries, licensees, etc. Trademark owners who operate their own gTLDs will also be able to reduce their exposure to infringement by cybersquatters in their gTLD.

Big Challenges And Strategy Adjustments Ahead

So what’s it gonna cost you? Although information on the cost associated with applying for a new gTLD is currently unavailable, the cost of developing and implementing the new gTLD policy is intended to be borne entirely by the applicants. Estimates of the application fee for a single gTLD range from $100,000 to $1,000,000. Domainers have already begun filing trademark applications to protect likely gTLDs and potentially to help in the application process.

Applications for new gTLDs will be processed on a first-come, first-served basis, meaning if you do not monitor third-party applications or apply to register your gTLD in one of the early rounds, you may lose the chance in later rounds if an identical or confusingly-similar gTLD has already been taken.

While it will be possible for individuals to set up a registry using someone else’s brand, given the exorbitant application costs anticipated, this risk seems much less significant than the enormous enforcement cost of policing domain names or making defensive registrations in 50-1000 new gTLDs.

Trademark owners should start making plans to protect their brands in this new domain name regime. Questions to consider include: Should we change our strategy in regard to defensive registrations? Should we plan to use rights protection mechanisms such as sunrise period challenges, if they are available? Should we change our enforcement strategy?

A New Way Of Thinking About The Web

The planned proliferation of gTLDs will impact Internet users, businesses, brand owners, and IP practitioners alike. Predictions of the long-term impact are difficult, but it seems clear that the “swarm” of new domain names will ultimately create such chaos that, Internet users increasingly will rely on Internet search engines to find the information or products they are seeking. With an increased reliance on search engines, keyword advertising strategies and search engine rankings will be of paramount importance.

Those interested in applying for and running new gTLDs who do not have the technical capacity to operate a registry should begin identifying potential back-end registry service providers as soon as possible. Many of these companies are or will be entering into agreements with applicants for new gTLDs that will likely preclude them from working with other applicants. Given the limited number of registry operators, and their limited capacity, it is important to request assistance or begin negotiations early.