The Impending Domain Name Explosion: Why Brand Owners Must Pay Attention on "Reveal Day" June 13

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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After years of preparation and a decidedly rocky start to ICANN’s New gTLD Program due to a glitch in the gTLD application system, the applications are in, and ICANN will soon begin evaluating the TLD candidates. First, though, comes the fun part: June 13, 2012 is the new “Reveal Day,” when all of the gTLD applications and applicants will be posted by ICANN for the world to see.

This date is important for several reasons. First, while several TLD applications have already been revealed by the applicants themselves, from the controversial .sucks to the comparatively banal .website, we finally learn more about the first-round gTLD landscape -- how many players are involved, the ratio of .brands to .generics. to .geographics, the number of “open,” “restricted,” and “closed” (single-registrant) registries, and so forth. Second, Reveal Day kicks off a 60-day period in which the public can submit comments regarding any of applications. The same 60-day span serves as the Early Warning period for ICANN’s Governmental Advisory Committee (GAC), in which one or more governments can provide notice to an applicant (officially, from the GAC to the ICANN Board) that its gTLD application raises sensitivities or concerns for those governments. Finally, Reveal Day marks the start of the seven-month objection period in which interested parties can object to any of the new applications on certain enumerated grounds, including prior trademark rights. Note, however, that this timeline is in a state of flux due to the large number (just over 1,900 at last count!) of applications, which ICANN will be reviewing in batches of about 500 (using a somewhat odd batching strategy).

Reveal Day presents an early opportunity for businesses to identify potential benefits and risks associated with the various proposed applications, and all companies should be actively planning to review the gTLD list upon publication to determine whether they should comment on, object to, or register second-level domains in one or more of the various new gTLDs. Given the large number of applications in the pipeline, companies should review the published list methodically and with several key issues in mind.

Risks at the Top Level

Each brand owner should review the application list to determine whether any of the new gTLDs consist of or incorporate its registered or unregistered trademarks. If so, the brand owner should consider submitting comments and/or filing a Legal Rights Objection. To prevail in a Legal Rights Objection, which will resemble a dispute under the Uniform Domain Name Dispute Resolution Policy (UDRP), an objector must demonstrate that adoption of the New gTLD would (i) take unfair advantage of the distinctive character or the reputation of the objector’s registered or unregistered mark, (ii) unjustifiably impair the distinctive character or the reputation of the objector’s mark, or (iii) otherwise create an impermissible likelihood of confusion between the applied-for gTLD and the objector’s mark. Legal Rights Objections will be administered by the World Intellectual Property Organization (WIPO). Fees total about $10,000 each for the objector and the responding applicant, with the bulk of that fee refunded to the prevailing party. Additional information is available at WIPO’s Legal Rights Objection website.

Brand owners should also review the application list with an eye toward what their competitors might be up to. For instance, have competitors applied to register their own .brand TLDs? Has a competitor applied to register a gTLD that could place the brand owner at a unfair competitive advantage, and to which the brand owner might be able to object on other grounds? Generally, the Reveal Day application will provide a glimpse into a digital landscape that could have enormous implications for every brand owner’s domain name, marketing, and business strategies going forward.

Risks (and Opportunities!) at the Second Level

While presumably relatively few companies will find themselves with a top-level trademark dispute on their hands, second-level domains within the new gTLDs -- the names “to the left of the dot,” as in foleyhoag.com -- are a different matter entirely. Unlike the gTLDs themselves, which require assumption of registry responsibility, significant application and operating fees, and a demonstration of business, technical, and operational savvy, domain names at the second level will be sold by the new top-level registries, via registrars like GoDaddy and Network Solutions, at prices much closer to what we’re used to paying for second-level domains within the existing group of top-level domains. As we have discussed previously, this means that we could be on the cusp of a cybersquatting explosion.

Coming to the aid of brand owners are two launch phase rights protection mechanisms (RPMs) -- a sunrise period, and the trademark claims service -- that must be implemented with the launch of each new gTLD. The sunrise period will allow brand owners an early opportunity to register second-level domain names corresponding to their brands (exact matches only!) before they become available for general consumption (or restricted registration, depending on the nature of the specific top-level domain), while the trademark claims service will, for a limited time after gTLD launch, alert brand owners to the second-level registration of their exact-match trademarks by others (as well as provide notice of trademark rights to potential second-level registrants). These two RPMs will be facilitated by the Trademark Clearinghouse, a comprehensive repository where brand owners can record their registered trademark rights -- for a fee, of course. While the details of these RPMs and the Trademark Clearinghouse itself have yet to be finalized, additional information is available at ICANN’s Trademark Clearinghouse information page.

With the availability of sunrise protections, starting on Reveal Day each brand owner should carefully review the published gTLD application list and identify the top-level domains in which it makes sense to register brands at the second level during the relevant sunrise periods, or afterward during the general registration periods. Some relevant questions for companies evaluating potential second-level registrations include:

  • Is the gTLD in question related to our industry or industries, or represent a vertical or field to which we might expand in the future? Does this domain name represent a new business opportunity, or will it otherwise be actively used by the company?
  • Is the gTLD in question likely to be popular?
  • Is the brand we are considering registering at the second level famous or well-known such that registration by a third party is inevitable if we do not register it first? If so, it is likely to cause harm to the company or brand, or be a mere annoyance?
  • Is the brand in question owned by unrelated entities in foreign jurisdictions that would have equal claims to corresponding second-level domain names?
  • Is the company willing to bear the annual renewal cost for this and all other second-level registrations, especially if the registrations are purely "defensive" in nature?
  • Does registration of this second-level domain name otherwise make sense given the company’s overarching domain name acquisition and enforcement strategy?

Some of these questions may not have easy answers, but they can be helpful starting points to determining company- and brand-specific criteria for developing and refining second-level registration strategies within the new gTLDs.

Availability of Post-Launch Remedies

While brand owners will have only one bite at the apple to object to specific new gTLDs on trademark grounds (barring systemic trademark abuse by a new gTLD registry), things are different at the second level. As with most of the existing TLDs like .com, .net, and .org, all new gTLDs will incorporate the UDRP, which allows trademark owners to obtain transfer of domain names that have fallen victim to cybersquatters. Joining the UDRP will be the Uniform Rapid Suspension (URS) procedure, which is intended to be a faster, low-cost alternative to the UDRP to be used in cases of clear cybersquatting. Unfortunately, ICANN has been unable to secure a service provider willing to administer the URS at the target price of about $300, and has instead set aside funds to be used for two “URS summit sessions” where the URS will be “reconfigured” to meet the lower cost. It will likely be many months before we learn of concrete URS implementation details. Finally, brand owners should keep in mind the availability of civil actions to combat cybersquatting. The Anticybersquatting Consumer Protection Act (ACPA) in the U.S., for instance, provides remedies of up to $100,000 per domain name, as well as an in rem provision allowing brand owners to obtain transfer of domain names even from foreign registrants.

Stay Connected

The initial gTLD application window has passed, but this first round of applications will be pending for many months before even a single new gTLD is “delegated” -- entered into the domain system. In the meantime, the myriad forces involved in ICANN policymaking, including domain name registries and registrars, service providers, intellectual property owners, governments, and ICANN itself, will be working to clarify gTLD implementation issues that have yet to be finalized, improve gTLD program aspects that require retooling, and otherwise influence the New gTLD Program going forward. While the majority of the New gTLD Program is not going to change at this point, at least for this initial round of applications, key changes -- e.g., a revised URS -- could affect trademarks owners’ approaches to domain name acquisition and enforcement strategy. Accordingly, it is imperative that all brand owners continue to pay close attention to these developments. We, of course, will continue to monitor new gTLD developments and provide additional information as warranted. For now, keep an eye on ICANN's website come June 13.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Trademark, Copyright & Unfair Competition | Attorney Advertising

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