Navigating an Expanded Domain Name Landscape

Twenty-five years since the birth of the premier online commercial space – .com – the Internet is set to undergo a watershed expansion. Dina Leytes1, an attorney at U.S. law firm Griesing Law, LLC considers what this means for brand owners and the steps they will need to take to defend themselves against cybersquatting in the expanded domain name space.

In June 2011, the Board of the Internet Corporation for Assigned Names and Numbers (ICANN), the self-regulated nonprofit California–based body which oversees the architecture of the domain name system, voted to open the floodgates to private entities seeking their own .anything online space. Today there are about 20 so-called generic top level domains (gTLDs), including .org, .net and .edu. This is in addition to some 250 country-code top level domains (e.g., .ch (Switzerland), .mx (Mexico)).

In January 2012 the floodgates will open on the
.anything space. (Photo: JESS3)

Many brand owners have enough trouble protecting their trademarks in today’s domain name system and are extremely apprehensive about the increased risks of cybersquatting this expansion will present, particularly in a difficult economic climate. Frederick Felman, Chief Marketing Officer for MarkMonitor, cautions that the potential for consumer confusion with the introduction of new gTLDs is likely to be very high, and recommends that companies waste no time in promulgating a strategy to strengthen and defend their online brand identity in the face of new gTLDs.

A number of brand owners, such as Canon, have publicly embraced the opportunity to create a customized online brand presence. Under their own .canon space, it would be possible for the company to create custom product-oriented domain names such as cameras.canon or printers.canon; this may even include consumer-oriented domain names such as yourname.canon.

In addition to applications based on a brand (.canon), applications based on geographic terms (.nyc, .paris), terms targeting specific industries or communities (.eco, .gay, .hotel) and generic terms (.shop, .music) can also be expected. Some, however, have questioned the legitimacy of ICANN, a private entity, operating such spaces for financial gain. The ICANN application fee alone is US$185,000 (excluding costs related to application preparation and legal advice). In addition, a gTLD application that successfully passes the ICANN process will need to budget for significant technical and marketing expenditure to cover anything from search engine ranking to email delivery. While second-level domain names (brand.eco, city.hotel, band.music) may be available on commercial terms similar to today’s gTLDs, the annual cost of operating a gTLD is estimated to range from US$25,000 to US$500,000.

The application process

ICANN will accept applications for new gTLDs from mid-January to mid-April 2012. If more than 500 applications are received, ICANN will review them in batches. However, details about the batching methodology remain unclear. The gTLD application process is complex and will require that brand owners partner with experts in the area; those who are not already well-versed in ICANN’s Applicant Guidebook may find themselves behind the curve.

The application process is not without potential pitfalls. For example, challenges can be lodged by a public-interest-minded “Independent Objector” against a gTLD application, as well as on four other grounds outlined below. In addition, for a 60-day period at the beginning of the process, ICANN’s Governmental Advisory Committee (GAC) may issue a “warning” notice for an application considered potentially sensitive or problematic by governments. Any challenges could significantly increase the costs and time involved in processing an application. Given the contentiousness of the years-long ICANN process that led to the June 2011 vote to begin accepting applications, ICANN has set aside one-third of each application fee (US$30,000,000 based on a 500-application model) to manage legal risks.

Below are some of the procedural milestones that new gTLD applicants can expect.

Initial evaluation

During the Initial Evaluation phase, a gTLD application will be reviewed to determine whether the applicant has good financial standing, sufficient technical and operational capabilities, and no history of cybersquatting. A string review will also be conducted to ensure that the gTLD in question is not similar to either an existing or applied-for gTLD. For competing strings, as a last resort, ICANN will hold an auction. Certain geographic and reserved strings (e.g. country names) will not be available. Other such strings, however, (e.g. city names) would carry conditions.

Objection filing

The formal objection period will last approximately seven months. During that time, an objector may allege that the applied-for gTLD would infringe its rights based on any of four grounds: string confusion, limited public interest, community, and legal rights (primarily trademark rights). Legal rights objections will be administered by the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center.

 Transition to delegation

Once an applicant completes the Initial Evaluation and overcomes any objections, the application will go forward, resulting in a registry agreement with ICANN. In the best-case scenario, applications may be handled within nine months. Where an application encounters obstacles (e.g., disputes) the process may take 20 months or more.

Intellectual property enforcement

Exponential growth of the domain name system means increased risks for brands and consumers, but as Erik Wilbers, Director of the WIPO Arbitration and Mediation Center, observes, “trademark owners cannot afford to shoot at everything that moves in the domain name system today, let alone in a vastly expanded space.” Mr. Wilbers anticipates that brand owners’ enforcement strategies will focus on the most serious instances of abuse complemented by an increased positive concentration on the core identity of brands online.

The gTLD process envisions several newly-created rights protection mechanisms. Agreeing on the details of these mechanisms has been a contentious process, with some asserting that the mechanisms are overreaching, and others claiming that they are inadequate and unduly compromised. These mechanisms are intended to complement the existing Uniform Domain Name Dispute Resolution Policy (UDRP). Adopted by ICANN following a WIPO initiative, the UDRP provides a relatively inexpensive alternative to litigation for trademark owners seeking to recover domain names that are identical or confusingly similar to their own mark from opportunistic, bad-faith actors. All new gTLDs must offer the UDRP, as well as the following mechanisms.

Trademark clearinghouse

The Trademark Clearinghouse will be a central repository of authenticated information on registered word-only trademarks. How the Clearinghouse will function remains unknown; in October 2011, ICANN requested comments from potential operators. The Clearinghouse must be used in connection with both (i) Trademark Claims and (ii) Sunrise services.

A Trademark Claims service will notify a prospective registrant that a domain name matches a trademark in the Clearinghouse database. If the domain name is then registered, the Claims service would then alert the trademark owner that a domain name corresponding to its trademark has been registered. This service is narrowly limited: a trademark owner will only receive notice if the domain name is an “identical match” to its mark. This means, for example, that if Omega submitted its “omega” trademark to the Clearinghouse, it would receive notice if a third party registered omega.watches, but not if buyomega.watches were to be registered.

A Sunrise service allows brand owners whose trademark is contained in the Clearinghouse to preemptively register - usually for a fee well in excess of normal registration fees - a domain name corresponding to its trademark for a limited period before general public registration in a new gTLD opens. As with the Claims service, Sunrise registrations are narrowly limited to exact matches.

Uniform Rapid Suspension (URS) system

The URS is intended to operate on a track more or less parallel to the UDRP. While it employs essentially the same substantive elements as the UDRP, there are differences brand owners should consider in weighing the potential utility of the URS. While the URS is nominally designed to be faster and cheaper than the UDRP, under the URS the burden of proof is greater than under the UDRP. However, unlike the UDRP, the URS provides a cost-free opportunity for a registrant’s response to be filed up to 30 days after a decision has been issued. A registrant can also seek de novo (new) review of a decision for up to six months after it has been issued (and may also request a further six-month extension). In addition, a complainant prevailing under the URS will not acquire the infringing domain name. Instead, the domain name will be suspended (meaning that the page will resolve to a dispute notice) until the end of the registration period, at which time it will be available once more for public registration, unless the complainant pays to extend the suspension for one year. At the time of writing, ICANN had not announced details concerning potential URS providers.

Post-Delegation Dispute Resolution Procedure (PDDRP)

The purpose of the PDDRP is to enable brand owners to bring an action against a gTLD registry operator (as opposed to multiple individual domain name registrants) whose operation or use of their gTLD causes or materially contributes to systematic trademark abuse. The PDDRP would not, however, provide recourse for brand owners merely because infringing second-level domain names exist in the gTLD. Instead, the PDDRP is meant to address situations in which a practice of “affirmative” registry conduct is evident; one example would be a registry operator actively inducing widespread infringement by others.

Phillip V. Marano, an attorney with the Washington, D.C., law firm Silverberg, Goldman & Bikoff LLP, has long followed industry debates about new gTLDs and now counsels clients on how to prepare for the launch. He recommends a bifurcated defensive approach focused at the top level (to the right of the “dot”) and at the second level (to the left of the “dot”). “While there are many shortcomings with ICANN’s second-level rights protection mechanisms, most brand owners will still be well advised to participate in Claims and Sunrise services to safeguard their valuable brand names,” Mr. Marano says.

While there is certainly no shortage of speculation on the degree to which ICANN’s program will spur innovation or confusion, one thing is clear: unchartered waters lie ahead.

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1  Ms. Leytes represents clients in connection with litigation and intellectual property (IP) and new media matters. Prior to entering private practice she worked at the WIPO Arbitration and Mediation Center.