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IP Cases & Commentary – Details

1 November 2011

Generic Top Level Domains (gTLDs) - New Challenge 'After the Dot' for Brand Owners

On 20 June 2011, following a long period of consultation with relevant stakeholders, the Internet Corporation for Assigned Names and Numbers (ICANN) announced its decision to open the internet’s naming system and allow any interested organisation (whether private or public) to apply to register new gTLDs and to become operators of the related registries.

In lay terms, this means that we will move from the current 22 gTLDs (including the famous .com, .net, .org etc) to a naming system which, through time and depending on market interest, will allow for the registration and operation of a potentially limitless number of gTLDs in any language or script.

A key factor in ICANN’s decision process was the desire to promote competition in the internet market and increase consumer choice. As the worldwide internet community now boasts approximately 1.5 billion users, innovation and diversity are felt to be indispensable pre-requisites of the naming system, which will now “better serve all of mankind” (in the words of Rod Beckstrom, President and Chief Executive Officer of ICANN).

This article focuses on some of the challenges and opportunities that the new gTLDs system will present for brand owners.

Brief notes on the application process and the possible benefits to brand owners

Registering a new gTLD and operating a registry is by no means as easy as registering a domain name. The application process is long (it can take from nine months to up to 20 months or longer), complex (it encompasses a considerable number of stages), and expensive (the basic evaluation fee is US$ 185,000, but overall costs may well be US$ 500,000 – 1,000,000).

ICANN wants to ensure that prospective applicants will be in a position to manage a registry financially, technically and operationally. ICANN expects the new gTLDs to be active and operational and, to this end, requires applicants to provide it with full information on themselves and a detailed plan for the launch and operation of the new gTLDs. Therefore, it will not be possible to register new gTLDs as a ‘blocking strategy’. The two options for applicants will be to run the registry as a ‘close system’ (ie, by allowing domain names to be registered only to select parties) or as an ‘open system’ (ie, by allowing the public at large to register domain names).

Therefore, brand owners are likely to apply either:

  • to secure the registration of their corporate style or trading name (and, funds permitting, key brand(s)) so that they, their groups of companies and, possibly, other selected parties may use it; or
  • via umbrella organisations seeking to register new generic gTLDs on behalf of their members, which will then be the only ones entitled to register domain names ending with the new gTLD: eg, the (fictional) International Organisation of Widget Manufacturers may apply for ‘.widget’ on behalf of its members so that only its members worldwide will be able to use the new gTLD.

Generally speaking, the advantages of securing one or more gTLDs for brand owners are said to be:

  • brand awareness: they will be able to consolidate their presence in the online market and increase brand reputation;
  • brand exclusivity: they are likely to strengthen the association between the trade mark and the business in the public’s mind, thereby also preventing dilution or confusion (especially if the sign or trade mark is subject to a co-existence agreement or there are other market operators using an identical or significantly similar sign);
  • greater security, consumer education and brand trust: the new gTLD will facilitate the identification of the ‘original’ from the ‘imitation’ or ‘counterfeit’: eg, the owner of the mark ‘WIDGET’, by trading only from websites with strings ending ‘.widget’, should enable the public to determine with certainty when they are dealing with the original. Further, where the brand owner has a network of trusted distributors or franchisees for its widgets, by letting them register a .widget domain name, it will create a ‘sense of community’ with its business partners and also increase its control over them; and
  • innovation: there will be a return in image, in that the registration of a new gTLD will at the very least denote their innovative approach.

How will brand owners protect their trade marks?

Whilst the launch of the new gTLD initiative has rightly caused concern amongst trade mark owners, several mechanisms and measures will be in place for them to protect their rights and it is vital to be aware of them to ensure that risks are minimised and potential threats are acted upon.

ICANN dispute resolution proceedings

As part of the new gTLD application process, once the administrative check stage is complete, all applications will be published by ICANN. This will give any aggrieved trade mark owner the chance to lodge a formal objection to a gTLD application.

Objections can be filed only on four specific grounds and the relevant ones for trade mark owners will be:

  • the String Confusion Objection, where the gTLD string is confusingly similar to an existing TLD or to another applied-for gTLD string in the same round of applications. The International Centre for Dispute Resolution (New York, USA) has agreed in principle to administer this procedure and the fees are currently set at approx. US$10,000; and
  • the Legal Rights Objection, where the gTLD applied for infringes the existing legal rights of the objector (ie, trade mark rights). The Arbitration and Mediation Center of the World Intellectual Property Organization (Geneva, Switzerland) has agreed in principle to administer this procedure and the fees will range between US$10,000and US$23,000 depending on the number of panellists.

Although possibly rare, one could envisage the situation in which the same objector may want to object to a gTLD on both the above grounds. Arguably, the fact that two separate providers are in charge of dealing with the two kinds of dispute makes the objection process unnecessarily more expensive and logistically complicated.

As ICANN is not contemplating a notification system for the benefit of trade mark owners; it is of real importance that gTLD applications are monitored each time they are published.

Considering the complexity of the application process and the costs involved, it is difficult to envisage that cybersquatters will be flocking to register new gTLDs as they would do for second-level domains. More likely is a dispute between trade mark owners who own the same mark in different countries.

Rights protection mechanisms for second-level domains

New gTLDs will have to implement a series of procedures to ensure that minimum standards of protection are guaranteed to trade mark owners. These will include:

  1. a sunrise period during which trade mark owners only are allowed to register second level domains before the general public can; and
  2. ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP)-based dispute resolution procedures, whereby trade mark proprietors will be able to file a complaint and ask for the transfer of infringing domain names registered and used in bad faith.

Considering the vast number of new gTLDs that may potentially be introduced, trade mark owners will have to step up their monitoring and enforcement activities and, depending on the relevance of the gTLDs in question, consider registering a number of second level domain names as a precautionary measure.

Trade mark clearinghouse

As part of the new gTLD program, ICANN will introduce a trade mark clearinghouse, ie, a database for the ‘authentication and storage of trade mark information’, on the basis of which trade mark owners will be notified of any sunrise period for new gTLDs and will also be notified of any attempts to register second-level domain names that are identical to their marks. ICANN has recently issued a request for information to identify potentially suitable providers of this service.

It will be crucial for each trade mark owner to ensure that the trade mark clearinghouse contains, at the very least, all of its key trade marks.

Uniform Rapid Suspension (URS) and Post-Delegation Dispute Resolution Procedure (PDDRP)

The new gTLD registries will also have to implement URS and PDDRP procedures:

Pursuant to the former, trade mark owners can request that blatantly infringing websites are immediately taken down and the domain name points to a URS placeholder page. The trade mark proprietor will be able to obtain the deletion or transfer of the domain name by means of the standard formal complaint procedure also operated by the same registry.

Pursuant to the latter, trade mark owners will be able to file objections against a new gTLD registry whose activities are alleged to cause or materially contribute to systemic trademark abuse. This procedure will ensure that applicants that are successful in the application process will comply with ICANN’s rules and administer their registries in a way that safeguards the rights of trade mark owners.

Again, it is essential that trade mark owners and their advisers are aware of the existence of these mechanisms and are familiar with the relevant procedures.

Whatever one may think of the new gTLD process, the fact is that ICANN intends to accept applications from January 2012 and there may well be a large number of applications. A sensible monitoring and objection process needs to be put in place soon, whether one is seeking one of the new gTLDs or not.

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