Saturday, February 6, 2010

ICANN's Proposal For New Generic Top Level Domain Names: Should All Brand Owners Be Concerned?

Over the past several years, the Internet Corporation for Assigned Names and Numbers ("ICANN"), the entity that oversees the Internet domain name system, has been aggressively pushing for the creation of new generic Top Level Domains (“gTLDs”). Currently, there are twenty-one gTLDs available, including those well-known extensions .com, .net, .org, .biz and .gov. In addition there are over 200 country-code top-level domains, such as .cn for China, .jp for Japan and .asia for the Asian region.

ICANN is now lobbying to potentially dramatically increase the number of gTLDs, which would allow for extensions 3-63 characters long. ICANN’s proposed plan would allow for the creation of gTLDs that may include brand names, such as www.goofy.disney, www.airline.usair, www.creditcards.visa and www.first.bank. The plan also calls for the registration of gTLDs for non-Latin scripts, including Chinese and Arabic.

The debate has heated up over ICANN’s proposal as brand owners voice their concerns over what they believe would become the new “wild wild west” for cyber squatters. Brand owners worry about the potentially exorbitant costs to enforce their trademark rights against those Internet pirates (a/k/a cyber squatters) that make a living reserving domain names that include other parties’ trademarks. They’re also concerned about the need to register “defensive” gTLDs to keep them out of the hands of squatters. The concern over the costs to reserve defensive registrations is clearly understandable given that the proposed cost to register gTLDs is $185,000USD each. Then an annual fee of $25,000 to maintain it! And those are not typos. $185,000 and $25,000 for a domain name!

Proponents of the plan argue that new gTLDs would enhance and improve the Internet by making available more domain name choices for companies, the implementation of new safeguards against Internet crime, such as reducing domain name squatting, phishing, spamming and other abuses, reducing domain name prices on the secondary market and reducing trademark confusion on the Internet, since different companies could use the same brand name with industry specific terms such as www.united.airline, www.united.investmentfunds and www.united.accountants.

Opponents of the new system argue that premature implementation of new gTLDs procedure without adopting proper safeguards causes serious concerns for brand owners, including increased cyber squatting and brand hijacking, increased consumer confusion and frustration, since consumers would not know where to find a company’s web site (i.e., www.unitedairlines.com, www.united.arlines, www.airlines.united?) and the need to spend hundreds of thousands of dollars on useless defensive domain name registrations. Opponents also argue that the new gTLDs system appears to be nothing more that a “money making scheme” that primarily benefits ICANN.

Proponents of the new gTLDs system argue that brand owners are over reacting to ICANN’s proposal and that, with respect to their concern over cyber squatters, there is a proposed Rapid Suspension System in place, which, when triggered, would immediately suspend an obviously infringing domain name thereby protecting the brand owner from continuing trademark infringement. However, what about those cases that are not so obvious?

In my opinion, the concerns raised by brand owners appear to be limited mostly to multi-national, well-known brands that would be most susceptible to domain name squatting issues. Small to medium-sized companies and many non-consumer products companies probably have little to worry about should ICANN’s proposed plan be implemented. All companies should, however, be keeping an eye on the process as it unfolds and, if implemented, be sure to monitor for misuses of their brand names in the new online “wild wild west.”

If you are interested in learning more about this topic, you may read more at the Goldstein Report here http://bit.ly/9wfbIm and by visiting ICANN’s web site here: http://bit.ly/4o73OE.

5 comments:

  1. I think it's a very serious issue about which some suitable action should be taken and that to in a very short time period because this domain name squatting issue is very critical one.

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  2. Agree. There must be an ECONOMICAL mechanism in place that allows trademark owners to take swift action against squatters. In my opinion, the costs associated with reserving a gTLD and associated costs thereafter should protect most brand owners. There are already plenty of "cheaper" alternatives for squatters under the current system (i.e., www.disneywonderland.com/www.coketastetest.com).
    Thanks for commenting.
    -Roger

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  3. Though the introduction of brand name in the domain market is a good idea but when it comes to price fixing, it should be economical. Only then is the use of purchasing it.

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  4. Hi Roger, nice post. You are the first trademark attorney to make the point that the (majority) small trademark owners either won't notice these changes, or will be helped by them because there will be new names available.

    Some studies we're conducting show that just about all cybersquatting/piracy/typosquatting is happening in .com -- there is virtually none of this activity in the top-level domains created since 2000 -- .info, .biz, .mobi, .pro, .travel, .museum, .tel, .asia etc. This is true whether the top-level domains have restrictive registration policies or not.

    Antony Van Couvering
    CEO, Minds + Machines

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  5. Antony,

    Thank you for your comment. Would seem to me that for those trademark owners that have not had to enforce their rights against more than the occassional cybersquatter over the past ten years or so will probably not be significantly affected by the launch of new gTLDs. In some respects, as you state, many of these smaller or lesser known brands may in fact benefit with additional choices. Those companies that do hold large portfolios of defensive registrations, however, will need to evaluate their current policies and re-think their strategies to stretch budgets. And no doubt there will unfortunately be cybersquatting issues and additional enforcement costs for some companies that are inherent with new gTLDs.

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