Sunday, November 6, 2011

The .XXX gTLD Sunrise Period Has Set For Brand Owners: Should Trademark Owners That Opted Not To Participate Be Concerned?

Now that the Sunrise period has set for brand owners to block their respective trademarks from being used in .XXX domain names, what’s next for brand owners that opted not to participate in the Sunrise period and how concerned should they be?

The Sunrise period for members and non-members of the adult community that have verifiable trademark rights or pre-existing exact-match domain names has closed. The next phase for registering .XXX domain names is the Landrush phase reserved only for those members of the adult community. Should there be competing reservations during that phase, those domain names will be auctioned to the highest bidder. That period is set to open on November 8 and close on November 25, 2011. The last and on-going phase will be the General Availability phase, which is set to open on December 6, 2011.

For those brand owners that participated in the Sunrise period to block their respective trademarks, it’s important to note that they were only eligible for blocking domain names that correspond to the exact spelling of their trademarks or pre-existing domain names. Should they decide to reserve defensive domain names for common misspellings of their respective marks – to keep them away from typo-squatters - they must do so during the General Availability phase.

For the past several years the intellectual property trademark attorney community and many brand owners have “sounded the alarm” with respect to the Internet Corporation for Assigned Names and Numbers’ ("ICANN") proposed plan to launch potentially hundreds of new generic top level domain names (“gTLD”), such as .garden, .books, .cars (and already approved .XXX), because, they argue, such launch would be catastrophic for brand owners since they would need to spend thousands and possibly hundreds of thousands of dollars on useless defensive domain name reservations and enforcement actions against squatters.

Recently, and interestingly, however, I have seen comments by some trademark attorneys that suggest that there may now be an emerging more realistic view on that issue. Those comments concern the new .XXX gTLD and suggest to me that the trademark attorney IP community view on gTLDs might be maturing. Those recent comments concern beliefs that the purpose of domain name sunrise periods is to “bilk” / “fleece” brand owners out of their money and there is no evidence that cybersquatters have any “real” interest in reserving new gTLDs – since those corresponding sites tend to receive less traffic than sites corresponding to .com domain names. That potential “maturing” view may be the result of new business realities and/or an appreciation for taking a business practical approach on the issue and not do what some people say many lawyers do best, “over lawyer.”

If there is growing sentiment among the trademark community that reserving or blocking .XXX domain names that correspond with brand owners’ trademarks may not be worth the expense (unless the marks are famous and/or coined marks or may have a certain connotation within the adult industry), perhaps the trademark community should not be overly concerned with reserving defensive domain names for the anticipated new gTLDs – especially those that would not correspond to a brand owner’s industry. I would certainly think that, for example, an automotive company would be more concerned with the .XXX gTLD than .garden or .pets.

I have blogged about the imminent deluge of new gTLDs, including HERE, HERE and HERE, and how that may affect the average brand owner. In one of those posts, I wrote:

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.”

In another post, I wrote the following:

I cannot recall the last time that I had a client call or complain about a cybersquatter using its trademark or phonetically similar trademark with one of the more obscure gTLDs (i.e., .travel, .jobs). Why? My thoughts are that there is likely not any reason for the average consumer to visit most gTLDs. Would the average consumer think to type in www.xerox.travel when searching for Xerox’s web site? Of course not. If that's the case, then why would cybersquatters care to reserve domain names that don't generate web traffic and revenue?

I have also reported the following:

Minds + Machines' study reports that “Overall, the claims of brand owners that they will be forced to spend significant amounts of money performing defensive registrations in the proposed new gTLDs are not supported by the historical data, which shows that they largely do not undertake defensive registrations in new gTLDs, nor is there any extensive cybersquatting in new gTLDs.”

The Domain Name Wire™ recently reported that the ICM Registry has already received over 42,000 applications for .XXX domain names and has pocketed over 8 million dollars – with the General Availability phase yet to open. Domain Name Wire also reports that:

The sunrise applications are five times as many as ICM Registry anticipated. If trademark holders are like many other businesses, we can expect a flurry of applications before the sunrise period ends this Friday so the numbers will grow.

Domain Name Wire author also comments that:

.XXX has benefited from some savvy (and expensive) marketing, lots of free press, and intellectual property lawyers selling fear to their clients.

I have provided a list of six actions that brand should consider to take now to ready themselves for the potential deluge of hundreds (and some argue thousands) of new gTLDs in my post HERE.

So what will it be for most brand owners? Take the business practical approach and defensively block and reserve only those gTLD names that make business sense or continue to do what most have done over the past decade plus, be “over-lawyered”?

1 comment:

  1. The idea that trademark holders will be required to pay a fee to protect their marks to an organization that has no right to license those marks seems almost unbelievable.

    The fact that ICANN has for years allowed its registrar commuity to trade in and profit from the sale of marks with absolutely no fear of liability for any resultant infringement says it all.

    ICANN, a non-profit, has consistantly found new ways to make money, by way of registration fee increases, by way of the approval and launch of new extensons and for what reason?

    They have provided no justification for the increased fees or any reasonable explanation as to what need xxx and the other proposed gtlds fulfill.

    ICANNS motives seem peculiarly similar to those of cybersquatters...to extort money from brand owners.

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