Expert Commentary

A New Domain: Protecting Your Trademarks in ICANN's Expanded Domain Name System

The Internet Corporation for Assigned Names and Numbers (ICANN) recently began allowing organizations from around the world to register generic top-level domains (gTLDs). The offering will increase the number of primary domains from roughly 20 to perhaps thousands. ICANN's new system may promote new business opportunities worldwide, but it is also fraught with potential intellectual property concerns for brand owners.


Intellectual Property
March 2012

On January 12, 2012, ICANN began accepting applications for gTLDs from any established public or private organization anywhere in the world. The decision to move forward with the program was approved in June 2011, after years of planning and policy discussion. The plan allows for companies to apply for domains associated with their brand such as .exxon or .google, or generic names such as .hotel or .restaurant. Additionally, as part of ICANN's new plan, applicants will have the option to register Internationalized Domain Names, containing non-Latin scripts like Arabic or Chinese.

ICANN's rationale is to increase consumer choice by facilitating competition between registry service providers and allow for additional marketing or branding opportunities. The decision to allow many more top-level domains, however, also means companies will have to police their marks and balance the risk and reward of registering for their own gTLD.

Registration Process and Registering Organization Responsibilities

Applications for a new top-level domain must be submitted by April 12, 2012, and will require the applicant to pay a total evaluation fee of $185,000. Once the 3-month application window closes, the evaluation process for the proposed domain name begins, which could last anywhere between 9 and 20 months, depending on objections by third parties.

Because the evaluation fee is quite high, it will likely price out entities that aren't serious. However, this evaluation fee isn't the end of an applicant's financial commitment. Applicants will be required to prove that they have the financial and operational wherewithal to keep the registry open for at least 3 years. This is significant because the cost to maintain a registry for 2 years has been estimated to be $2 million. Applicants will have the opportunity to recoup their investment by offering second-level domains to third parties, or they may keep them for themselves for additional branding.

Why Apply for a gTLD?

Owning and operating a gTLD registry can provide a company with newfound business opportunities. For instance, applicants that are granted their own gTLD will be able to run their own registry and sell second-level names such as italian.restaurant or mexican.restaurant. Although the costs to register and maintain a registry are high, ICANN allows a registry operator to set rules and prices for those that register second-level domains. Depending on how an operator structures its business model, this could serve as an ongoing revenue stream by allowing renewals.

From a business development perspective, a company could use its top-level domain to develop a new branding strategy. For example, operation of the domain name .pizza could create brand definition and loyalty by having a generic name that is easy to remember. Indeed, a company will have full control of its domain space and could create product launches with individualized secondary-level names. Importantly, having a gTLD will legitimize the brand and give customers a sense of security that is already evident with .edu and .gov domains.

While the above reasons are from a business development standpoint, registering can also be done for defensive purposes. Some organizations already employ a defensive registration plan to prevent brand abuse on the Internet. With the expansion of domain name possibilities now, corporations will have to continue this process. Depending on a company's financial ability and business model, this may include applying for a gTLD before a competitor does. Because the applications are considered in phases, if a company waits until a later round, it risks losing the availability of its desired name. Further, waiting until a later round poses the problem of ICANN refusing to award the domain name due to likelihood of confusion with a name that was previously awarded.

Risks of Applying

Although there are plenty of benefits to applying for a new gTLD, spending the potentially millions of dollars to apply for and maintain a registry has its own risks that must be evaluated. Agreeing to operate a registry is a significant commitment both financially and operationally. The operator must employ a large technical staff to maintain the registry while also adhering to ICANN's guidelines for operating a registry. Because this is the first large-scale offering of its kind, registry operators and second-level customers will have figure out their appropriate business model. That is, a gTLD owner will have to spend time and resources marketing its new product and educating customers on the benefits. Therefore, there is no time frame for when an operator can expect to recoup the investment and become profitable.

Next Steps: How To Protect Your Company's Intellectual Property

First, consult with your financial, marketing, information technology, and legal teams to assess your business strategy and whether the company has the capacity to operate a registry. It will take an effort from management across the company to weigh the risks associated with registering.

If your company decides not to pursue its own gTLD, you should take a proactive approach to protecting your brand. ICANN does not currently have a system that will automatically alert you if an organization is attempting to register your trademark. Therefore, approximately 2 weeks after the application window closes, ICANN will post the public portions of applications. At this time, you should examine the list and file an objection on any name that may be similar to your trademarks.

As an additional safeguard, ICANN will make available a trademark clearinghouse to register your company's mark, and users trying to register this mark will get a warning that they may be cybersquatting if they attempt to register it. This clearinghouse will not be available for another few months as ICANN is currently determining the appropriate service provider to host it.

The bottom line from a prevention perspective is that your company should become educated with the application process, decide whether registering is the best decision for the company, and take action sooner rather than later.

Conclusion

The new ICANN gTLD offering has the potential to create new business opportunities and branding strategies. However, registering a gTLD and operating the registry requires the operator to have the financial and operational capacity and is not necessarily meant for everyone. Should a company choose not to register its brand, it must become more vigilant with its marks as the possibility for trademark infringement will increase. To that end, companies should assess the costs and benefits of the new plan, while at the same time keeping a watchful eye on their intellectual property.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

Like This Article?

IRMI Update

Dive into thought-provoking industry commentary every other week, including links to free articles from industry experts. Discover practical risk management tips, insight on important case law and be the first to receive important news regarding IRMI products and events.

Learn More