Hundreds of New TLDs Expected in Draft "Streamlined" Internet Naming Policy

29 October 2008 Publication
Authors: Craig S. Fochler

Legal News Alert: Trademark, Copyright & Advertising

The Internet Corporation for Assigned Names and Numbers (ICANN) has released a draft of policies intended to ease the process for parties seeking to create new top-level Internet domains (TLDs). New TLD examples might be .SHOES or .SUMMER or a dot followed by a trademark, as in .FOLEY. ICANN is receiving comments on these new policies until December 8, 2008. The final policies should be in place in early 2009, and new TLDs could start appearing online under the “streamlined” procedure by the end of 2009.

What does this mean for trademark owners?
Currently there are approximately 20 generic top-level domains (gTLDs) like .COM, .ORG and .NET, and approximately 250 country-specific top-level domains (ccTLDs) like .RU for Russia and .EG for Egypt. While trademark owners may (and should) already have policies and procedures in place for acquiring domain names and policing new registrations for infringement, with the potential flood of new gTLDs — estimated at 500 in the first round alone — an ad hoc approach to domain name management will be unwieldy and inefficient, if it has not been already.

We believe an orderly and centralized domain name management process will help you best protect your trademark portfolio in the face of the coming streamlined procedure for new gTLDs. This alert will provide a basic level of understanding of the new gTLD procedure so that you may consider establishing or (re)adjusting current domain name policies.

When can I register domain names in each new gTLD?
Each new gTLD application must include a proposed “Rights Mechanism Protection” for the domain names it will register. This is a proposed policy from the applicant demonstrating how procedures will be put into place in the proposed new gTLD to protect trademark rights, human rights, freedom of expression, and the like. Based on the prior introduction of gTLDs, the new streamlined gTLDs will likely begin with a phased domain name registration process, typically a three-step process to opening registrations in the new gTLD to the general public. This has included an initial “sunrise” period that allowed trademark owners and others to register domain names in which they have rights. The sunrise period is then typically followed by a “landrush” period, where any third parties can apply for a domain name, and auctions are held between multiple applicants of identical domain names. For the most part, domain names are awarded on a “first-come, first-served” basis.

Trademark owners will want to pay close attention to the deadlines for the sunrise registration period and any new gTLD approved by ICANN, since sunrise registration of a domain name is considerably simpler and less expensive than the potential expense of the landrush and the uncertainty of the first-come first-served period.

Can I register a new gTLD?
The fee for evaluating a new gTLD application is estimated at US $185,000. This is in addition to the cost of developing any business plan, preparing the application for submission, the US $100 fee to enter the online application system, potential further review fees in the area of US $50,000, and the annual ICANN registry fees, which start at $75,000 and go up to approximately five percent of registry transaction revenue.

The entire application evaluation fee will be collected at the time the application is submitted so as to offset the cost of administering the process, and to further ensure that the applicant has the technical, financial, and organizational ability to administer the new gTLD process. Once the streamlined application rules are approved, in the second quarter of 2009, there will be approximately four months in which new applications for gTLDs will be accepted in the opening round.

How is this application process more streamlined than previous processes?
ICANN has held two prior rounds of application for new gTLDs. The 2000 round approved seven new TLDs (including .BIZ, .NAME, and .PRO) from the 47 applications, and was criticized for rejecting so many. The 2003 round approved another seven new TLDs (including .MOBI and .TRAVEL) from 10 applications, but they were all “sponsored” TLDs that required registrants to meet certain requirements before registering domain names. For example, to register a domain name in .TRAVEL, you must be pre-authenticated as being associated with the travel industry. Where previous rounds required applicants to meet criteria demonstrating that the new gTLD was a needed contribution to the Internet or was of particular benefit to a special group, the streamlined process will only require a proposed new gTLD meet a “do-no-harm” standard, as explained by ICANN Board Chairman Peter Dengate Thrush: “Most important is [that] the new process takes out a lot of subjectivity.”

How many new gTLDs will there be?
Although difficult to know for sure, we estimate that there may be hundreds of new gTLDs. Applications will be grouped in “rounds.” ICANN is preparing to receive 500 applications in the first round alone. Non-contentious applications may be processed in a few months, going live as early as the fall of 2009, and the entire application and dispute resolution process for the first round of streamlined gTLDs is expected to be completed within three years. The procedures and fees will be evaluated and are expected to be adjusted between rounds. The second round of applications for new gTLDs will occur some time in 2010.

What if an applicant tries to register my trademark as a gTLD?
With all of the anticipated new gTLDs, aggressive pursuit of every potential infringer or user of a domain name that is similar or identical to one’s trademark may not be efficient. Trademark holders may have to develop levels of tolerance and acceptance, and establish focused enforcement strategies based on core or house marks, assessments of potential and actual usage of the gTLDs, and likelihood of success.

The draft policies indicate that the letters that comprise a new gTLD, called the “string,” must not “infringe the existing legal rights of others,” including trademarks. However, unlike applying for a trademark, ICANN will not maintain a trademark registry or check against any database to prevent such registrations, which is consistent with their current policy. Should an applicant attempt to register a potentially infringing gTLD under the new process, the proposed rules will provide for an objection-based dispute resolution procedure. The current draft policies do not provide for any filtering of the strings to flag applications for registered marks, and ICANN does not take any affirmative steps to confirm whether a domain name applicant is (or is not) the rightful trademark owner.

An application also can be challenged by “a significant portion of the community to which the string may be explicitly or implicitly targeted.” Analysis of the final rules, registration costs, and dispute resolution fees will likely help us better understand what the most appropriate course of action may be such as registering a new gTLD to use or to protect this space on the Internet or wait to oppose parties that attempt to register strings that infringe a particular trademark.

What else should I be aware of in the new proposed procedures?

  • Need-Based Fee Reduction: Possible fee reduction scheme for streamlined gTLD applicants from “least developed” economies, including developing nations and “indigenous and minority peoples.”
  • No Squatters: An applicant granted a streamlined gTLD must use it within a fixed timeframe.
  • String Confusion: Two proposed gTLD strings cannot be confusingly similar to each other, and ICANN has proposed a preemptive filter as well as a dispute resolution process that may include auctions.
  • Non-English TLDs: New gTLDs can use characters that are not part of the Latin alphabet (A – Z) or the Arabic numeric set (0 – 9), although it requires a specific step in the application. Cyrillic script is the example for these Internationalized Domain Names (IDN) in the Draft Applicant Guidebook § 1.3.
  • Registrant Rules: Each new gTLD applicant can establish its own rules regarding registrant fees, content restrictions, or application periods.
  • Dispute Resolution: Each new gTLD must at a minimum adhere to the Uniform Domain-Name Dispute-Resolution Policy. There also may be a phased registration process, as discussed above, or a preemptive authentication process.

The streamlined gTLD process promises to be challenging to trademark owners and provides an important opportunity to establish, readjust, and reevaluate domain name and trademark registration, policing, and enforcement strategies. We suggest reviewing such strategies before the new gTLD application period opens in mid-2009 so that policies may be developed that protect trademark and domain name interests while being mindful of budgetary concerns in the face of exponentially increasing infringement possibilities.


Legal News Alert is part of our ongoing commitment to providing up-to-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Sharon R. Barner
Chair, Intellectual Property Department
Chicago, Illinois
312.832.4569
sbarner@foley.com

Miriam Claire Beezy
Chair, Trademark, Copyright & Advertising Practice
Century City, California
310.975.7966
mbeezy@foley.com

Craig S. Fochler
Chair, Trademark, Copyright & Advertising Practice
Chicago, Illinois
312.832.4379
cfochler@foley.com

Authors:

Jeffrey H. Greene
Vice-Chair, Trademark, Copyright & Advertising Practice
New York, New York
212.338.3519
jgreene@foley.com

Britton Payne
Associate
New York, New York
212.338.3534
bpayne@foley.com

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