Pros, cons of changes in domain naming

In January of 2012, the Internet Corporation for Assigned Names and Numbers will open the door for a new wave of generic top-level domain names. Traditional gTLDs like .com and .org will still exist, but soon, almost any word may be registered as a domain name. While the change may help some companies create stronger online identities, questions remain about whether pursuing a gTLD will be worth the cost and effort.

Reasons for the change

Charlie Meyer, head of the trademark practice group at Woodard Emhardt Moriarty McNett and Henry, explained the rationale behind the new development in domain names.
 

Meyer

“One of the reasons new gTLDs are being introduced is the perception that existing gTLDs such as .com have become scarce and some companies are fighting over the limited resources of a particular domain name,” he said.

ICANN says that it has introduced this change to support more global marketplace competition, allowing entrepreneurs, businesses, governments and companies to have their own top-level domains. But with an application fee of $185,000 and ongoing associated costs, the new gTLDs aren’t for everyone.

Chuck Fox, an intellectual property attorney for Maginot Moore & Beck, said that until ICANN announced this change in June, anyone could set up a .com domain for as little as $15 in the course of a lunch break. But with the low cost and ease of registration, domain names were often disputed after the fact, through ICANN’S Uniform Domain Name Dispute Resolution – a sometimes lengthy, costly and frustrating process for anyone who believed they were entitled to a particular domain name.

“With the current system, they sort of put the cart before the horse,” Fox said. “The new generic system that ICANN has proposed is sort of the opposite.”

ICANN’s new approach to gTLD registration comes with a thorough evaluation and public comment process, which in theory guarantees that when entities are granted a gTLD, it will not conflict with an existing gTLD. Because of the application fee, and the requirement that any gTLD applied for must be activated, people who have made money in the past by hoarding and reselling inactive domain names – or cybersquatting – will likely be shut out by the new process.

“The idea is: we’re gonna make it difficult to get these things,” Fox said. “Some guy sitting in his garage is not going to be cybersquatting.”

However, the new registration process will have no effect on the existing domain name system and its accompanying problems.

Pros and cons

Once the application process closes in April 2012, all applications will be posted for public comment. That means if a business is hoping to secure a gTLD for a product that is in development, competitors can find out what that product is by reviewing existing applications.

Fox recommends that corporate attorneys keep an eye on applications to watch for any gTLDs that could cause concerns about trademark infringement. He also recommends studying in advance how to formally object to gTLDs.

Walsh

Tom Walsh, a partner with Ice Miller’s intellectual property group, said it’s hard to predict what will happen when ICANN opens the three-month registration process in January.

“One issue – probably the most prominent issue – is a particular word can be used for multiple companies,” Walsh said. “Think, for example, of ‘delta’ – there’s Delta airlines, and there’s Delta faucets.”

Neither company is in violation of the other’s trademark, because each offers distinct services. But two companies cannot register the same gTLD. When and if that happens, a company could file a “string dispute resolution,” if it believes the name – or string – of the other gTLD would be easily confused with its own gTLD or would lead to general confusion.

A gTLD can be as specific as “.hitachi,” or as vague as “.sports,” and whether the more generalized names will stand as gTLDs remains to be seen.

“If you’re taking a generic term like .sports, a wide category with a lot of things that people are interested in, from what I can tell they’re not necessarily going to prevent those top-level domains from being granted,” Fox said. But in this hypothetical scenario, another entity could challenge the application.

Securing a gTLD like .sports could be a good source of revenue for companies that have the finances and technical resources to operate as a registrar. The owner of .sports becomes a registrar, and if the domain name has a broad appeal, Meyer said, other companies might wish to register as a second level, or sub-domain under that gTLD (like .rowing.sports). The owner of the gTLD would set the fee for sub-domains.

Any business or entity serving as a registrar is responsible for sub-domains registered under its gTLD and should therefore make sure sub-domains aren’t infringing on trademarks. Fox said that attorneys who represent businesses applying for a gTLD should understand how to tackle trademark dispute resolutions, requests for information from law enforcement agencies, methods for handling spammers and all of the other complicated problems that can arise for registrars.

Meyer said that the introduction of new gTLDs does raise the risk of more trademark infringement issues.

“To some extent, standards and procedures to block inappropriate trademark use are being written into the implementation rules for new domain names,” Meyer said. “For example, we are currently in a window (expiring on Oct. 28) to file requests to exclude people from registering .xxx domain names using someone’s registered trademark.  Similar exclusion options may be implemented into other new gTLDs. Additionally, companies in certain industries may have priority to obtain top-level or second-level domain names associated with their industry.  For example, established companies in the adult entertainment industry have priority to obtain .xxx domain names.”

Taking the plunge

Fox recommended a few key steps attorneys should take if helping a client apply for a gTLD, and that begins with knowing the exact names a client is interested in pursuing. And if attempting to register a trademark, the company should be able to prove it owns the mark.

“Make sure your client has the financial means to pay for the registration and can show proof of ongoing financial solvency to satisfy ICANN during the application process,” Fox said. “The registration and yearly fees will only be part of the expenses required to run a gTLD.”

A company must also be able to demonstrate that it has the technological and legal infrastructure to run a gTLD, as well as proper hardware.

Assuming everything goes according to plan and there are no challenges to the application, Fox said it would be at least nine months from the initial filing before a company could begin using its new gTLD.

“We’re waiting to see just how this is going to play out – what sort of top-level domains are going be snapped up, how popular they’re really going to be,” Walsh said. “It wouldn’t have gotten this far if there hadn’t been some demand for these top-level domains.”•