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August 1, 2011 Vol. 66 No. 14 Back to Bulletin Main Page

Brand Owners Prepare for Launch of New gTLDs

Beginning in 2012 brand owners and others will have the opportunity to customize Internet domain names in the space to the right of dot—think of .inta instead of On June 20, 2011, the ICANN Board of Directors approved its new generic top-level domain name (gTLD) program. ICANN expects the application period to open on January 12, 2012 for a three-month window and close on April 12, 2012. Brand owners need to immediately consider the implications of this process on their legal rights and business models.

Should You Apply?
The ICANN application fee alone for a new gTLD is US $185,000; completing the application will also require specialized technical, business and legal knowledge. If more than one applicant has a legitimate interest in a certain new gTLD string, the string may be auctioned to the highest bidder. Successful applicants will become part of the domain name system, will be required to execute a 10-year registry agreement with ICANN, and must meet various ongoing ICANN compliance requirements. As a further complication, applications will only be accepted during the designated three-month window; another round of applications will likely not take place for several years. So, a “wait and see” approach may result in a significant opportunity cost.

Companies should educate all stakeholders who would be affected by the program, with an eye towards assisting high-level executives with the ultimate decision regarding whether to participate and in what capacity. Competition, marketing, branding and priority for investment in innovation should all be considered when deciding whether an organization applies for a new gTLD. If the balance of these considerations tips in favor of not applying, brand owners still need to develop effective enforcement strategies to protect their rights against third-party infringers during the course of the new gTLD application process.

Objections During the Application Process
Knowing how to protect your brand during the new gTLD application process should be a priority. In late April 2012, approximately two weeks after the close of the application period, ICANN will publicly post all gTLD applications. Concerned parties will have approximately seven months to file objections to submitted applications. There are several types of objections applicants and non-applicants may raise during this period, including legal rights, “string” confusion (the gTLD is confusingly similar to another existing or proposed gTLD), limited public interest in the proposed gTLD and objections based on the interests of a particular community.

Brand owners will likely find the legal rights objection to be the most relevant. A legal rights objection can be raised by any party that has valid rights to the string of characters that make up the gTLD, regardless of whether the objector is an applicant. If the objector prevails, the infringing application will be terminated. However, a legal rights objection is likely to be ineffective against an applicant who does in fact have legitimate rights to a string; an objector who is not also an applicant for that string will then have no recourse. Given that more than one party may have rights to the same mark, this is a significant concern for brand owners.

Other types of objections require that the objector be a new gTLD applicant or existing TLD operator (for string confusion objections), or meet other specialized criteria (for limited public interest or community objections). Organizations that are especially concerned with third party applications may wish to familiarize themselves with these objection types and requirements.

Redelegation: Do Brand Owners Lose Rights?
As it does not yet know the business utility or long-term benefit of a new gTLD, a brand owner may apply for and operate a new gTLD but then decide that the pay-off is not worth the ongoing cost to maintain the registry and decide to close the registry. However, “redelegation” gives ICANN the ability to transfer the registry to a successor operator at its own sole discretion—over the brand owner’s objection. This could have negative consequences for the brand owner’s ability to control the use of its mark.

ICANN claims to have provided some protection for brand owners in the redelegation process through an exception requiring the registry’s consent to the transfer. However, this exception applies only where the registry operator both owns all second-level domains under that gTLD, and maintains all the domains for its (and its corporate affiliates’) exclusive use. Thus, the exception will not apply in the common cases where a brand owner provides second-level domains for use by its customers, licensees or franchisees. Dot-brand operators may wish to propose changes to this registry agreement provision, but since material changes to the agreement require ICANN Board approval, such a request cannot be taken for granted and may delay the application’s approval.

In deciding whether to apply for a new gTLD, brand owners must balance the potential benefits with the costs and risks—including the risk of losing potential opportunities. Two things, however, are clear: (1) the decision whether or not to participate should be a carefully considered one, with informed input from stakeholders at the highest level; and (2) reaping the rewards of participation requires careful planning and consideration, beginning as soon as possible.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

© 2011 International Trademark Association