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July 15, 2017 Vol. 72 No. 12 Back to Bulletin Main Page

INTA Study Provides Data on How Brands Are Using New gTLD Program

In 2012, ICANN launched a program to create an unlimited number of generic top-level domains (gTLDs) to enhance competition and consumer choice. During the development of the New gTLD Program, the trademark community expressed concern that an expanded TLD landscape would unleash a wave of cybersquatting and other abusive behavior, which would substantially increase brand owners’ costs to police their marks online.

At the beginning of this year, INTA’s Impact Studies Committee commissioned a survey of its corporate members to determine what impact the New gTLD Program has had on brands’ enforcement costs. This study, in part, was conducted at the request of ICANN’s Competition, Consumer Trust and Consumer Choice (CCT) Review Team, which is currently evaluating whether the New gTLD Program is achieving its stated goals.

The survey was sent to 1,096 INTA regular members and asked respondents for detailed cost information for 2015 and 2016. The questions were accompanied by a detailed workshe
et to help respondents collect the necessary data. Compiling the requested data was labor intensive and, consequently, 33 members completed the survey. While the respondent pool was small, the study provides insight into how brands have been affected by the new TLD universe. This type of study is a new endeavor for INTA, and given the complexity of the questions, we are pleased with the participation of our members. INTA views the results as an indicator of trends. The key takeaways from the study are as follows:

1. Brands Are Purchasing New gTLDs to Prevent Unauthorized Third-Party Use

While the goal of the New gTLD Program was to increase choice, the study showed that most brand owners are not purchasing new gTLDs with choice in mind. Rather, most brand owners have defensively registered new gTLDs to prevent infringement. Unsurprisingly, most companies do not intend to use some of the more problematic gTLDs (such as “. sucks” or “. feedback”) other than to prevent unauthorized third-party use. In turn, most brands simply park new gTLDs after purchase. Parking new names indicates a trend that brand owners are not using new gTLDs as alternate or more effective names for their businesses.

Following the new gTLD expansion, ICANN established mandatory “sunrise periods,” which allow brands to acquire domain names corresponding to their marks before the domain names are available to the public. Most respondents reported that sunrise periods have made it easier to acquire new gTLDs that match their marks. That said, most of these domain names are acquired and parked for defensive purposes and are not adding value for brand owners.

Further, the volume of new gTLDs has made it difficult for brands to implement any meaningful prophylactic defense strategy—particularly because brands are often forced to pay inflated “premium” prices to purchase a new gTLD during the sunrise period.

2. Enforcement Against Infringers Is Challenging

In turn, brands are also policing bad actors through more traditional means, such as monitoring services, cease and desist letters, and Uniform Domain-Name Dispute Resolution Policy (UDRP) proceedings, as well the newly established trademark Rights Protection Mechanisms (RPMs), such as Uniform Rapid Suspension (URS) proceedings. In addition, some respondents have undertaken counter-confusion marketing efforts and internal training in response to the new gTLDs.

According to most respondents, UDRP proceedings and the required sunrise periods have helped to reduce the risks of new gTLDs to a “major” or “moderate” extent. However, when pursuing enforcement activities, many brands have still experienced challenges in contacting domain name owners. For example, respondents noted that 75 percent of the domain registrants that they have encountered were utilizing a privacy or proxy service. Moreover, nearly two thirds of attempted enforcement efforts against these domain names encountered some level of incorrect or incomplete WHOIS information.

On average, INTA members spent $150,000 per year on defensive actions with Internet monitoring and diversion actions the largest line item. Costs specific to new TLDs comprise about one seventh of the total and these costs are expected to grow over time. The level of brand activity, however, does not always directly correlate to the size of the brand owner. For this reason, some smaller brand owners with heightened brand activity are feeling the brunt of these increased costs.

The stated goal of the New gTLD Program was to increase competition, consumer trust, and consumer choice. Although brand owners are registering domains in the new gTLDs, their main reason for doing so is to prevent infringement, rather than to diversify and make use of these domains. Thus, brand owners have not experienced the benefits that ICANN envisioned when designing the New gTLD Program. Rather, as was feared when the it was proposed, the primary impact of the New gTLD Program on trademark owners has been to drive up the cost and challenge of enforcing trademark rights in the domain name system.

INTA aims to continue its review of the new gTLD issue more thoroughly and plans to refine the survey worksheet as a tool for data collection that reflects real-world practice and satisfies the need for information that may be useful to ICANN’s reviews.

The survey report is available to INTA members for download here.

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.

© 2017 International Trademark Association