Undressing .XXX: Sexier Than the Name Itself

First proposed to the Internet Corporation for Assigned Names and Numbers (ICANN) in 2000 and quickly rejected, proposed again in 2004 and cast off by ICANN again, the Internet's red-light district ' the .XXX top level domain name (TLD) ' is finally a reality.

From September 7 through October 28, ICM Registry LLC (ICM), the British company approved by ICANN to operate the .XXX registry, accepted applications for .XXX domains as part of its Sunrise A and Sunrise B programs.

Sunrise A is a program that allows companies within the adult industry to register .XXX domain names corresponding to their .COM domain names as well as domain names for their registered trademarks. Sunrise B allows those outside the adult industry to reserve blocking registrations corresponding to their registered trademarks.

Historically, big corporations with multi-million dollar brands and the adult-entertainment industry have been on opposite sides of the fence over brand protection, with owners of famous brands like Nike, Starbucks and Lexus claiming any association of their marks with adult entertainment constitutes dilution by tarnishment. The adult-entertainment industry has very often met such claims as unfounded attempts to stifle its First Amendment right of free speech. Ironically, but legally predictably as far as protecting e-commerce interests, since the introduction of .XXX, both camps are united in a battle with ICANN and ICM to protect their brands from misappropriation.

Mainstream companies and porn-site operators may make strange bedfellows, but on the propriety of the .XXX Sunrise A and B periods, they seem to agree.

“It's legalized extortion,” complains Jeff Dillon, director of online sales at San Francisco-based Gamelink.com, one of the world's largest streamers of adult-natured content.

But it's the way traffic flows in the e-commerce realm.

“It's yet another enforcement action brand owners have to take to protect their brands as a result of ICANN's continued expansion of the top-level domain space,” laments Steve Stolfi, vice president, global sales and strategic partnerships at Corsearch, a search company that performs a variety of trademark-related clearance and protection services for brand owners, including monitoring newly registered domain names.

According to Dillon, Gamelink has spent millions of dollars building a brand and audience at its .com site.

“Forcing our company to buy GAMELINK.XXX only to redirect traffic back to our .com site is a pure money-making scheme,” he says. “If Gamelink doesn't purchase GAMELINK.XXX, it's a certainty some other company will, in an attempt to trade on our reputation and traffic.”

Pain ' For Years

Mainstream brand owners have been feeling Dillon's pain for years, often acquiring ownership of infringing domain names for which they have no use simply to stop a cybersquatter or other bad actor from using them. The .XXX TLD simply adds another layer to the already complex Internet enforcement chain.

How the Process Plays Out Initially

The mechanics of brand protection in .XXX are not all that complicated. For a brand owner to be eligible for a Sunrise B registration, it must have a registered trademark:

• Issued prior to the submission of its Sunrise application;
• In a jurisdiction where the brand owner conducts “substantial bona fide commerce” in connection with its mark; and
• Must be an exact match to the .XXX domain.

If a brand owner wishes to reserve more than one .XXX domain name, then it must file separate Sunrise applications for each.

Proving .XXX TLD Entitlement

Sunrise A applicants from the adult-entertainment industry must also prove their entitlement to a .XXX TLD, either by satisfying the same trademark-ownership criteria as Sunrise B applicants or by showing that they own and operate an existing domain name that corresponds to the .XXX domain name applied for.

When Applications Compete

If ICM receives competing applications from Sunrise A and B applicants, then ICM will notify both parties and offer the Sunrise A applicant an opportunity to withdraw its application. However, the registration of the domain name will ultimately be given to the Sunrise A adult-industry applicant if it does not voluntarily abandon its application. In this case, the non-adult-industry brand owner's only recourse is to consider other dispute-resolution options, if applicable.

'Land Rush' Expected

After the sunrise period ended on October 28, a brief “land rush” period was expected to commence. During the land rush, those in the adult-entertainment industry will be allowed to apply for .XXX domain names with no requirement to show trademark rights or other prior rights.

Issuing Registrations

After the sunrise and land-rush periods close, registration in .XXX will be issued on a first-come, first-served basis, with no preemptive rights protections in place. At that point, trademark owners outside the adult-entertainment industry will be precluded from registering a .XXX domain name and will have to rely on the same enforcement options already available to resolve domain-name disputes, such as the Uniform Domain Name Dispute Resolution Policy (UDRP) and anti-cybersquatting litigation.

Additionally, ICM is offering a rapid evaluation service (RES) intended to provide a prompt remedy to address a limited class of situations in which there is objectively clear abuse of well known, distinctive registered trademarks or service marks of significant commercial value, or of personal or professional names of individuals. All complaints under the RES will be subject to a preliminary evaluation under which an evaluator may decide to suspend the operation of the domain name in the .XXX TLD, pending a final decision. This preliminary evaluation will occur within two business days, pursuant to the rules.

A Double Standard?

While the world's top mainstream brand owners generally have no trouble meeting the legal criteria for blocking .XXX registrations and arguably can afford the $200'$300 fee per registered trademark to do so, the adult industry (where rules, regulations, social mores, and other costs of doing business are rampant) is not so fortunate. This could explain why the adult-entertainment industry is among the leading critics of the new .XXX TLD. At the XBIZ EU Conference held in London on October 4, ICM's chief executive officer, Stuart Lawley, was barraged with questions, negative comments, boos and hisses ' all relating to .XXX. It was clear from the commentary that many adult industry companies consider .XXX names something they have to have, not because .XXX adds any real value to their business, but because if they do not register in .XXX, someone else will grab their brands there first.

Shut your eyes and you might think the comments from the adult industry were coming from general counsels of big business. In a comical scene at the XBIZ EU Conference, a long-haired hippy-looking character from the People for the Ethical Treatment of Animals (PETA) aligned himself with Pepsi and other well known trademarks, arguing that ICM should block established brands in .XXX for no charge. ICM's Lawley was quick to point out that running a clearinghouse takes time and money and that it could not be done for free. What he didn't say, and what remains the prevailing position in the adult industry, is that .XXX is an unnecessary Internet land grant to a single company composed of a few domain-name industry insiders who stand to profit immensely without providing any tangible value to the industry beyond what exists in the current TLDs.

It's easy to understand why players in the adult-entertainment industry feel this way. At the going rate for a .XXX domain name, the costs to block or reregister a portfolio in .XXX can add up quickly. In what may be a first, the adult industry may be feeling the same type of brand protection and enforcement cost pain brand owners outside the adult industry have been feeling for years with ICANN's introduction of new TLDs, not to mention what it is about to experience as ICANN rolls out vanity TLDs such as .CARS and .IBM next year.

Not So Fast!

Of course, ICM takes the opposite view. Having spent 10 long and expensive years lobbying ICANN to award it the right to dole out .XXX domain names, it claims the real value in .XXX is that it will bridge the gap between the mainstream audience and the adult industry. ICM argues there is real money to be made from a public hungry for safe, reputable adult entertainment. Armed with $20 million it claims to be spending to promote .XXX in mainstream publications such as Time, The Los Angeles Times and The Financial Times, ICM asserts that the real opportunity for the adult industry is not so much in transferring existing portfolios, but in building newly branded .XXX websites. ICM cited the example of CASTING.XXX, assigned during a test period and the first .XXX site to go live, as an example of a successful .XXX website that has a completely different meaning in .XXX than it would in other TLDs, such as CASTING.COM, a website focused on metal casting. According to Lawley, CASTING.XXX generated $70,000 in member sign-up fees during its first month alone.

A minority in the adult-entertainment industry may be buying into ICM's advertising and promotion. On October 5, Corbin Fisher, a huge player in the gay porn sector, announced it purchased GAY.XXX for $500,000, the highest price ever paid for a domain name in any extension pre-launch period. According to Jason Gibson, Corbin Fisher's CEO, it has “some innovative plans for making this the one-stop Web destination for all things related to gay adult entertainment.” The GAY.XXX site is not yet developed, but a provocative homepage already is in place. ICM claims it has sold nine premium .XXX domains for $100,000 or more during the launch and indicates that .XXX registrations have already vastly exceeded sales expectations. So, some in the adult-entertainment business are seeing the value in building a brand in the .XXX space.

A Content Corral?

But most big players continue to worry that .XXX will “ghettoize” the Internet, forcing online adult content to a confined space. This, in turn, could make it much easier for governments to restrict the domain's use. The ultimate fear is that government censorship of pornography and other expressive content on the Internet will eventually follow. Lawley, however, points to the fact that no government had, by late October, blocked .XXX domains. Lawley also states that ICM will vehemently defend any governmental attacks on expression or content in the .XXX space. To this end, ICM is donating $10 per registration fee to the International Foundation for Online Responsibility (IFFOR), which is tasked with serving the needs of the global online adult-entertainment community. Lawley also says ICM will make additional contributions to fund legal defenses for operators in the .XXX space.

Lawley may eventually need to fund his own defense, as some brand owners have already threatened to file suit against ICM if it allows registrations of their marks in the .XXX space. Last July, Hustler President Michael Klein took a firm stand, declaring that ICM is “prohibited from registering or selling to a third party any .XXX domain names that contain the famous HUSTLER trademark or other HUSTLER-related trademarks.” Klein also stated that “it appears the .XXX TLD will do nothing but drive up costs to the adult community and force us to fight infringement on yet another front.” He claims that Hustler is prepared to take whatever legal action is necessary to prevent ICM from allowing third parties to buy Hustler domains in the .XXX space, but no suits had been filed as of late October.

Conclusion

The real battles in the .XXX space are yet to be fought and much uncertainty remains, but one thing is abundantly clear ' mainstream companies and adult-entertainment companies are, for the most part, on the same side of the anti-.XXX fence. Strange bedfellows indeed.

First proposed to the Internet Corporation for Assigned Names and Numbers (ICANN) in 2000 and quickly rejected, proposed again in 2004 and cast off by ICANN again, the Internet's red-light district ' the .XXX top level domain name (TLD) ' is finally a reality.

From September 7 through October 28, ICM Registry LLC (ICM), the British company approved by ICANN to operate the .XXX registry, accepted applications for .XXX domains as part of its Sunrise A and Sunrise B programs.

Sunrise A is a program that allows companies within the adult industry to register .XXX domain names corresponding to their .COM domain names as well as domain names for their registered trademarks. Sunrise B allows those outside the adult industry to reserve blocking registrations corresponding to their registered trademarks.

Historically, big corporations with multi-million dollar brands and the adult-entertainment industry have been on opposite sides of the fence over brand protection, with owners of famous brands like Nike, Starbucks and Lexus claiming any association of their marks with adult entertainment constitutes dilution by tarnishment. The adult-entertainment industry has very often met such claims as unfounded attempts to stifle its First Amendment right of free speech. Ironically, but legally predictably as far as protecting e-commerce interests, since the introduction of .XXX, both camps are united in a battle with ICANN and ICM to protect their brands from misappropriation.

Mainstream companies and porn-site operators may make strange bedfellows, but on the propriety of the .XXX Sunrise A and B periods, they seem to agree.

“It's legalized extortion,” complains Jeff Dillon, director of online sales at San Francisco-based Gamelink.com, one of the world's largest streamers of adult-natured content.

But it's the way traffic flows in the e-commerce realm.

“It's yet another enforcement action brand owners have to take to protect their brands as a result of ICANN's continued expansion of the top-level domain space,” laments Steve Stolfi, vice president, global sales and strategic partnerships at Corsearch, a search company that performs a variety of trademark-related clearance and protection services for brand owners, including monitoring newly registered domain names.

According to Dillon, Gamelink has spent millions of dollars building a brand and audience at its .com site.

“Forcing our company to buy GAMELINK.XXX only to redirect traffic back to our .com site is a pure money-making scheme,” he says. “If Gamelink doesn't purchase GAMELINK.XXX, it's a certainty some other company will, in an attempt to trade on our reputation and traffic.”

Pain ' For Years

Mainstream brand owners have been feeling Dillon's pain for years, often acquiring ownership of infringing domain names for which they have no use simply to stop a cybersquatter or other bad actor from using them. The .XXX TLD simply adds another layer to the already complex Internet enforcement chain.

How the Process Plays Out Initially

The mechanics of brand protection in .XXX are not all that complicated. For a brand owner to be eligible for a Sunrise B registration, it must have a registered trademark:

• Issued prior to the submission of its Sunrise application;
• In a jurisdiction where the brand owner conducts “substantial bona fide commerce” in connection with its mark; and
• Must be an exact match to the .XXX domain.

If a brand owner wishes to reserve more than one .XXX domain name, then it must file separate Sunrise applications for each.

Proving .XXX TLD Entitlement

Sunrise A applicants from the adult-entertainment industry must also prove their entitlement to a .XXX TLD, either by satisfying the same trademark-ownership criteria as Sunrise B applicants or by showing that they own and operate an existing domain name that corresponds to the .XXX domain name applied for.

When Applications Compete

If ICM receives competing applications from Sunrise A and B applicants, then ICM will notify both parties and offer the Sunrise A applicant an opportunity to withdraw its application. However, the registration of the domain name will ultimately be given to the Sunrise A adult-industry applicant if it does not voluntarily abandon its application. In this case, the non-adult-industry brand owner's only recourse is to consider other dispute-resolution options, if applicable.

'Land Rush' Expected

After the sunrise period ended on October 28, a brief “land rush” period was expected to commence. During the land rush, those in the adult-entertainment industry will be allowed to apply for .XXX domain names with no requirement to show trademark rights or other prior rights.

Issuing Registrations

After the sunrise and land-rush periods close, registration in .XXX will be issued on a first-come, first-served basis, with no preemptive rights protections in place. At that point, trademark owners outside the adult-entertainment industry will be precluded from registering a .XXX domain name and will have to rely on the same enforcement options already available to resolve domain-name disputes, such as the Uniform Domain Name Dispute Resolution Policy (UDRP) and anti-cybersquatting litigation.

Additionally, ICM is offering a rapid evaluation service (RES) intended to provide a prompt remedy to address a limited class of situations in which there is objectively clear abuse of well known, distinctive registered trademarks or service marks of significant commercial value, or of personal or professional names of individuals. All complaints under the RES will be subject to a preliminary evaluation under which an evaluator may decide to suspend the operation of the domain name in the .XXX TLD, pending a final decision. This preliminary evaluation will occur within two business days, pursuant to the rules.

A Double Standard?

While the world's top mainstream brand owners generally have no trouble meeting the legal criteria for blocking .XXX registrations and arguably can afford the $200'$300 fee per registered trademark to do so, the adult industry (where rules, regulations, social mores, and other costs of doing business are rampant) is not so fortunate. This could explain why the adult-entertainment industry is among the leading critics of the new .XXX TLD. At the XBIZ EU Conference held in London on October 4, ICM's chief executive officer, Stuart Lawley, was barraged with questions, negative comments, boos and hisses ' all relating to .XXX. It was clear from the commentary that many adult industry companies consider .XXX names something they have to have, not because .XXX adds any real value to their business, but because if they do not register in .XXX, someone else will grab their brands there first.

Shut your eyes and you might think the comments from the adult industry were coming from general counsels of big business. In a comical scene at the XBIZ EU Conference, a long-haired hippy-looking character from the People for the Ethical Treatment of Animals (PETA) aligned himself with Pepsi and other well known trademarks, arguing that ICM should block established brands in .XXX for no charge. ICM's Lawley was quick to point out that running a clearinghouse takes time and money and that it could not be done for free. What he didn't say, and what remains the prevailing position in the adult industry, is that .XXX is an unnecessary Internet land grant to a single company composed of a few domain-name industry insiders who stand to profit immensely without providing any tangible value to the industry beyond what exists in the current TLDs.

It's easy to understand why players in the adult-entertainment industry feel this way. At the going rate for a .XXX domain name, the costs to block or reregister a portfolio in .XXX can add up quickly. In what may be a first, the adult industry may be feeling the same type of brand protection and enforcement cost pain brand owners outside the adult industry have been feeling for years with ICANN's introduction of new TLDs, not to mention what it is about to experience as ICANN rolls out vanity TLDs such as .CARS and .IBM next year.

Not So Fast!

Of course, ICM takes the opposite view. Having spent 10 long and expensive years lobbying ICANN to award it the right to dole out .XXX domain names, it claims the real value in .XXX is that it will bridge the gap between the mainstream audience and the adult industry. ICM argues there is real money to be made from a public hungry for safe, reputable adult entertainment. Armed with $20 million it claims to be spending to promote .XXX in mainstream publications such as Time, The Los Angeles Times and The Financial Times, ICM asserts that the real opportunity for the adult industry is not so much in transferring existing portfolios, but in building newly branded .XXX websites. ICM cited the example of CASTING.XXX, assigned during a test period and the first .XXX site to go live, as an example of a successful .XXX website that has a completely different meaning in .XXX than it would in other TLDs, such as CASTING.COM, a website focused on metal casting. According to Lawley, CASTING.XXX generated $70,000 in member sign-up fees during its first month alone.

A minority in the adult-entertainment industry may be buying into ICM's advertising and promotion. On October 5, Corbin Fisher, a huge player in the gay porn sector, announced it purchased GAY.XXX for $500,000, the highest price ever paid for a domain name in any extension pre-launch period. According to Jason Gibson, Corbin Fisher's CEO, it has “some innovative plans for making this the one-stop Web destination for all things related to gay adult entertainment.” The GAY.XXX site is not yet developed, but a provocative homepage already is in place. ICM claims it has sold nine premium .XXX domains for $100,000 or more during the launch and indicates that .XXX registrations have already vastly exceeded sales expectations. So, some in the adult-entertainment business are seeing the value in building a brand in the .XXX space.

A Content Corral?

But most big players continue to worry that .XXX will “ghettoize” the Internet, forcing online adult content to a confined space. This, in turn, could make it much easier for governments to restrict the domain's use. The ultimate fear is that government censorship of pornography and other expressive content on the Internet will eventually follow. Lawley, however, points to the fact that no government had, by late October, blocked .XXX domains. Lawley also states that ICM will vehemently defend any governmental attacks on expression or content in the .XXX space. To this end, ICM is donating $10 per registration fee to the International Foundation for Online Responsibility (IFFOR), which is tasked with serving the needs of the global online adult-entertainment community. Lawley also says ICM will make additional contributions to fund legal defenses for operators in the .XXX space.

Lawley may eventually need to fund his own defense, as some brand owners have already threatened to file suit against ICM if it allows registrations of their marks in the .XXX space. Last July, Hustler President Michael Klein took a firm stand, declaring that ICM is “prohibited from registering or selling to a third party any .XXX domain names that contain the famous HUSTLER trademark or other HUSTLER-related trademarks.” Klein also stated that “it appears the .XXX TLD will do nothing but drive up costs to the adult community and force us to fight infringement on yet another front.” He claims that Hustler is prepared to take whatever legal action is necessary to prevent ICM from allowing third parties to buy Hustler domains in the .XXX space, but no suits had been filed as of late October.

Conclusion

The real battles in the .XXX space are yet to be fought and much uncertainty remains, but one thing is abundantly clear ' mainstream companies and adult-entertainment companies are, for the most part, on the same side of the anti-.XXX fence. Strange bedfellows indeed.