Recourse Strategies In the New Age of .XXX Domain Names

The .XXXtra Early Bird

For the moment, the landscape remains somewhat uncertain. The ICM Registry (the operating registry for the .XXX sponsored domain) has affirmed that more than 80,000 applications were received during Sunrise A and B (see, http://bit.ly/xGSzJY), and that 25,000 pre-orders for the General Availability Period were tendered in advance of the opening of the final stage in the launch (see, http://bit.ly/xgGrdB) (though it remains to be seen how many of these filings were for defensive purposes versus those with an intention to use the .XXX domain and operate an active website). Gay.XXX, one of the few names offered to companies in advance of open sale of .XXX addresses, was recently sold for $500,000 (http://bit.ly/x5a9Uv) (a fairly respectable number, considering that a general application for a .XXX goes for a scant $225). It would seem, then, that all was not quiet on the Western front despite the designation of a “Quiet Period” spanning from Nov. 25 to Dec. 6. In fact, “quiet” may have entirely been a misnomer in this instance as those who have waited until the beginning of the General Availability Period may have discovered that another Applicant beat them to the punch by lodging a pre-application during this so-called Quiet Period (www.icmregistry.com/launch).

A Claim of .XXXploitation

There has been some indication that there are troubled waters ahead. Ironically, the initial legal dispute specific to the .XXX domain launch was initiated on Nov. 16, 2011 by Manwin Licensing International and Digital Playground, owners of two of the biggest adult content companies and members of the very community that .XXX was intended to support. See, Manwin Licensing International S.A.R.L. and Digital Playground Inc. v. ICM Registry LLC (C.D. Calif. 2011), http://bit.ly/wz5c9E. The parties allege that the establishment of .XXX has produced “monopolistic conduct, price gouging, and anti-competitive and unfair practices, broadly harming competition, businesses, and consumers.” Further, the complaint states that the launch of .XXX is forcing the hand of trademark, domain name and brand owners to purchase .XXX domains defensively to prevent other domain owners from registering/using their name in the domain, thereby causing confusion or dilution resulting in a loss of business and harm to reputation, and that the detrimental effect on competition effectively outweighs all potential benefit of .XXX. The complaint touches on the exploitative nature of .XXX alleging, in effect, extortion for the enrichment of ICM and its affiliates, given the apparent monopoly that ICM enjoys on the TLD and ultimately paints a picture of ICANN and ICM conspiring to jettison bidding for the domains and making ICM the sole registrar. The complaint is a fairly comprehensive summation of what many brand owners no-doubt thought under the looming shadow of .XXX in that the options in view of the launch of the new TLD appeared to be: proactively shell out cash to protect your brand (for members outside and within the adult community alike) or assume the risk of having your brand included in a .XXX domain and associated with someone else's product or service and expose yourself to the possibility of unknown injuries to your brand and reputation.

FleXXXing Legal Muscles

ICM's site boasts that .XXX is the “world's coolest new domain” (www.buy.xxx) (perhaps it does have a sexy leg up on .biz or .gov) and that “.XXX is the domain that changes everything” Everything? Maybe. At the beginning of the General Availability Period, applications for .XXX functioned much the same as for any .gov, .int, or .aero TLD sponsored by a specific community served by the domain. Perhaps .XXX won't change everything, but it is no doubt a controversial catalyst for brand owners and the not so inconsequential first waters through the dam of new TLD domains. At present it would seem as though the only peep into the substance of what domains have been applied for comes courtesy of ICM's .XXX search gateway. Entering a potential .XXX prefix surrenders two results: “Not Available, Try Again!” (Whomp, whomp!) or “Your Domain Is Available!” (Bingo!). A quick search indicated that bigmac.XXX, cocacola.XXX, justinbeiber.XXX and doratheexplorer were taken. However, many brands remained available, so be fair warned that your brand, too, could be used to house a website for naughty business. And what of that? What does it mean to the brand owner who inputs his product or business name into the search engine only to discover that is has been “taken” (perhaps by a member of the adult community, perhaps not)? What protections are in place? What recourse does he have? What legal ramifications are going to stem from the .XXX release?

The language of the Registry-Registrant Agreement present on the ICM Registry website (http://bit.ly/wAqJns) includes provisions specific to the intellectual property rights of third parties, namely, that by registering or reserving a .XXX TLD the Applicant agrees to refrain from infringing upon the intellectual property rights of others, is advised that there is an inherent responsibility to investigate ownership rights of others with regard to the name in the .XXX TLD prior to applying, and that the Applicant (read: not ICM) is exclusively liable for any claims of infringement stemming from the .XXX registration and materials on the corresponding website. Further, the Applicant (in submitting to the Registry-Registrant Agreement) avows that the name in the .XXX TLD will not be used for illegal purposes, including child pornography, infringement of intellectual property rights, the promotion of spam, the impersonation of any person or entity, or the violation of privacy/publicity rights. (ICM does appear to be quarterbacking an effort to register .XXX domains specific to actors in the adult community (www.icmregistry.com/performers), so the name of an individual that just so happens to also be that of an actor in the adult community may be the extension of a .XXX domain in the very near future).

.XXXploring the Brand Owner's Remedies:
Plan A vs. Plan B

There are, essentially, two paths of protection available in the event that a brand owner wants to prevent/prevail against another potential .XXX domain name Registrant, namely, Plan A: cost-efficient and Plan B: not cost-efficient. Plan A, in a nutshell, involves the concerned brand owner pre-emptively registering/reserving its name via .XXX to avoid the belated discovery of HEYTHATSMYBRAND.XXX. In light of the cessation of the Sunrise Periods, however, the ability of a trademark owner to preventatively apply for a .XXX is somewhat hindered, and for a brand owner without a trademark registration, it arguably never existed. It's a game of timing now, hinged on “who files first” during the General Availability period. In the event that a brand owner does not succeed in filing first and a member of the adult community does register and use HEYTHATSMYBRAND. XXX in connection with a domain and website featuring salacious, “adult” content, the remedies in Plan B become relevant. In sum, Plan B includes dispute resolution proceedings such as those governed under the Uniform Domain Name Resolution Policy (UDRP), the Charter Eligibility Dispute Resolution Procedure (CEDRP) and the Rapid Evaluation Service (RES). While UDRP actions are commonly employed in domain name contentions, CEDRP and RES actions are geared toward the .XXX domain frontier.

A CEDRP action is reserved specifically for the resolution of challenges to registered .XXX names on the basis of suspected use that is inconsistent with the qualifications for registration (in that the registration or use of the domain is not used in accordance with the Sponsored Community criteria (not adult oriented)) or due to an Improper Sunrise A Registration (in that the registration of the domain did not conform to the provisions of the Sunrise Program as they apply to the Sponsored Community Adult holders of trademark rights or existing domain names). (www.icmregistry.com/policies/cedrp-policy). The lone remedy available is the “cancellation of the registration and return of the cancelled domain name to the pool of available names available for registration in the .XXX TLD.”

The RES is included by reference in the Registry-Registrant Agreement and aims to provide a hasty review of cases 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 (www.icmregistry.com/policies/res-policy). ICM has stressed that the number of instances in which RES is appropriate will be narrowly interpreted and limited to a single registered trademark and to .XXX domain registrations that are “apparently and obviously intended to abuse or interfere with the rights embodied in such trademark and service marks.” Similar to a UDRP action, for a successful argument under RES, three criteria must be met:

1. The .XXX extension must be identical or confusingly similar to an existing mark;
2. The Respondent has legitimate rights and interests in the domain name (in that there has been use/preparations to use the domain prior to the complaint), the Respondent is commonly known by the name in the domain, or the domain name embodies a secondary meaning associated with the Complainant and does not have acquired distinctiveness amongst the adult community; and
3. The domain was registered and is used in bad faith.

The sole remedy available for a Complainant in this instance is the cancellation of the .XXX domain and the re-direction of the Web page signifying the deactivation.

Neither Plan A nor Plan B, as noted above, is a particularly ideal remedy for the brand owner confronted with .XXX. As such, it's not surprising that sparks of contention such as those raised by Manwin and Digital Playground are coming to light. For giants in the adult entertainment industry such as these, the cost to file another application or two for .XXX domains is a drop in the bucket when compared with the cost of potential legal fees. An effort to thwart or, at a minimum, rethink .XXX outright is seemingly an effort to nix the monopolistic control that ICM has on the adult Web space.

Conclusion

The introduction of .XXX represents the new frontier of TLDs on the new TLD horizon. As ICANN moved ever closer to the introduction of the new gTLD application process (and in 2012 into the virgin territory heralded by the initiation of a host of new TLDs that could potentially range from .burger to .restaurant to .McDonalds), we are collectively inching toward a monumental shift in the domain name system as a whole, where the governing registry will have control over everything right of the dot.

The sun has set on the collective Sunrise periods in the race to acquire .XXX domain names. Sun-up on Nov. 8, however, shed new light on a seemingly boundless landscape of .XXX domain name possibilities. The dawn of the wild, wild West of .XXX domain name acquisition, a trail first blazed by a red light Landrush between Nov. 8 and Nov. 25, 2011, where the sole prerequisite for Applicants was a membership in the adult Sponsored Community (namely, individuals, companies and organizations who “provide talent, products or services to the adult industry”) (www.icmregistry.com/about). Demonstrated members were not required to be trademark owners or exhibit pre-existing ownership rights or even be first in line for the domain (www.icmregistry.com/launch/plan/#landrush_rules). While domains with lone Applicants were set to be automatically allocated at the close of Landrush, unlike the prior periods in the launch, competing Applicants participated in a closed auction at the end of the period.

As the dust settled following the close of Landrush, however, the last (and potentially most contentious) leg of the launch commenced. General availability began on Dec. 6, and .XXX domains are being allocated on a first come basis; no requirements for pre-existing rights or adult community memberships apply (www.icmregistry.com/launch/plan/#general_aval). Now is the time for trademark, domain name and brand owners to purchase .XXX domains to proactively race to stake a claim in their brand if only as a defensive measure to prevent other domain owners from registering/using their name in a .XXX context. It's a showdown at the .XXX corral.

Myriad questions for brand owners remain. In the event that yours wasn't the first hand to pull the trigger in the .XXX domain name shoot 'em up, what are the ramifications of having your mark incorporated into an active .XXX domain? Is there any recourse? Are there any mechanisms in place to protect intellectual property in a post-.XXX world?

The .XXXtra Early Bird

For the moment, the landscape remains somewhat uncertain. The ICM Registry (the operating registry for the .XXX sponsored domain) has affirmed that more than 80,000 applications were received during Sunrise A and B (see, http://bit.ly/xGSzJY), and that 25,000 pre-orders for the General Availability Period were tendered in advance of the opening of the final stage in the launch (see, http://bit.ly/xgGrdB) (though it remains to be seen how many of these filings were for defensive purposes versus those with an intention to use the .XXX domain and operate an active website). Gay.XXX, one of the few names offered to companies in advance of open sale of .XXX addresses, was recently sold for $500,000 (http://bit.ly/x5a9Uv) (a fairly respectable number, considering that a general application for a .XXX goes for a scant $225). It would seem, then, that all was not quiet on the Western front despite the designation of a “Quiet Period” spanning from Nov. 25 to Dec. 6. In fact, “quiet” may have entirely been a misnomer in this instance as those who have waited until the beginning of the General Availability Period may have discovered that another Applicant beat them to the punch by lodging a pre-application during this so-called Quiet Period (www.icmregistry.com/launch).

A Claim of .XXXploitation

There has been some indication that there are troubled waters ahead. Ironically, the initial legal dispute specific to the .XXX domain launch was initiated on Nov. 16, 2011 by Manwin Licensing International and Digital Playground, owners of two of the biggest adult content companies and members of the very community that .XXX was intended to support. See, Manwin Licensing International S.A.R.L. and Digital Playground Inc. v. ICM Registry LLC (C.D. Calif. 2011), http://bit.ly/wz5c9E. The parties allege that the establishment of .XXX has produced “monopolistic conduct, price gouging, and anti-competitive and unfair practices, broadly harming competition, businesses, and consumers.” Further, the complaint states that the launch of .XXX is forcing the hand of trademark, domain name and brand owners to purchase .XXX domains defensively to prevent other domain owners from registering/using their name in the domain, thereby causing confusion or dilution resulting in a loss of business and harm to reputation, and that the detrimental effect on competition effectively outweighs all potential benefit of .XXX. The complaint touches on the exploitative nature of .XXX alleging, in effect, extortion for the enrichment of ICM and its affiliates, given the apparent monopoly that ICM enjoys on the TLD and ultimately paints a picture of ICANN and ICM conspiring to jettison bidding for the domains and making ICM the sole registrar. The complaint is a fairly comprehensive summation of what many brand owners no-doubt thought under the looming shadow of .XXX in that the options in view of the launch of the new TLD appeared to be: proactively shell out cash to protect your brand (for members outside and within the adult community alike) or assume the risk of having your brand included in a .XXX domain and associated with someone else's product or service and expose yourself to the possibility of unknown injuries to your brand and reputation.

FleXXXing Legal Muscles

ICM's site boasts that .XXX is the “world's coolest new domain” (www.buy.xxx) (perhaps it does have a sexy leg up on .biz or .gov) and that “.XXX is the domain that changes everything” Everything? Maybe. At the beginning of the General Availability Period, applications for .XXX functioned much the same as for any .gov, .int, or .aero TLD sponsored by a specific community served by the domain. Perhaps .XXX won't change everything, but it is no doubt a controversial catalyst for brand owners and the not so inconsequential first waters through the dam of new TLD domains. At present it would seem as though the only peep into the substance of what domains have been applied for comes courtesy of ICM's .XXX search gateway. Entering a potential .XXX prefix surrenders two results: “Not Available, Try Again!” (Whomp, whomp!) or “Your Domain Is Available!” (Bingo!). A quick search indicated that bigmac.XXX, cocacola.XXX, justinbeiber.XXX and doratheexplorer were taken. However, many brands remained available, so be fair warned that your brand, too, could be used to house a website for naughty business. And what of that? What does it mean to the brand owner who inputs his product or business name into the search engine only to discover that is has been “taken” (perhaps by a member of the adult community, perhaps not)? What protections are in place? What recourse does he have? What legal ramifications are going to stem from the .XXX release?

The language of the Registry-Registrant Agreement present on the ICM Registry website (http://bit.ly/wAqJns) includes provisions specific to the intellectual property rights of third parties, namely, that by registering or reserving a .XXX TLD the Applicant agrees to refrain from infringing upon the intellectual property rights of others, is advised that there is an inherent responsibility to investigate ownership rights of others with regard to the name in the .XXX TLD prior to applying, and that the Applicant (read: not ICM) is exclusively liable for any claims of infringement stemming from the .XXX registration and materials on the corresponding website. Further, the Applicant (in submitting to the Registry-Registrant Agreement) avows that the name in the .XXX TLD will not be used for illegal purposes, including child pornography, infringement of intellectual property rights, the promotion of spam, the impersonation of any person or entity, or the violation of privacy/publicity rights. (ICM does appear to be quarterbacking an effort to register .XXX domains specific to actors in the adult community (www.icmregistry.com/performers), so the name of an individual that just so happens to also be that of an actor in the adult community may be the extension of a .XXX domain in the very near future).

.XXXploring the Brand Owner's Remedies:
Plan A vs. Plan B

There are, essentially, two paths of protection available in the event that a brand owner wants to prevent/prevail against another potential .XXX domain name Registrant, namely, Plan A: cost-efficient and Plan B: not cost-efficient. Plan A, in a nutshell, involves the concerned brand owner pre-emptively registering/reserving its name via .XXX to avoid the belated discovery of HEYTHATSMYBRAND.XXX. In light of the cessation of the Sunrise Periods, however, the ability of a trademark owner to preventatively apply for a .XXX is somewhat hindered, and for a brand owner without a trademark registration, it arguably never existed. It's a game of timing now, hinged on “who files first” during the General Availability period. In the event that a brand owner does not succeed in filing first and a member of the adult community does register and use HEYTHATSMYBRAND. XXX in connection with a domain and website featuring salacious, “adult” content, the remedies in Plan B become relevant. In sum, Plan B includes dispute resolution proceedings such as those governed under the Uniform Domain Name Resolution Policy (UDRP), the Charter Eligibility Dispute Resolution Procedure (CEDRP) and the Rapid Evaluation Service (RES). While UDRP actions are commonly employed in domain name contentions, CEDRP and RES actions are geared toward the .XXX domain frontier.

A CEDRP action is reserved specifically for the resolution of challenges to registered .XXX names on the basis of suspected use that is inconsistent with the qualifications for registration (in that the registration or use of the domain is not used in accordance with the Sponsored Community criteria (not adult oriented)) or due to an Improper Sunrise A Registration (in that the registration of the domain did not conform to the provisions of the Sunrise Program as they apply to the Sponsored Community Adult holders of trademark rights or existing domain names). (www.icmregistry.com/policies/cedrp-policy). The lone remedy available is the “cancellation of the registration and return of the cancelled domain name to the pool of available names available for registration in the .XXX TLD.”

The RES is included by reference in the Registry-Registrant Agreement and aims to provide a hasty review of cases 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 (www.icmregistry.com/policies/res-policy). ICM has stressed that the number of instances in which RES is appropriate will be narrowly interpreted and limited to a single registered trademark and to .XXX domain registrations that are “apparently and obviously intended to abuse or interfere with the rights embodied in such trademark and service marks.” Similar to a UDRP action, for a successful argument under RES, three criteria must be met:

1. The .XXX extension must be identical or confusingly similar to an existing mark;
2. The Respondent has legitimate rights and interests in the domain name (in that there has been use/preparations to use the domain prior to the complaint), the Respondent is commonly known by the name in the domain, or the domain name embodies a secondary meaning associated with the Complainant and does not have acquired distinctiveness amongst the adult community; and
3. The domain was registered and is used in bad faith.

The sole remedy available for a Complainant in this instance is the cancellation of the .XXX domain and the re-direction of the Web page signifying the deactivation.

Neither Plan A nor Plan B, as noted above, is a particularly ideal remedy for the brand owner confronted with .XXX. As such, it's not surprising that sparks of contention such as those raised by Manwin and Digital Playground are coming to light. For giants in the adult entertainment industry such as these, the cost to file another application or two for .XXX domains is a drop in the bucket when compared with the cost of potential legal fees. An effort to thwart or, at a minimum, rethink .XXX outright is seemingly an effort to nix the monopolistic control that ICM has on the adult Web space.

Conclusion

The introduction of .XXX represents the new frontier of TLDs on the new TLD horizon. As ICANN moved ever closer to the introduction of the new gTLD application process (and in 2012 into the virgin territory heralded by the initiation of a host of new TLDs that could potentially range from .burger to .restaurant to .McDonalds), we are collectively inching toward a monumental shift in the domain name system as a whole, where the governing registry will have control over everything right of the dot.