New GTLDs Law Strategy for Business

The applications for some examples of the different TLDs that were applied for are listed in the table below. The table illustrates branded TLDs and generic TLDs and is important to understand, as these will be used in different ways.

[IMGCAP(1)]

Brand TLDs

On the brand side, the new .google, .canon and .apple TLDs, among others, will be used specifically by the respective brand to resolve to websites uniquely associated with that brand. Canon announced early on that it intended to apply for the “.canon” TLD, stating in a press release dated March 16, 2010: “With the adoption of the new gTLD system, which enables the direct utilization of the Canon brand, Canon hopes to globally integrate open communication policies that are intuitive and easier to remember compared with existing domain names such as 'canon.com.'” Thus, Canon plans to use its TLD to promote its own products/services and likely won't be selling off smaller individual domain names of the TLD to third parties.

Generic TLDs

On the generic side, there are a number of entities that have applied for multiple domain names, seeing this as an opportunity to own valuable pieces of Internet real estate that can be sold off to the public, ala .com, .co, .net and the like. The most prolific of these entities is Donuts, Inc., which applied for 307 generic TLDs and raised over $100 million in Series A and B financing from hedge funds, private equity firms, and a “top-tier” bank. See, “After Its $100M+ Series A, Donuts, A Register for New gTLDs, Raises 'Tens of Millions' In Series B So It Can Bid for More .Names,” TechCrunch.com, and the Donuts Investors page on Donuts.co.

For Donuts and its investors, the potential return on investment could be tremendous if Donuts hits on even just a couple of TLDs that become Internet fixtures. Considering that registered domains increased 12% since 2011, and estimates from Cisco's Visual Networking Index (2010-2015) that the Internet will have roughly 15 billion users by 2015 and quadruple the amount of traffic, Donuts may be the first of many future well-backed “TLD Funds” to move into the domain space. See, “Global Internet Traffic Projected to Quadruple by 2015,” Cisco.com.

Controversy over the Program

ICANN has been the subject of withering criticism from companies around the world ' particularly in the U.S. ' that are upset about having to spend more time and money to protect brands against cybersquatters, phishing scams and the like. It has also been the subject of harsh criticism in the U.S. Congress, where there have been several hearings concerning the new TLD program that have questioned ICANN's ability to execute the program without compromising the safety and security of the Internet ' ICANN's most critical job. Rep. Bob Goodlatte (R-VA), the chairman of the House Sub-Committee on Intellectual Property, Competition and the Internet, summarized the concerns in testimony on May 4, 2011, stating:

The gTLD proposal is designed to dramatically expand the number of top-level domains available . This expansion will raise significant revenue for ICANN, possibly launch new businesses to manage the new gTLD's, and create more options for registrars to sell domain names to consumers. The investment and economic potential from these new domains may be significant , but investment in economic potential should not necessarily be the focus of whether the gTLD proposal moves forward. We need to ask ourselves the tough questions.
How will this expansion affect trademark holders?
Will it create opportunities for fraud, increased consumer confusion, and IP theft?Besides ICANN, who is asking for these new gTLD's, consumers, registrars, or those looking to create businesses around these new top-level domains, is the gTLD proposal simply a solution that is in search of a problem that may or may not exist?”

May 4, 2011 Testimony, emphasis added .

In fact, just a few weeks ago there was a technical report from Verisign Inc. entitled “New gTLD Security and Stability Considerations,” which raised specific concerns that the new TLD program could compromise the security of the Domain Name System (DNS), because the program lacks adequate monitoring safeguards. Other potential problems include security certificates and plans for changes to the root zone to be automated. The report stated in part: “The impact related to the introduction of new gTLDs may well result in insecurity for widely deployed [W]eb security and cookie mechanisms, and potentially contribute to the loss of consumer confidence and erosion of consumer privacy and trust in the Internet, as well as broader security and stability implications yet unforeseen.” See, Verisign Labs Technical Report, pg. 8, sec. B.

Verisign, as the entity which runs the .com registry, arguably has more to lose than anyone because of the new gTLD program. Hundreds of new competitors will soon be vying with .com to sell domain names. However, the report is representative of the potential problems that the new gTLD program faces, and the pressure on ICANN to make sure that despite all this change, there are no changes for users in the way the Internet fundamentally works.

Navigating the New'TLD Space

For businesses (large and small), understanding the landscape of the new TLDs and how to navigate an expanding Internet will be critical, particularly those that have their principal consumer point of contact on the Internet. Why is it critical?

First, although consumers have generally not put much stock in TLDs as identifiers, that may all be about to change. Consumers may very quickly expect known brands to follow the likes of Canon, Google and Apple and have their own TLDs. Second, many established brands and companies were caught unaware when the first domains came online in the late 1990s and early 2000, and spent tens of thousands of dollars either registering domain names that they never planned to use, buying domains registered by third parties, or having to file expensive lawsuits to stop other from using their marks. Similar mistakes in a much larger and expanding Internet could be expensive, embarrassing and do damage to the respective brand if the third party uses the domain to hurt consumers and erode confidence in the brand.

Realizing this, many brands registered specific domain names in the .XXX registry during the “Sunrise” or early registration period that preceded the open/public launch of the registry on Dec. 6, 2011. Even educational institutions like Harvard (harvard.xxx), Brigham Young University (byu.xxx), Notre Dame (notredame.xxx), Penn State (pennstate.xxx) and many others worldwide registered domains in the .XXX registry to ensure that the most specific terms and/or domains could not be used to damage their good names and public image.

Although the expansion of the Internet is on the one hand a significant opportunity for brands to enhance their connection to customers, on the other and as illustrated by the .XXX registry, it could also do a lot of damage if brands don't act proactively and prevent third parties using their names or marks to confuse and scam consumers.

Steps to Take

But if you're not Harvard and are simply running a small business without an army of lawyers to help you navigate this space, there are still steps that you can take (without keeping an attorney on retainer) that will help you through this process:

• Identify the new TLDs that might be helpful. A lot of companies now use multiple domains to resolve to a single home-website. If you are running a small hotel chain you should be aware that there is going to be a .hotel TLD. Owning your name in this space might be good for business.
• Identify new TLDs that might be harmful. This does not mean registering every permutation of a domain name so that you start maintaining a massive, defensive domain library. Instead, focus on specific TLDs that might be related (even tangentially) to your brand and assess whether owning it might save time and money later on. If your company is a bookshop operating in a .com or .net space, consider whether third-party registrations in TLDs like .store, .web or .shop would be harmful (even if not value-added) if they were used by a third party or competitor?
• Delegate someone to watch this space. The new gTLD program is part legal, part technical, and part marketing ' therefore responsibility at a small business for watching developments and competitor activity in this space is likely to fall through the cracks if no one is actively monitoring it. Don't let this happen; have an intern or junior staffer (at the very least) keep track of the new TLDs and track what competitors might be doing in the space. A number of the TLDs may be developing innovations or community ties that your business should know about.
• Use the new gTLD Rights Protection Mechanisms (RPMs). If you do find yourself having to deal with a cybersquatter, there are plenty of options for dealing with the situation that don't involve filing an expensive lawsuit ' particularly if your case is simply about the domain name itself and not an issue of damages or monetary compensation. There are a number of RPMs that can be helpful, depending on the type of infringement. Further, if the cybersquatter is blatantly using your name or mark as part of a scheme to confuse consumers (and profit from the false association), you may be able to file a domain arbitration (Uniform Domain-Name Dispute-Resolution Policy (UDRP)) to retrieve or cancel the domain name without having to file a lawsuit.

David K. Mitnick is the Founder and President of DomainSkate, LLC, a domain name arbitration dispute facilitator. Prior to starting DomainSkate, Mitnick spent 10 years as an intellectual property lawyer with Amster Rothstein & Ebenstein LLP in New York, working in all phases of intellectual property law including trademark licensing and prosecution, patent and copyright litigation and Internet law. He serves as the Advisory Board Chairman of the Brooklyn Law School Trade Secrets Institute. He can be reached at [email protected].

ICANN, the International Corporation for Assigned Names and Numbers, is a non-profit organization that runs the main root zone of the Internet. They have spent almost a decade planning and studying how to expand the Internet. This plan, otherwise known as the New gTLD (Global Top Level Domain) Program will expand the 22 existing top level domains (TLDs) (.com, .net, and .info) to well over a thousand TLDs within the next year. This expansion comes as part of what ICANN perceives as its mandate to create a truly international Internet space that is a reflection of the global Internet community. The new TLDs will include internationalized domain names that, for the first time, will be in non-Roman characters, meaning there will be TLDs in Chinese, Japanese and Arabic.

Beginning in January 2012, ICANN started accepting applications for new TLDs from applicants interested in owning and running a TLD. (For background and history of the TLD expansion, see, “From Dot-Com to Dot-Whatever,” from the July 2011 issue of Internet Law & Strategy.) Although ICANN estimated that it would receive about 500 applications from interested parties, when it opened the application period it received over 1,900.

In the very near future, ICANN's plans will come to fruition, as a number of the applications have passed through the ICANN internal review process and should be online in the next month or two. ICANN is anxious to get the first uncontested ( i.e. , those that only have one applicant) international TLDs online to show that they are making progress and the program is working, and that it is a critical part of the ICANN multi-stakeholder model.

The applications for some examples of the different TLDs that were applied for are listed in the table below. The table illustrates branded TLDs and generic TLDs and is important to understand, as these will be used in different ways.

[IMGCAP(1)]

Brand TLDs

On the brand side, the new .google, .canon and .apple TLDs, among others, will be used specifically by the respective brand to resolve to websites uniquely associated with that brand. Canon announced early on that it intended to apply for the “.canon” TLD, stating in a press release dated March 16, 2010: “With the adoption of the new gTLD system, which enables the direct utilization of the Canon brand, Canon hopes to globally integrate open communication policies that are intuitive and easier to remember compared with existing domain names such as 'canon.com.'” Thus, Canon plans to use its TLD to promote its own products/services and likely won't be selling off smaller individual domain names of the TLD to third parties.

Generic TLDs

On the generic side, there are a number of entities that have applied for multiple domain names, seeing this as an opportunity to own valuable pieces of Internet real estate that can be sold off to the public, ala .com, .co, .net and the like. The most prolific of these entities is Donuts, Inc., which applied for 307 generic TLDs and raised over $100 million in Series A and B financing from hedge funds, private equity firms, and a “top-tier” bank. See, “After Its $100M+ Series A, Donuts, A Register for New gTLDs, Raises 'Tens of Millions' In Series B So It Can Bid for More .Names,” TechCrunch.com, and the Donuts Investors page on Donuts.co.

For Donuts and its investors, the potential return on investment could be tremendous if Donuts hits on even just a couple of TLDs that become Internet fixtures. Considering that registered domains increased 12% since 2011, and estimates from Cisco's Visual Networking Index (2010-2015) that the Internet will have roughly 15 billion users by 2015 and quadruple the amount of traffic, Donuts may be the first of many future well-backed “TLD Funds” to move into the domain space. See, “Global Internet Traffic Projected to Quadruple by 2015,” Cisco.com.

Controversy over the Program

ICANN has been the subject of withering criticism from companies around the world ' particularly in the U.S. ' that are upset about having to spend more time and money to protect brands against cybersquatters, phishing scams and the like. It has also been the subject of harsh criticism in the U.S. Congress, where there have been several hearings concerning the new TLD program that have questioned ICANN's ability to execute the program without compromising the safety and security of the Internet ' ICANN's most critical job. Rep. Bob Goodlatte (R-VA), the chairman of the House Sub-Committee on Intellectual Property, Competition and the Internet, summarized the concerns in testimony on May 4, 2011, stating:

The gTLD proposal is designed to dramatically expand the number of top-level domains available . This expansion will raise significant revenue for ICANN, possibly launch new businesses to manage the new gTLD's, and create more options for registrars to sell domain names to consumers. The investment and economic potential from these new domains may be significant , but investment in economic potential should not necessarily be the focus of whether the gTLD proposal moves forward. We need to ask ourselves the tough questions.
How will this expansion affect trademark holders?
Will it create opportunities for fraud, increased consumer confusion, and IP theft?Besides ICANN, who is asking for these new gTLD's, consumers, registrars, or those looking to create businesses around these new top-level domains, is the gTLD proposal simply a solution that is in search of a problem that may or may not exist?”

May 4, 2011 Testimony, emphasis added .

In fact, just a few weeks ago there was a technical report from Verisign Inc. entitled “New gTLD Security and Stability Considerations,” which raised specific concerns that the new TLD program could compromise the security of the Domain Name System (DNS), because the program lacks adequate monitoring safeguards. Other potential problems include security certificates and plans for changes to the root zone to be automated. The report stated in part: “The impact related to the introduction of new gTLDs may well result in insecurity for widely deployed [W]eb security and cookie mechanisms, and potentially contribute to the loss of consumer confidence and erosion of consumer privacy and trust in the Internet, as well as broader security and stability implications yet unforeseen.” See, Verisign Labs Technical Report, pg. 8, sec. B.

Verisign, as the entity which runs the .com registry, arguably has more to lose than anyone because of the new gTLD program. Hundreds of new competitors will soon be vying with .com to sell domain names. However, the report is representative of the potential problems that the new gTLD program faces, and the pressure on ICANN to make sure that despite all this change, there are no changes for users in the way the Internet fundamentally works.

Navigating the New'TLD Space

For businesses (large and small), understanding the landscape of the new TLDs and how to navigate an expanding Internet will be critical, particularly those that have their principal consumer point of contact on the Internet. Why is it critical?

First, although consumers have generally not put much stock in TLDs as identifiers, that may all be about to change. Consumers may very quickly expect known brands to follow the likes of Canon, Google and Apple and have their own TLDs. Second, many established brands and companies were caught unaware when the first domains came online in the late 1990s and early 2000, and spent tens of thousands of dollars either registering domain names that they never planned to use, buying domains registered by third parties, or having to file expensive lawsuits to stop other from using their marks. Similar mistakes in a much larger and expanding Internet could be expensive, embarrassing and do damage to the respective brand if the third party uses the domain to hurt consumers and erode confidence in the brand.

Realizing this, many brands registered specific domain names in the .XXX registry during the “Sunrise” or early registration period that preceded the open/public launch of the registry on Dec. 6, 2011. Even educational institutions like Harvard (harvard.xxx), Brigham Young University (byu.xxx), Notre Dame (notredame.xxx), Penn State (pennstate.xxx) and many others worldwide registered domains in the .XXX registry to ensure that the most specific terms and/or domains could not be used to damage their good names and public image.

Although the expansion of the Internet is on the one hand a significant opportunity for brands to enhance their connection to customers, on the other and as illustrated by the .XXX registry, it could also do a lot of damage if brands don't act proactively and prevent third parties using their names or marks to confuse and scam consumers.

Steps to Take

But if you're not Harvard and are simply running a small business without an army of lawyers to help you navigate this space, there are still steps that you can take (without keeping an attorney on retainer) that will help you through this process:

• Identify the new TLDs that might be helpful. A lot of companies now use multiple domains to resolve to a single home-website. If you are running a small hotel chain you should be aware that there is going to be a .hotel TLD. Owning your name in this space might be good for business.
• Identify new TLDs that might be harmful. This does not mean registering every permutation of a domain name so that you start maintaining a massive, defensive domain library. Instead, focus on specific TLDs that might be related (even tangentially) to your brand and assess whether owning it might save time and money later on. If your company is a bookshop operating in a .com or .net space, consider whether third-party registrations in TLDs like .store, .web or .shop would be harmful (even if not value-added) if they were used by a third party or competitor?
• Delegate someone to watch this space. The new gTLD program is part legal, part technical, and part marketing ' therefore responsibility at a small business for watching developments and competitor activity in this space is likely to fall through the cracks if no one is actively monitoring it. Don't let this happen; have an intern or junior staffer (at the very least) keep track of the new TLDs and track what competitors might be doing in the space. A number of the TLDs may be developing innovations or community ties that your business should know about.
• Use the new gTLD Rights Protection Mechanisms (RPMs). If you do find yourself having to deal with a cybersquatter, there are plenty of options for dealing with the situation that don't involve filing an expensive lawsuit ' particularly if your case is simply about the domain name itself and not an issue of damages or monetary compensation. There are a number of RPMs that can be helpful, depending on the type of infringement. Further, if the cybersquatter is blatantly using your name or mark as part of a scheme to confuse consumers (and profit from the false association), you may be able to file a domain arbitration (Uniform Domain-Name Dispute-Resolution Policy (UDRP)) to retrieve or cancel the domain name without having to file a lawsuit.

David K. Mitnick is the Founder and President of DomainSkate, LLC, a domain name arbitration dispute facilitator. Prior to starting DomainSkate, Mitnick spent 10 years as an intellectual property lawyer with Amster Rothstein & Ebenstein LLP in New York, working in all phases of intellectual property law including trademark licensing and prosecution, patent and copyright litigation and Internet law. He serves as the Advisory Board Chairman of the Brooklyn Law School Trade Secrets Institute. He can be reached at [email protected].