ICANN's Trademark Clearinghouse Sees Slow Initial Take-up

A surprising analysis of the trademarks submitted so far shows that less than 2% of trademarks entered come from industries producing goods with significant safety implications if sold through unofficial channels online. To be more specific, data reveals that approximately 1% of trademarks submitted to date come from companies manufacturing cosmetics, and even less than that (0.8%) relates to pharmaceutical and medical products. This lack of involvement in the TMCH leaves these businesses open to a variety of potential risks such as cyber-squatting, typo-squatting and other types of online trademark abuse. Failing to enter trademarks into the TMCH also means that these businesses will not receive any type of notification if third parties register Web addresses matching their trademarks with the intention to sell fake products via the new domains. This is something businesses should not take lightly, given that the counterfeit goods market is set to exceed a whopping $1.7 trillion by 2015, according to a report from the International Chamber of Commerce. See, “Impacts of Counterfeiting and Piracy to Reach U.S. $1.7 Trillion by 2015.”'

In further analysis of the trademarks submitted thus far, less than 10% of those entered into the TMCH relate to clothing and footwear, leaving household apparel brands also potentially vulnerable to infringement. The largest group of applications submitted to the TMCH to date relate to scientific or teaching apparatus (23%), which includes medical equipment and computer software. Using the NICE classification ' an international classification of goods and services applied for the registration of trademarks and service marks ' as a benchmark, trademarks associated with advertising or business management account for 22% of the registrations, while 16% relate to sporting or entertainment.

Regional Shifts

A few regional disparities were also revealed from the trademark submissions gathered so far. For one, despite the TMCH being open to trademark owners across the globe, the highest volume of submissions came from the U.S. (44% of current applications), followed by France (10%), the UK (under 7%), and Germany (4%).

It is fair to note that participation in the TMCH at this point may be considerably impacted due to trademark agents acting on behalf of rights owners. Agents can offer specialist support and management of any trademark submission on behalf of brand owners. Agents make a prepayment to the Clearinghouse to get registered, which is then used to pay for client records in the TMCH (any unused balance is returned to the agent). Agents are also offered a reduced fee when entering trademarks, from which trademark owners benefit. There are currently more than a 100 trademark agents registered with the TMCH, with many more expected to register at some point in the near future. The agents may still be gathering or checking client data, but will at some point submit all this to the Clearinghouse, so the volume of records entered into the TMCH is expected to rise significantly. (An attorney who is not an “agent” can record a trademark on behalf of a client, but must pay for each individually and, likely, then invoice the client. Once the record is submitted, all other communication will be sent directly to the client, i.e. , the mark holder. However, if the application is made by an agent, all communication goes through the agent.)

The TMCH marks the first time that there is a single, global repository of registered trademarks, including trademarks from almost all of the world's jurisdictions and in multiple scripts. As a result, the TMCH offers a streamlined process for brands to register for protection of their intellectual property both domestically and internationally. In terms of when and which domain names will be the first to launch, those who have registered domain names which cater to diverse language of communities and appear in non-Roman characters are given first priority. Also known as International Domain Names (IDNs), the early launch of these particular domain names has encouraged a significant amount of international submissions of trademarks from brands and region specific rights holders from Japan, China and Saudi Arabia.

While this strong, early initiative from trademark holders looking to proactively record their trademarks in the TMCH represents a positive first step for many businesses, it is equally concerning that there are still many trademark holders who have yet to submit their marks for protection. Though there is no existing deadline for submitting a trademark to the TMCH, it is critical that brand owners be prepared to submit their trademarks or contact their trademark agent as early on as possible to ensure that enough time is reserved for dealing with potential administrative corrections. A recent independent survey commissioned by Deloitte and conducted by Vanson Bourne found that 96% of the leading brands view the impending arrival of new domains as a risk to their intellectual property, which only strengthens the case for advanced preparation as the only logical choice for avoiding unexpected challenges.

Conclusion

The TMCH was created and launched with an overall goal to serve as a crucial first step toward rights protection and defense for trademark holders during the expansion of Internet domains. Now it is up to each business to contact a trademark agent to take full advantage of the TMCH prior to the launch of the first new gTLDs in the next upcoming months in order to ensure maximum security on their trademarks.

Jan Corstens is a Partner with Deloitte, operators of the Trademark Clearinghouse.

Later this year, the Internet is set to undergo a series of new and drastic changes with the first rollout of hundreds of new generic Top Level Domains (gTLDs), otherwise known as the right-most label in a domain name (e.g., .org, .info and .edu). (ICANN has yet to confirm when new TLDs will go live, although the final “pre-designation” testing is underway (see, ICANN “New gTLD Programme Update,” Sept. 19, 2013), and the industry believes it will be in the next couple months.) Examples of potential new gTLDs include brand-specific, geographic and even foreign script domains such as .google, .washington and even .music. Ahead of these official updates to the Internet, new data reveals that the Internet Corporation for Assigned Names and Numbers' (ICANN) Trademark Clearinghouse (TMCH), the central database of validated trademarks that helps defend brand owners against cyber-squatting or other types of trademark infringement, has received more than 10,000 applications from mark owners wishing to protect themselves ahead of the domain name expansion. Despite this number, there is still a significant lack of participation from many top businesses that have yet to register and, as a result, are at greater risk of intellectual property infringement and potentially putting consumers at risk as well.

The TMCH offers two unique and distinct protective services for those who record their trademarks:

1. The Sunrise Period. Before the open launch of any new gTLD to the general public, a Sunrise Period will take place that enables trademark holders to secure domain names identical to their marks ahead of wider availability. Any business wishing to secure a domain name associated with their trademarks during this period must have submitted the relevant marks into the TMCH. Additionally, since the TMCH reviews marks from all jurisdictions according to the same requirements, use of the TMCH provides a consistent basis for accepting Sunrise registrations. It is important to note that new gTLD registries also have the ability to establish additional registration criteria, and may offer additional limited registration periods after the Sunrise Period to establish additional opportunities or protections.
2. The Trademark Claims System. The second key benefit of a record in the TMCH is notification alerts via the Trademark Claims System. For a period of at least 90 days after each new Web extension launches, trademark holders will receive a warning if someone else registers a domain name that matches their mark or marks. This warning allows trademark holders the chance to promptly deal with any trademark infringement.

Brand owners that are particularly interested in taking advantage of registrations during Sunrise Periods are strongly encouraged to partake in early submissions, as delays could lead to the inability to register a domain name. Additionally, opting to wait may leave trademarks open to a window of vulnerability as it can take up to 30 days for submissions to be processed. The Early Bird system operated by the TMCH allows trademark owners or their agents to register ahead of time while their subscription fee only starts when the first domain is launched.

Pharmaceutical and Clothing Counterfeit-Prone

A surprising analysis of the trademarks submitted so far shows that less than 2% of trademarks entered come from industries producing goods with significant safety implications if sold through unofficial channels online. To be more specific, data reveals that approximately 1% of trademarks submitted to date come from companies manufacturing cosmetics, and even less than that (0.8%) relates to pharmaceutical and medical products. This lack of involvement in the TMCH leaves these businesses open to a variety of potential risks such as cyber-squatting, typo-squatting and other types of online trademark abuse. Failing to enter trademarks into the TMCH also means that these businesses will not receive any type of notification if third parties register Web addresses matching their trademarks with the intention to sell fake products via the new domains. This is something businesses should not take lightly, given that the counterfeit goods market is set to exceed a whopping $1.7 trillion by 2015, according to a report from the International Chamber of Commerce. See, “Impacts of Counterfeiting and Piracy to Reach U.S. $1.7 Trillion by 2015.”'

In further analysis of the trademarks submitted thus far, less than 10% of those entered into the TMCH relate to clothing and footwear, leaving household apparel brands also potentially vulnerable to infringement. The largest group of applications submitted to the TMCH to date relate to scientific or teaching apparatus (23%), which includes medical equipment and computer software. Using the NICE classification ' an international classification of goods and services applied for the registration of trademarks and service marks ' as a benchmark, trademarks associated with advertising or business management account for 22% of the registrations, while 16% relate to sporting or entertainment.

Regional Shifts

A few regional disparities were also revealed from the trademark submissions gathered so far. For one, despite the TMCH being open to trademark owners across the globe, the highest volume of submissions came from the U.S. (44% of current applications), followed by France (10%), the UK (under 7%), and Germany (4%).

It is fair to note that participation in the TMCH at this point may be considerably impacted due to trademark agents acting on behalf of rights owners. Agents can offer specialist support and management of any trademark submission on behalf of brand owners. Agents make a prepayment to the Clearinghouse to get registered, which is then used to pay for client records in the TMCH (any unused balance is returned to the agent). Agents are also offered a reduced fee when entering trademarks, from which trademark owners benefit. There are currently more than a 100 trademark agents registered with the TMCH, with many more expected to register at some point in the near future. The agents may still be gathering or checking client data, but will at some point submit all this to the Clearinghouse, so the volume of records entered into the TMCH is expected to rise significantly. (An attorney who is not an “agent” can record a trademark on behalf of a client, but must pay for each individually and, likely, then invoice the client. Once the record is submitted, all other communication will be sent directly to the client, i.e. , the mark holder. However, if the application is made by an agent, all communication goes through the agent.)

The TMCH marks the first time that there is a single, global repository of registered trademarks, including trademarks from almost all of the world's jurisdictions and in multiple scripts. As a result, the TMCH offers a streamlined process for brands to register for protection of their intellectual property both domestically and internationally. In terms of when and which domain names will be the first to launch, those who have registered domain names which cater to diverse language of communities and appear in non-Roman characters are given first priority. Also known as International Domain Names (IDNs), the early launch of these particular domain names has encouraged a significant amount of international submissions of trademarks from brands and region specific rights holders from Japan, China and Saudi Arabia.

While this strong, early initiative from trademark holders looking to proactively record their trademarks in the TMCH represents a positive first step for many businesses, it is equally concerning that there are still many trademark holders who have yet to submit their marks for protection. Though there is no existing deadline for submitting a trademark to the TMCH, it is critical that brand owners be prepared to submit their trademarks or contact their trademark agent as early on as possible to ensure that enough time is reserved for dealing with potential administrative corrections. A recent independent survey commissioned by Deloitte and conducted by Vanson Bourne found that 96% of the leading brands view the impending arrival of new domains as a risk to their intellectual property, which only strengthens the case for advanced preparation as the only logical choice for avoiding unexpected challenges.

Conclusion

The TMCH was created and launched with an overall goal to serve as a crucial first step toward rights protection and defense for trademark holders during the expansion of Internet domains. Now it is up to each business to contact a trademark agent to take full advantage of the TMCH prior to the launch of the first new gTLDs in the next upcoming months in order to ensure maximum security on their trademarks.

Jan Corstens is a Partner with Deloitte, operators of the Trademark Clearinghouse.