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ICANN Approves New gTLDS and Increases Efforts to Stem Cybersquatting and Domain Name Tasting

Client Advisory

October 13, 2008

The Internet landscape is shrinking fast - almost any domain name you can think of is taken. The Internet Corporation for Assigned Names and Numbers (“ICANN”) is responding by creating new generic top-level domains (“gTLD”)[1] personalized to the owner (think “.(your name here)” or “.news”). For the author, “.Scotts” has a certain appeal. However, the Scotts lawn care company may also want to grab that cyber turf. How is this going to work?

New gTLDs: Dot (your name here)

The number of new gTLDs will soon increase from the existing twenty-one[2] gTLDs now approved. 

With the new gTLDS, your company, say the Jane Doe Media Company, may soon have the opportunity to own and run “.janedoe” and use or sell such web addresses as www.music.janedoe or www.business.janedoe to increase brand awareness and build relationships with consumers, vendors, and/or licensees, on and off the Internet. The company can also implement strategies to oversee the intellectual properties within. 

Application Process

ICANN has yet to officially release information about the application process. The ICANN site notes that fees will be set at a level “which enables the full recovery of costs associated with running the application process.”[3] However, given the marketability of the venture for ICANN and potential new gTLD operators, it is rumored that the application fee could be at least six figures with additional costs for challenging applications, set-up, annual fees to ICANN, and more. Moreover, it is not clear that application fees will be returned if applications are rejected.

The first round of applications is scheduled for the second quarter of 2009.[4] The application process will likely be web-based and last at least thirty to forty-five calendar days. Applications will be accepted on a first-come first-serve basis.[5] Those that are “financially, technically and organizationally capable,”[6] and apply early, have the best shot at the most marketable gTLDs, provided there are no competing applications for the same gTLD[7] and no third-parties assert successful objections[8]

Potential Benefits to Owning Your Own gTLD[9]

Why would you consider a new gTLD? New gTLDs will create new destinations on the Internet which, for the brand owner, are likely to result in new marketing opportunities, brand exposure, and alternative methods to protecting intellectual properties on the Internet. Marketing relationships with the consumer will be created when consumers seek out the brand’s gTLD for trustworthy and engaging information; exposure may be obtained through improved search engine rankings and new keyword strategies; and, the brand owner will have the opportunity to craft use and dispute resolution policies to reduce intellectual property infringement and fraud, and prevent cybersquatters from building a haven within the new gTLD.

New gTLDs Will Require Increased Monitoring and Implementation of New Enforcement Strategies

The addition of new gTLD applications and approved gTLD strings will require increased monitoring of the domain name and gTLD landscape. As a trademark owner, you will need to determine, among other things, the amount of money and time to be spent on enforcing marks against applications and future second level domains (domains within the new gTLDs), and anticipating the intellectual property disputes stemming from such matters. 

As noted, the gTLD application fees may be cost prohibitive for many. This high cost is expected to encourage serious innovation, and discourage cybersquatters from meddling in the intellectual property rights of others. The brand owner also will be responsible for continued implementation of anti-cybersquatting strategies to defend against better-established cybersquatters, whether through use of the courts and the Anticybersquatting Consumer Protection Act (“ACPA”)[10], arbitration via ICANN’s Uniform Dispute Resolution Policy (“UDRP”)[11], or the use of defensive applications. Microsoft, Neiman Marcus[12] and Dell[13] are just a few of the brand owners that have found some success through actions brought against cybersquatters based on violation of the ACPA. 

Efforts To Sour Domain Name Tasting and Reduce Cybersquatting

ICANN has recently stepped up its efforts and proposed new policies to reduce the abusive practice of mass registration and cancellation of domains.[14] 

Under the current generally accepted registration policies, a domain name registrant has a five-day grace period to return the domain name – there is no net cost to the registrant and no ICANN fee of .20 is charged to the registrar. Domainers (mass domain name speculators - the new cybersquatters[15]) frequently abuse this practice by testing domain names by the thousands during the five-day window to see if the domains have sufficient traffic to generate more income than the annual registration fee, usually through pay-per-click advertising. This abuse of the five-day grace period is generally referred to as “domain name tasting,”[16] or in some instances, “domain name kiting,”[17] and both have the potential for facilitation of mass trademark infringement. To put things into perspective, in February 2007, 55.1 million domain names were registered and 51.5 million were cancelled and refunded just before the five-day grace period, presumably because they created no advertising revenue.[18] This abuse has caused major intellectual property enforcement headaches for large and small brand owners alike. 

To tackle the problem, ICANN recently proposed a new resolution to implement a non-refundable fee on domain name registrations for mass domain name speculators. It will create a non-refundable 20 cent per-transaction ICANN fee for domain names deleted during the grace period once the level of deletions exceeds 10 percent of a registrar’s net new registrations in that month. 

Plan Ahead

The application period for new gTLDs will open soon. If you are interested in a new gTLD to build a community on the Internet, build your brand, and control potentially infringing practices…apply early. Your potential names are unlikely to be available in the later rounds, especially if they are well-known, or border on the descriptive or generic. Which names should you apply for? The decision requires evaluating your gTLD opportunities and risks, and devising a strategy for potentially defensive applications. 

If you are not interested in applying to own gTLDs for your brands, be aware that others may. Regardless of whether you intend to seek out a new gTLD, heightened domain name portfolio management and monitoring will be a necessity. 

The upcoming “dot (your name here)” is the next stage e-commerce opportunity and has the potential to increase consumer recognition of your brand. Plan ahead, consult the right people and be ready to be one of the first to grab your piece of the new Internet.  


Questions regarding this client advisory may be directed to author Scott M. Sisun at (212-238-8728, sisun@clm.com) or department partners Rose Auslander at (212-238-8601, auslander@clm.com) or H. Thomas Davis (212-238-8850, davis@clm.com).

Author's Note:  The author would like to thank Rose Auslander for all of her contributions to this advisory.


Endnotes

[1] “gTLDs are a part of the structure of the Internet’s domain-name system … Examples of gTLDs are .EDU, .JOBS, and .COM.” ICANN.org, New gTLDs — Frequently Asked Questions ¶1, http://www.icann.org/en/topics/new-gtld-strategy-faq.htm (last visited October 4, 2008).

[2] The list of twenty-one is as follows: .aero, .arpa, .asia, .biz, .cat, .com, .coop, .edu, .gov, .info, .int, .jobs, .mil, .mobi, .museum, .name, .net, .org, .pro, .tel, .travel. IANA.org, Root Zone Database, http://www.iana.org/domains/root/db/# (last visited October 4, 2008).

[3] ICANN.org, supra note 1, at ¶7.

[4] Internet Corporation for Assigned Names and Numbers, New gTLD Program: What Kind of Internet Do You Want? 17 (2008), http://par.icann.org/files/paris/BAA_Intro_NewGTLDs_Paris_23Jun08.pdf.

[5] Internet Corporation for Assigned Names and Numbers, ICANN Generic Names Supporting Organisation, Board Report, Introduction of New Generic Top-Level Domains 21 (2007), http://gnso.icann.org/issues/new-gtlds/council-report-to-board-pdp-new-gtlds-11sep07.pdf.

[6] Id.at 19.

[7] ICANN is considering auctions, among other methods, as a tie-breaking method where there is more than one qualified applicant for a gTLD string. Internet Corporation for Assigned Names and Numbers, supra note 4, at 22.

[8] Potential grounds for objection: confusingly similar gTLD strings; infringement of IP rights; moral and public order objections; objections from community groups. Id. at 15.

[9] Officially, the potential benefit of new gTLDs are: “To encourage and foster creativity, innovation, consumer choice, and competition in the domain name space.” Id. at 5.

[10] “Cyberpiracy prevention,” provides for, among other things, civil liability for registering, trafficking or using a domain name confusingly similar to a mark. 15 U.S.C. § 1125(d) (2007).

[11] “Under the [UDRP], most types of trademark-based domain-name disputes must be resolved by agreement, court action, or arbitration before a registrar will cancel, suspend, or transfer a domain name.” ICANN.org, Uniform Domain-Name-Dispute-Resolution Policy, http://www.icann.org/en/udrp/udrp.htm (last visited October 4, 2008).

[12] Paul Sloan, The Man Who Owns the Internet, CNNMoney.com, May 22, 2007, http://money.cnn.com/magazines/business2/business2_archive/2007/06/01/100050989/.

[13] Brian Krebs, Dell Takes Cybersquatters to Court, The Washington Post, (November 28, 2007), available at http://www.washingtonpost.com/wp-dyn/content/article/2007/11/28/AR2007112801679.html.

[14] Internet Corporation for Assigned Names and Numbers, ICANN Board Recommends Action on Domain Tasting 1 (2008), http://www.icann.org/en/announcements/announcement-29jan08.htm.

[15] “Cybersquatters have rebranded themselves as ‘domainers.’ ” Doug Isenberg, Perspective: ICANN Needs to Clamp Down on Domain Name Abuse, CNET News, June 21, 2006, http://news.cnet.com/2010-1030-6084970.html?tag=yt.

[16] “Domain tasting” is the practice by registrants to use the five-day grace period to test the profitability of domains. Internet Corporation for Assigned Names and Numbers, GNSO Initial Report on Domain Tasting 30 (2008), http://gnso.icann.org/issues/domain-tasting/gnso-initial-report-domain-tasting-07jan08.pdf.

[17] “Domain kiting” is slightly different from domain tasting as it involves the continual registration, deletion, and re-registration of the same names in order to avoid paying registration fees. Id. at 30.

[18] Bob Parsons.tv, Why It's Getting Harder to Get the Domain Names you Want. Go Daddy Rescues Registerfly Customers, http://www.bobparsons.tv/WhyyoucantgetthedomainnameyouwantGoDaddyrescuesRegisterflycustomers.html (June 4, 2007, 14:33 EST).



Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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