What impact will the newly approved domain names have for brand owners?

What impact will the newly approved domain names have for brand owners?

Theo Savvides, Partner in Osborne Clarke's Intellectual Property practice and Associate, Jonathan Maynard discuss  the impact of the newly released gTLDs.

In brief

Since the end of October 2013, more than one hundred new generic top level domains (gTLDs) have been formally approved as the largest ever expansion of the internet finally enters its closing stages. The newly delegated domains include generic terms as varied as .BIKE, .ESTATE, .SEXY, .LUXURY, .DANCE, .COMMUNITY and .HOLDINGS.

Geographic gTLDs have also proved popular, with .BERLIN and .TOKYO already delegated and .LONDON expected in Spring 2014.

Also, for the first time the new domains include non-Latin scripts and the domains delegated so far include the Japanese for "everyone", the Arabic for "web" or "network", the Chinese for "game" and the Cyrillic for "online" and "site". Around 1,400 new domains in total are expected to be rolled out over the course of the next year or so. Previously the internet contained only around 20 gTLDs (such as .COM, .ORG, .NET) alongside a couple of hundred country code TLDs (such as .FR, .ES, .DE).

ICANN has published a list of the newly delegated gTLDs on its website, which is updated with all new delegated gTLDs and which can be found here.

Where did these new domains come from?

In June 2012, ICANN (short for The Internet Corporation for Assigned Names and Numbers) accepted a total of 1,930 applications from businesses vying to own and operate new internet registries. Of these as many as 1,400 are likely to be successfully delegated at some point. Businesses willing to pay the $185,000 application and evaluation fee were allowed to apply for any string of characters, from generic terms such as .CAR to brand terms such as .BMW. Applicants could also specify whether or not they were going to operate the new domain as an open registry (i.e. to sell web domains to the general public under the new top level name, such as yoursite.HOLDINGS) or as a closed registry (i.e. withholding a new top level name from the general public, and retaining it for the exclusive use of themselves or their selected affiliates, e.g. businessname.BRAND, or officialdealer.BRAND).

Many applicants applied for multiple domains, with venture capital backed Donuts (applying via various companies) leading the pack with 307 applications and with several other internet registry businesses also spending a lot of money, making applications in the double-digits. Of the large technology players, Google applied for 101 domains while Amazon applied for 76. Other notable applicants include beauty giant L'Oreal which applied for 14 gTLDs, including brand terms such as .LOREAL .GARNIER and .MAYBELLINE, as well as generic terms such as .BEAUTY, .MAKEUP and .HAIR.

The most popular domains which are the subject of competing applications from more than one applicant (such as .MUSIC and .CLOUD) are still being dealt with by ICANN. At least some of those gTLDs are likely to be ultimately allocated by auction. The domains that have been rolled out in recent weeks have been largely uncontroversial and uncontested.

Controversies and objections

It has not been smooth sailing for all applicants however. Earlier this year, ICANN suspended applications for genuinely generic domains (e.g. .BOOK, .MUSIC) which were going to be withheld from the public (so-called "closed generic" gTLDs). Adverse comments were raised in the public consultation stage of the application process to the effect that no single business should be granted the sole right to operate or control websites hosted under gTLDs that correspond to everyday words. That issue has led to a prohibition on applications for such closed generic gTLDs in the future, however the question of how to deal with the affected applicants in the current expansion round (and their hefty application fees), is either still being debated within ICANN or has not been answered publically.

Additionally a handful of applications have been rejected or abandoned as a result of specific objections raised. The fashion brand Patagonia abandoned its application for .PATAGONIA following objections raised on behalf of the people of Patagonia. Similarly, Amazon's application for .AMAZON was dealt a blow when ICANN's Governmental Advisory Committee recommended the application be refused after concerns were raised by the South American governments which share the Amazon region. Additionally, a small number of applications have been refused on the basis that other applicants or third parties have prior trade mark rights in the term applied for.

Opportunities for businesses

The big opportunity for those with the budget and the will was to apply to run one or more of these new domains. At present however ICANN is not receiving applications and the next application round is unlikely to be announced until the current process is nearer completion.

For the rest of the world, there will be opportunities to obtain web addresses under a rich variety of TLDs which correspond to the goods or services they offer. At present, the recently delegated domains are only open to businesses who have registered their trade marks with the ICANN-appointed Trademark Clearinghouse (on which more below).

Whether or not we will see a mass migration from.COM to .CAR by the automotive sector, or to .SINGLES by dating sites remains to be seen. In a world in which most consumers navigate the internet by search engine rather than by typing urls, the value of investing marketing and IT budgets to identify and acquire brand-synergistic domain names may be limited.

Risks for businesses

Cybersquatting has been a problem for brand owners since the inception of the internet. The massive proliferation of new top level domains means that businesses which are concerned about third parties acquiring web addresses that correspond to their company names or brand identities could have around 1,400 TLDs to police, rather than the couple of hundred currently in existence. To assist in addressing brand owners' concerns, the new gTLD regime provides for an ICANN-appointed Trademark Clearinghouse to which all operators of new top level registries must refer when rolling out their new domain.

The Trademark Clearinghouse

Brand owners are able to list their registered trade marks in the Clearinghouse, at a cost of $150 per mark per year (although discounts are available for prepayments and for bulk users such as law firms). Trade marks can be added to the Clearinghouse online at www.trademark-clearinghouse.com.

At present, the recently delegated gTLDs are in a Sunrise Period which must last at least 30 days, during which only brand owners who have registered their trade marks in the Trademark Clearinghouse may buy second-level domains.

If the brand owner does not purchase a domain that corresponds to its trade marks within that time, third parties will be free to buy those domains. Any purchaser of web addresses which exactly match a trade mark in the Clearinghouse will be notified of the brand owner's trade mark rights. However, these notices will only be sent to the brand owner if the purchase is made within the first 90 days of operation of the new gTLD (a so-called Trademark Claims Period). Savvy cybersquatters will no doubt await the end of the Claims period before making abusive registrations.

There is no mechanism for brand owners to prevent registration of web addresses which correspond to their trade marks, unless they buy up all possible domains which correspond to their trade marks themselves.

In addition to the Trademark Clearinghouse and the normal domain name dispute resolution procedures, a Uniform Rapid Suspension procedure will be put in place with the intention of providing an efficient and inexpensive mechanism for dealing with obvious instances of cybersquatting.

Concluding comments

After a lengthy process, often delayed, the largest expansion of the internet to date is finally happening. While the Trademark Clearinghouse and other rights protection measures provide monitoring and enforcement tools for trade mark owners, the sheer scale of the gTLD expansion programme will necessitate a reappraisal of online brand protection strategies across the board.
Acquiring defensive registrations of domain names under every available gTLD will soon become prohibitively expensive for even the most well-resourced brand owners. Most brand owners will need to adapt their online brand protection strategy to focus on monitoring the rollout of new gTLDs and the registration of potentially infringing registrations under them, with a view to making selective defensive purchases or challenging infringing domain registrations on a case-by-case basis. To this end, brand owners should consider utilising the new Trademark Clearinghouse and should seek legal advice from a trade mark specialist when considering challenging infringing domain registrations.

Article reproduced with kind permission of Osborne Clarke

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