There has been much hype recently about new domain name extensions that will soon become available. Instead of the traditional .com, .net and .org, the less traditional .biz and .info, or the non-traditional .xxx, domain name registrants may soon be able to own an extension of their choice. Such personalized extensions could relate to a registrant's business or industry (e.g., .cigar, .fashion, .wine). The value of such a personalized extension seems inherent, especially for leaders in a given industry.
The new domain name extensions, referred to as gTLD's (Generic Top-Level Domain Names), are being issued by the Internet Corporation for Assigned Names and Numbers ("ICANN"), a California-based "non-profit" that possesses great power to bestow new domain name extensions upon the public (and to charge handsomely for the service).
While the prospect of owning and controlling your very own domain name extension sounds riveting, the details behind the program reveal that it will not be practicable or desirable for many businesses to participate. In fact, we cannot imagine a single client of our firm that would have a genuine interest in participating, given the substantial costs and ongoing requirements of the program.
As a preliminary matter, the application fee is $185,000 per new gTLD. This is the fee for ICANN to evaluate the application, but there is no guarantee that an Applicant will be approved. Moreover, the application fee is not fully refundable (although ICANN does indicate that a partial refund may be available in certain situations). In addition, if more than one Applicant applies for a specific gTLD, the extension will be auctioned off to the highest bidder.
If fortunate enough to make it through the application process with reserves in its coffers, the successful Applicant will be required to enter into a ten year contract with ICANN, under which it will be obligated to pay $6,250 in fees quarterly. This computes to an additional $250,000 in fees over the ten year contractual period.
Perhaps more troubling, the successful Applicant will be charged with operating a fully functional domain name registry and complying with all the technical obligations and reporting requirements which it entails. ICANN indicates that an Applicant is "applying to create and operate a registry business supporting the Internet's domain name system" and "will need to demonstrate the operational, technical and financial capabilities to run a registry."
Clients have been asking what steps they should take to protect their trademarks in view of the issuance of new gTLD's. Trademark and brand owners should be aware that there will be an opportunity to file a formal objection to any applied-for gTLD that: (i) takes advantage of the objector's reputation or trademark; (ii) impairs the distinctive character of such trademark; or (iii) creates a likelihood of confusion with such trademark.
Assuming that the current schedule holds to form, ICANN will publish a list of all applied-for gTLD's in late April 2012. Interested parties will then have approximately seven (7) months to file objections based on several grounds, the most significant of which for brand owners is "legal rights." This means that any party that has valid rights to the string of characters that comprises the gTLD in dispute (such as trademark rights) may object to the application on this ground. The procedures for resolving the objections will likely resemble existing trademark and domain name dispute resolution procedures of which brand owners are likely familiar, including proceedings through the World Intellectual Property Organization (WIPO).
One major "catch" to the objection process is that even assuming that an objecting party has trademark rights in the string of characters that comprises the gTLD in dispute, such party will not be able to prevent an application from being approved if the Applicant has independent rights in the string of characters. Since multiple parties may own rights in the same trademark for different goods and services, it is entirely conceivable that an Applicant will have independent legal rights in the applied-for gTLD, in which case the objecting party will have no recourse to prevent the application from being approved.
Brand owners that are interested in protecting their trademarks should engage an Intellectual Property Attorney and/or Trademark Litigation Attorney to monitor the gTLD applications, evaluate whether an objection is necessary or prudent, and guide them through the objection process.
Brand owners may also want to consider setting up a periodic process to search for new domain names that have been registered in connection with new gTLD's, in order to ensure that such domain names do not violate the trademark rights of the brand owner (e.g., www.infringingmark.newgTLD).