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New Top Level Domains: Implications for Trademark Owners

Lawrence Stanley Sept. 15, 2011

ICANN (the Internet Corporation for Assigned Names and Numbers has announced that it will accept applications for new general Top Level Domain names (gTLDs) from January 11, 2012 through April 11, 2012. Now, in addition to .com, .net. .org and .xxx, new domain names may be established for brands (e.g., .nike), product categories (e.g., .skincare or .computers), geographic locations (e.g., .newyorkers), media (e.g., .music) or anything else an applicant might think of.

Becoming a Top Level Domain Owner

During the first application period, ICANN will accept only 500 applications, while subsequent periods (yet to be established) will be limited to 400 applications. Overall, ICANN has ruled that no more than 1000 new gTLDs may be established per year.

The bar to entry, however, is high.

First, becoming a general Top Level Domain means having the business structure and technical capability for being a registry — that is, a company which (a) establishes policies for domain name allocation, (b) maintains a database of all the domain names registered in the new top-level domain, and (c) generates the zone files necessary to convert second-level domain names to IP addresses. (A relatively simple definition of domain name registry is available here. A second-level domain is the one immediately preceding the final dot. Thus, in “,” the gTLD is “.com” and the second-level domain is “webtm”.) This won’t be something that companies can simply subcontract. Owners of the new gTLDs will be required to play an active role in managing the website addresses under its domain.

Second, becoming a Top Level Domain is expensive, time-consuming and complicated. The initial application fee is US$185,000 and further fees may be imposed during the application process as determined by ICANN. (For instance, disputes may arise between applicants who attempt to register two strings that ICANN determines are “confusingly simliar” and resolution of such disputes costs money.) Among other requirements, applicants will have to submit audited financial statements and principals will be subject to background screening to confirm eligibility based on “(1) General business diligence and criminal history; and (2) History of cybersquatting behavior.” The criteria used for criminal history evaluation are the same ones used in the banking and finance industry. Following acceptance, new TLD owners will have to sign the “New gTLD Agreement” with ICANN. They will also have to pay a fixed fee of US$6,250 per calendar quarter and transaction fees of twenty-five cents per domain names registered over 50,000.

Meeting the Concerns of Trademark Owners

ICANN estimates that the first gTLDs will come online in 2013. This raises particular concerns for trademark holders, insofar as it potentially opens new doors for cybersquatters and increases the possibility for some trademark owners, for example those whose marks are registered in a single territory, to be pre-empted by a foreign competitor using the same name. Ostensibly, applicants seeking to register gTLDs for actual registered trademarks will not be able to do so without ownership or license from the trademark owners. However, if a trademark owner does not apply for domain name protection in the first round and some applicant obtains a gTLD which is deemed to be “confusingly similar” to the registered mark, the owner of the registered mark may be prevented from later establishing a gTDL using its brand name. The problem is perhaps even more serious for trademarks with limited scopes. For example, the word “Delta” is used a trademark by many companies to designate different types of goods and services. Registration of .delta by any one of them would preclude all others from registering under that trademark.

In the hopes of minimizing the risks faced by trademark owners, ICANN plans to implement objection procedures to give trademark owners an opportunity to object to new gTLDs which are the same or confusingly simlar to the objector’s registered trademark. After the first application period closes in April 2012, ICANN will verify all applications for completeness and will release on its website the list of strings, applicant names, and other application data. At that point it will be up to trademark owners to file a “Legal Rights Objection” with the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO), a proceeding which will cost up to several thousand dollars in filing fees alone.

Preventing trademark misappropriation in second-level domain registrations inside a gTLD will be somewhat simpler, at least in the initial 60-day “sunrise” period of a new gTLD. When a new gTLDs is launched, it will be required, during that sunrise period, to search the Trademark Clearinghouse being set up by ICANN and if an intended website name matches an entry in the Clearinghouse, send a notice to both the intended website owner and the trademark holder. In addition, the new gTLD will be required to offer dispute resolution for owners of registered trademarks who object to the intended name. (The burden on the new gTLD may be substantial. In the first fifteen minutes of the “.co” gTLD, there were 100,000 applications for new websites.)

A note on the Trademark Clearinghouse: As of this date, ICANN has still not determined who the Trademark Clearinghouse service provider will be or how information will be registered with the Clearinghouse, but at the Trademark Clearinghouse Implementation-Planning Workshop held in Singapore on June 22, 2011, various participants believed that trademark information should be provided by individual trademark owners rather than obtained from national trademark registries, like the Patent & Trademark Office. For more details on these procedures, still in the planning stages, see, the “Module 3 – Objection Procedures” and “Trademark Clearinghouse” in the current version of the Applicant guidebook available [] here.