What's in a (Domain) Name?

April 1, 2009

Last year, the directors of Internet Corporation for Assigned Names and Numbers (ICANN), the organization overseeing the world wide web's domain name system, unanimously approved a massive expansion in generic top-level domains (gTLDs). A top-level domain is a string of letters comprising the suffix of a domain name, i.e., those letters coming after the last dot in a website address. Currently, there are only 21 gTLDs, including .com, .net, .edu, and .org. ICANN's proposed guidelines, which have not yet been finalized, would allow established companies and organizations – but notably, not individuals or sole proprietorships – to apply for their very own gTLD. For example, instead of www.brandX.com, Company X could register www.shoes.brandX or www.cars.brandX or www.anything.brandX.

ICANN's stated purpose in offering this new opportunity is to provide greater innovation, choice, and competition in the domain-name marketplace, especially for non-English language domains (the current gTLDs use only English characters). At present, many organizations settle for cumbersome, hard-to-remember domain names because so many web addresses are already occupied.

The possibility of registering new gTLDs could provide a creative marketing tool for companies looking to improve their brand recognition on the web. In addition, because all domain names within a gTLD will be controlled by the registered party, the new system should enhance user security. The proposed system may also create new business opportunities, as the owner of a new gTLD will have the ability to sell subdomain names, e.g., the owner of the .news domain could sell cnn.news and cbs.news, among others.

Several issues remain to be sorted out. One common criticism of the proposed system has been the potential confusion that may arise as consumers will need to distinguish between similar domain names. (e.g., Which is the valid domain, microsoft.com/sales or sales.microsoft?) The opportunity for such rampant trademark infringement poses concern for many companies as well as consumers, who may face increased exposure to phishing scams. Critics also decry the potential rise in cybersquatting, which involves bad faith domain name registration of a well-known trademark by a non-trademark holder who then offers to sell the domain name to the trademark owner at a typically inflated price. Providing for an unlimited number of new gTLDs, ICANN's proposed system, some say, will provide unlimited opportunities for cybersquatters. For example, even if Coca-Cola registers .coca-cola, to protect its trademark effectively it would have to police the use of coca-cola.soda, coca-cola.pop, coca-cola.diet, and the list goes on. Other possible negative consequences of the new gTLD initiative that have been raised include increases in counterfeiting and general fraud, as well as an overall devaluation of domain names already in existence.

ICANN believes many of these issues will be addressed during the application process. For instance, ICANN expects that the high cost of applying for and maintaining a new gTLD will discourage cybersquatters and other parties with bad intentions. On that note, the initial evaluation fee will be $185,000 in addition to annual registry fees up to $75,000. The registrant also will incur all costs associated with providing and maintaining the technical infrastructure to operate the registry. Furthermore, to help reduce consumer confusion with existing domain names, the application process calls for an opposition period during which interested third parties can object to a potential registration on grounds of likely confusion or existing legal rights. ICANN has also set out a dispute resolution procedure and may develop "white lists" of domain names that cannot be registered.

The Applicant Guidebook governing the application and evaluation process is still being finalized. Among the issues ICANN continues to study and analyze are trademark protection, security and stability concerns related to root zone capacity, potential for malicious conduct, and overall economic demand for new gTLDs. ICANN expects the first applications to be received in December 2009 or in the first quarter of 2010.

Thus, the increase in gTLDs will certainly provide unique branding and business opportunities for organizations across the globe. But it may also provide an avenue for unauthorized use of another's trademark or brand name, creating headaches for companies that will need to guard against such unauthorized use. Whether you are interested in registering a new gTLD or are concerned about protecting your brand name in this new environment, you may wish to review the current (second) draft of the Applicant Guidebook, which can be found on ICANN's website.

Moreover, ICANN encourages all interested parties to comment on the latest draft during the public comment period that runs until April 13, 2009.

You may participate by emailing your comments to ICANN; if you so choose. Click here to view the specific email addresses to which you can send your comments. At the conclusion of the comment period, ICANN will review and consider all comments in drafting its third version of the Applicant Guidebook, which is expected for release in the third quarter of 2009. In addition, the next ICANN public meeting will take place June 21–26 in Sydney, Australia, where discussion of the new gTLD program is expected.

The Intellectual Property and Advertising attorneys at Frost Brown Todd continue to monitor these developments and can provide advice on making comments, registering gTLDs, and protecting and enforcing your intellectual property rights in this new environment.