On June 20, 2011, the Board of the Internet Corporation for Assigned Names and Numbers (ICANN) granted the expansion of the number of top-level domains (TLDs). A TLD is one of the domains at the highest level in the hierarchical Domain Name System of the Internet. The TLD is the portion of a domain name to the right of the dot. For example, in the domain name www.google.com, the TLD is “.com”. This expansion allows for an unlimited number of TLDs, including private brands (e.g., .nike) or places (e.g., .newyork). Thus, the new program exposes the Internet to creative new uses by industries and brand owners.
Brand owners applying for a new TLD may receive the following benefits: obtaining a short and memorable domain name; improved advertising and ranking on search engines; new, creative marketing opportunities; and improved security because users will recognize a domain as belonging to a specific brand owner. Brand owners who purchase a TLD must use the TLD. Thus, the brand owners participating in the program may either restrict a new TLD to internal use, open the new TLD to limited partners, or allow third parties to register domain names within the new TLD.
Despite the benefits a brand owner may receive when applying for a new TLD, there are unavoidable drawbacks. For example, the application process is expensive; the application fee is $185,000 per TLD, and the estimated cost of employing consulting experts to prepare a complete application may be $100,000 or more. Additionally, brand owners may pay dispute resolution fees, auction fees if another party is competing for the same TLD, or other potential fees. ICANN’s Consensus Policies also require brand owners to commit to a 10-year Registry Agreement that requires a minimum payment of $25,000 annually. Furthermore, the application process is time-consuming. The application contains fifty questions covering general business, financial, technical and operation information. Moreover, if a brand owner does not apply for a new TLD, the brand owner may lose a preferred TLD or market share to a competitor who obtains a new TLD and may not be able to apply for a subsequent TLD until 2013 or later.
ICANN has implemented procedures to resolve conflicts that arise over ownership of .brand TLDs, such as when two TLDs are confusingly similar. For example, third parties may file both comments and objections to applications. Additionally, legal rights holders may file an objection if the proposed TLD infringes upon legal rights that are enforceable under internationally recognized principles of law. Registered or unregistered trademarks may form the basis of an objection.
ICANN anticipates accepting TLD applications from January 12, 2012 to April 12, 2012 and posting the applications fifteen days after the deadline. Following a seven month objection period, ICANN will post initial results in November 2012, and new TLDs will be introduced in early 2013.
The take-away message is clear: regardless of whether brand owners apply for a TLD, they should be assertive, enforce their trademark rights once the new TLDs are launched, and monitor the use of their brands.
Filed under: Trademark by kylew