New domain name system could draw threat to trademarks

New domain name system could draw threat to trademarks
James Davis of Arent Fox LLP spoke about the new domain name system in Toronto recently.

A new system to create domain names and registries is about to be launched in January that could trigger trademark infringement concerns for large companies.
Right now there are about two dozen generic top-level domain names in existence, with dot-com and dot-org among the more common. In January 2012, the Internet Corporation for Assigned Names and Numbers — the body that manages the Internet’s address system — will start accepting applications for new gTLDs.

“The new gTLDs means an almost unlimited expansion of the current system,” explained James Davis of Washington, D.C.- based Arent Fox LLP, speaking as part of The Legal and Practical Guide to Protecting Your Brand on the Web and in Social Media program at the Osgoode Professional Development session in Toronto on Sept. 26.

The new gTLD system will be launched Jan. 12, 2012 when applications will be accepted by the Internet Corporation for Assigned Names and Numbers until April 12, 2012. The evaluation process will then take place in the summer and fall with results announced Nov. 12, 2012.

Proponents of the new gTLD system say it’s coming at a time when more domain name options are needed — that every word in the dictionary and every string of words has already been registered in the dot-com realm, and companies who want to register domain names are finding it difficult to find them.

The new gTLDs can take different forms. Some will be generic words, which could be a type of product such as dot-shoes or dot-travel, while some companies are looking to register their own brands and consolidating their online presence under their own brand name. There could also be community or geographic gTLDs such as dot-Toronto or dot-nyc.

It is expected the expansion will create new opportunities for cybersquatters and criminals, which will put a burden on companies and brand owners to enforce their trademarks and do a lot more online monitoring than they are now.

“What’s happening is we’re opening up a lot of new real estate, and any time you open up a lot of real estate you start to attract the ne’er-do-wells and scammers that try and play off your mark to confuse consumers and profit from it. There are going to be all these new gTLDs to monitor to make sure people aren’t creating domain names and web sites that are playing off your brands,” cautioned Davis.

Unlike in the past where individuals would register a simple domain name, the difference with the new gTLDs is that companies or organizations will be applying to create, operate, and run a new registry and assume the responsibilities that come with that.

“You’re not just registering a domain name that you can one day let lapse — there are commitments you make if you want to do this,” said Davis. “There is an enforcement aspect to this — you will have to enforce your trademarks in this new real estate which means monitoring and finding out which applications are being filed and whether there are perspective problems.”

So how did all of this come about? When ICANN was created in 1998, the generic top-level domain space was limited to eight gTLDs. In 2000 and 2004, additional gTLDs were introduced to expand that number to 22. In 2008, ICANN voted to permit an unlimited number of gTLDs. Under the new system, anyone can apply for a domain and, subject to ICANN approval, administer the new gTLD.

Acquiring new gTLDs will be limited to larger companies due to the cost and commitment required, said Davis.  Any established public or private organization can file an application for a new gTLD. Individuals are not allowed to do so.

Criminal and financial background checks will be conducted on applicants to make sure they have the financial wherewithal to operate these systems.  The detailed web-based application will be time-consuming to fill out.

“The last thing ICANN wants is for criminals and people who are ill-prepared to create these new gTLDs and then flounder, or create an environment where scammers or phishers can show up,” said Davis.

The application fee is US$185,000 for a 10-year contract. There is also a $25,000 annual fee and a charge of 25 cents per domain name after 50,000 have been registered. There will also be additional costs for maintenance to keep the registry running and monitor for potential abuse.

All new gTLD registries are also required to interface with the Trademark Clearinghouse, which has been approved by ICANN. The Trademark Clearinghouse will serve as a repository for information to be authenticated, stored, and disseminated relating to the rights of trademark owners.

“It authenticates and validates trademarks and it also sends information to all the registries and makes sure there is communication between the registries and those who register with Trademark Clearinghouse,” said Davis.

ICANN has implemented some policies and mechanisms brand owners should take advantage of to mitigate the risks. The Trademark Clearinghouse is one of them. It is a system by which trademark owners can record their trademarks in one location. They are then sent out to the different registries to get information on what is happening.

“It’s a quickly-evolving process and no one knows particularly what the top-level domain names will work out to be. I think we’re going to be faced with some interesting times as things progress in the next five to 10 years,” said John McKeown of Cassels Brock & Blackwell LLP, who also spoke at the session.

Davis said some companies he talks to plan to play the waiting game, but they could lose out.

“A lot of my clients have decided they don’t want to jump in right now but wait for the second round,” said Davis. “That’s not a bad strategy, but a competitor could get the domain name before you. Also, the second round has not been scheduled yet — [it] may be five years later or longer than you wanted to wait.”

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