In June 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) announced a dramatic shake up to the internet naming system following its resolution to allow the registration of custom domain suffixes (or generic Top Level Domains (gTLDs)). When applications open in January next year, businesses will be able to apply for gTLDs containing almost any word in any script or language.
With the change, businesses will have the opportunity to establish a broad, uniform and unique internet presence. For businesses with a wide range of products, it will enable a straightforward means of dividing their portfolio of products and services and targeting content to specific users. Other businesses might seek to open up their new custom domains to the public, allowing users to apply for their own pages within a unique online community.
Such opportunities are not without their difficulties, and ICANN’s plans represent a significant challenge from a brand protection and IP policing perspective. For lawyers regularly advising on IT, internet and IP matters, it is important to be aware of the increased risks and the steps that can be taken to protect and enforce a client’s brand.
Throughout the long consultation process, stakeholders and businesses expressed concern about the protection of trademarks and other IP rights under the new set up. Brand owners were particularly keen to see that, in the second suggested scenario above, the expansion of gTLDs would not lead to an expansion in trademark infringement and cybersquatting, with offenders taking advantage of inexperienced gTLD administrators. Lobbyists were keen to see that new gTLD owners would be provided with the tools to prevent infringement if and when they open up their custom domains to public registrants.
As a result, ICANN has sought to incorporate a raft of protective measures into the process. Although the final form of the measures remains to be seen, the precautions are two-fold: First, there will be extensive scrutiny and stringent requirements imposed on gTLD applicants. Second, tools and procedures will be put in place to prevent and deal with trademark infringement and cybersquatting in the new online environment.
The application process
ICANN estimates that even a straightforward application will take around nine months to complete, which gives some indication of the hurdles to be overcome. Protection mechanisms built into the application process include:
· Cost. The application fee for a custom gTLD will be US$185,000 (£112,000). If granted, ICANN will impose further quarterly fees of US$6,250 (£3,800) and a ‘transaction fee’ of US$0.25 per transaction will apply in certain circumstances. Upkeep costs will also be substantial, with some commentators estimating costs of £300,000 a year to operate the gTLD (according to Warwick Ashford, Computer Weekly, 9 September 2011). Inevitably, significant investment will be required to satisfy ICANN’s stringent technical tests and ICANN will scrutinise an applicant’s financial capability. Such costs are expected to prove a major filter, limiting the number of custom gTLDs and restricting responsibility to those with adequate resources.
· Rigorous examination. ICANN will subject each application to comprehensive examination. Among the requirements of the 300+ page application form, applicants must demonstrate sophisticated technical standards and processes and mechanisms to protect intellectual property. As Bruce Tonkin of Melbourne IT told the BBC, ‘You need IT robustness and … intellectual property protections … You have to have a 24/7 abuse team. You have to have mechanisms where a trademark holder has first right to get their name‘ (see BBC web site news item of 20 June 2011).
· Registry agreements. Successful applicants will be obliged to enter into a registry agreement with ICANN. The registry agreement will provide ICANN with a legal basis to shut down rogue gTLD operators. gTLD owners will therefore be compelled to manage their domain diligently and lawfully.
· Restrictions on applicants. Applicants must demonstrate a legitimate claim to the domain name sought (for example, an application for a gTLD containing a registered trademark ought to be accompanied by proof that the applicant owns the relevant trademark). Further, Individuals and sole traders are ineligible to apply and corporate applicants must demonstrate ‘good standing’. Companies and corporations listed on any of the 25 largest exchanges globally will benefit from a presumption of good standing, but others will be subject to a vetting procedure. It is hoped that companies able to satisfy this requirement will be responsible and averse to the bad publicity that unchecked trademark infringement within their gTLD would bring.
· Publication and objection. Each application received by ICANN will be published on ICANN’s web site and subjected to a public comment and formal objection process. This will provide a further layer of scrutiny of each new applicant and will also provide an additional mechanism for trademark and brand holders to object to any infringement within the gTLD.
Protective measures and procedures
ICANN’s safeguards and measures to prevent trademark infringement do not end with the application process. Once a custom gTLD is granted, the operator will have a number of tools at its disposal to assist in avoiding issues of trademark infringement. Specific measures designed to assist gTLD operators include:
· New trademark clearing house. ICANN expect to put in place an international trademark clearing house to serve as a database of trademarks registered worldwide. New gTLD holders will be provided with access to the clearing house to assist in the regulation of sub-domains within their gTLD.
· Streamlined dispute resolution process. ICANN propose to implement a Uniform Rapid Suspension (URS) system operated by third-party providers. Rapidity will be a key element of the system. After a complainant has filed an objection with the gTLD owner, the gTLD owner will send a Notice of Complaint to the registrant of the sub-domain subject to the complaint. The registrant will then have 14 days to respond, in default of which the service provider will carry out an evaluation based on the complainant’s evidence alone. Determination in favour of the complainant will lead to suspension of the domain. Complaint filing fees are expected to be in the order of US$300 (£188), though some ‘loser pays’ mechanism is expected.
· ‘Post-Delegation Dispute Resolution Procedure’ (PDDRP). The PDDRP procedure will deal with complaints against the gTLD owner itself. The gTLD owner will agree in its registry agreement with ICANN (which, as above, is a requirement under the application procedure) to participate in the process and be bound by its determinations. PDDRP is not to be used to remove offending sub-domains (for which the URS procedure should be used), but rather to deal with gTLD owners who are neglecting or failing in their duties to protect trademark owners. Fees for complaints are to be announced but, if a complaint is upheld, it is expected that these will be reimbursed by the gTLD owner. The service provider will have powers to impose remedial measures on the gTLD owner to prevent future infringement, including, in serious cases, suspension of the ability to accept new sub-domain registrants. In extraordinary cases involving malice, the gTLD operator might event find its registry agreement with ICANN being terminated.
What to do now?
New gTLD applications will not open until next year and the first gTLDs will not appear until the end of 2012. However, lawyers advising on IT issues and brand protection should be advising clients now on how best to prepare for the imminent changes.
· Be prepared to register trademarks (and equivalent global IP rights) with the trademark clearing house once established. Helpfully, however, ICANN has made clear that failure to submit trademarks to the clearing house will not be taken as a waiver of rights.
· Observe, monitor and participate in the public objection stage of the application procedure. The number of applications is not expected to be overwhelming and it ought to be relatively straightforward to review the list of gTLDs applied for once published by ICANN.
· Look out for details of the streamlined URS and PDDRP systems to be set up by ICANN.
Most important, don’t panic. Taking on a new gTLD is not a gimmick for the brand-obsessed. A custom gTLD will require significant investment and the setting up, effectively, of a full on registry business.
Conclusions
The effectiveness of ICANN’s protective mechanisms remains to be seen. Many are at an outline stage with detail to follow. However, given the stringent requirements and prohibitive cost, a proliferation of new gTLDs is unlikely. That alone ought to ease the concerns of trademark holders.
ICANN appear to have set up a system that will provide new gTLD owners with the tools and support required to police their domains effectively. Brand owners will, in turn, be protected from rogue gTLD owners by the PDDRP system. How that is borne out in reality will depend upon take up when applications open next year, and the effectiveness of the various schemes yet to be set up. Trademark and brand owners would be wise to remain vigilant and to ensure they take advantage of the protection on offer.
More information about the anti-abuse mechanisms discussed above can be found in ICANN’s gTLD Applicant Guidebook here.
Alex Hall is a Solicitor at Mundays LLP: www.mundays.co.uk
