Cloudy with a chance of disaster

Apple  introduced iCloud to the world of consumer computing.  The service promises to provide access to files, such as music and photos, from multiple devices.  A recent radio advertisement touts the benefits of an online payroll system that can be accessed from anywhere in the world, and is so easy to use a boy operating a lemonade stands can use it.  The concept behind iCloud and software that is accessible anywhere is not new, but is part of a rapidly growing technology platform called the cloud or cloud computing.  Cloud computing gives both consumers and businesses the ability to use software applications and input and access data on any number of devices anywhere in the world.

Cloud computing is generally the ability to remotely access software and data from off-site servers and other hardware through the Internet.  It is divided between public and private clouds.  A public cloud services multiple clients and customers, and a private cloud, similar to traditional outsourcing that is controlled by the user, services only one or a limited number of clients and customers.  Application software offered in the cloud, or software as a service (Saas), runs on servers located off-site or in a remote location.  The software does not reside on the desktop or local computer or server.  Netbook computers are designed to operate Saas, because they do not need a hard drive, but merely need access to a browser and the Internet to operate the SaaS application.

Many of us are already in the cloud with Google’s Gmail, Yahoo mail, Facebook, Flickr, and Google docs.   The number of business applications is rising rapidly.  The economic and other benefits cannot be ignored, particularly in stressed economic times.  However, there are several potential drawbacks, especially for business applications, that need to be addressed before fully embracing and launching the concept.

Some of the advantages of a public cloud are the sharing of costs, infrastructure, and resources, but the advantages of a private cloud are control and security.  Because cloud services are operated on servers not owned or operated by the user, there are significant cost savings available.  Users do not need to support upfront capital investment to purchase the same level of hardware and software required for internal networks.  With access through the Internet, information may be input and accessed from any location in the world where there is Internet access, and because the cloud is not tied to a specific location or device, the information may be accessed by multiple and diverse devices.  Cloud services are scalable, again without significant cost increases.

Unfortunately, there are also several potential landmines that cannot be ignored, and many cloud providers have developed boiler plate terms of service that are non- or minimally negotiable.  In many cases, the terms of service may be modified by the service provider simply by providing notice online.  As a result, it may not be possible to negotiate several of the critical terms that impact on the use on the cloud.

Some unavoidable concerns are security and privacy, because both are out of the control of the user.  The level of care exercised by the cloud service provider may not rise to the same level the user might maintain.  These concerns are particularly relevant for financial institutions under GLBA and health care providers and business associates under HIPAA.  Backing up data, business continuity, continuous access to data, backwards compatibility, and location of servers for purposes of US and international law regarding privacy are a few other examples of issues that need to be addressed.

Cloud computing is on the rise, and provides some incredible benefits, but it is not for everyone . . . yet.  No business should use the cloud without first doing a full assessment of its needs, and assess the downside of the failure to meet those needs, both legal and business.  Any due diligence or assessment should include a careful review of the terms of use.  Over time, many of the concerns will likely diminish, but for now, users must walk carefully through the minefield of potential disasters.

Door opens for new competition in the domain name world

On June 20, 2011, ICANN (Internet Corporation for Assigned Names and Numbers), the international body that regulates domain names, approved the implementation of a procedure for the adoption of new generic top level domain names (gTLD).  Generic top level domain names are the letters to the right of the dot in a domain name, such as .com, .net, and .org.  Prior to this action, there were 22 generic top level domain names, but now there could be potentially thousands of new gTLDs.  According to ICANN, “Internet address names will be able to end with almost any word in any language, offering organizations around the world the opportunity to market their brand, products, community or cause in new and innovative ways.”

New gTLDs will be assigned based on a complex and expensive application procedure.  The initial filing fee is $185,000, and there is an annual fee of $25,000.  These are in addition to other application fees in some cases, and other expenses as well.  The application procedure guidebook is approximately 350 pages.  Applications may be filed between January 12, 2012 and April 12, 2012.  There may be additional rounds of applications, but the first will be the most critical, and it is not certain there will be additional rounds.  According to http://dot-nxt.com/applicants, there are currently already over 120 applications that will be filed during the application period, and some of the anticipated names are .mls, .music, .hotel, .canon, .hitachi, and .vegas.

One of the important objectives of ICANN in adopting the new gTLD was to avoid cybersquatting, and other trademark and intellectual property infringement.  In the early days of the Internet and the use of domain names, cybersquatting became a significant problem, and finding remedies was a challenge.  In response, Congress passed the Anticybersquatting Consumer Protection Act, and ICANN adopted the Uniform Dispute Resolution Procedure.  Under the new procedure, the application fee alone will be a significant deterrent, but there are other procedures and protections built in as well.  Not only will the application process attempt, through an evaluation procedure, to identify any potential infringement and misuse, but there will be procedures for third parties to protect their own intellectual property and other rights.  The policy includes a trademark clearinghouse and sunrise procedure, as well as dispute resolution procedures.  However, there is no crystal ball to identify what problems will arise, and how successful these procedures will be in protecting rights and avoiding problems.

The adoption of this new policy and the implementation of new gTLD could be revolutionary.  Consumers will no longer be left to finding products and services using potentially confusing second level domain names and domain names.  For example, a search for a Nissan automobile at nissan.com will be disappointing.  Computer products and messages about Nissan Motor’s litigation against Nissan Computer are available at Nissan.com, but Nissan automobiles will only be found at nissanusa.com.  Nissan Motors may be highly motivated to apply for the new gTLD .nissan to avoid the problem going forward.  Brand owners will have a unique opportunity to secure a strong position on the Internet, and will no longer need to compete with others for domain names within the .com gTLD.  Communities of people and organizations may have a unique and strong presence online, such as organizations supporting a .eco gTLD.

There are at least two significant implications for brand owners and others doing business in an online world.  Businesses need to seriously consider either banding together with others to develop a community or generic domain name, such as financial institutions adopting the gTLD .bank, or consider adopting a brand gTLD, such as .canon or .deloite.  However, applying for and adopting a new gTLD will not be for everyone.  In addition, brand owners will need to be vigilant in making sure that others do not trample on their rights when adopting new gTLD, and take appropriate action.  Some appropriate actions are to monitor applications filed, submit comments to ICANN on applicable applications, including as part of a community, file objections and lawsuits, if necessary, and participate in other procedures, including trademark clearinghouse and sunrise procedures.  This significant development is also a good opportunity to review current online brand strategies to see if any changes or modifications are appropriate.

Significant changes in the world of the Internet, in addition to bringing positive changes, also usually yield unintended consequences.  Unintended consequences are likely with the venture as well.  But, the potential for brand and community awareness is huge.  Brand owners and community participants will need to be vigilant and aware of developments and the implications for them as this policy and application process unfold, and new gTLDs launch in cyberspace.