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.

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