Preparing Trademark Clients for the New Unlimited Top Level Domains

Article originally appeared in Thomson Compumark on 09/16/17

On June 20, the Internet Corporation for Assigned Names and Numbers (ICANN) authorized the launch of a new program to permit qualified domain name registrars to apply for any string of characters “after-the-dot”. These new generic Top Level Domains (gTLDs) present both risks and opportunities for trademark clients. On the one hand, the enforcement landscape will become much more difficult as new TLDs proliferate. On the other hand, ICANN claims that the new unlimited gTLDs will foster creativity, competition, and innovation. Although the TLDs are referred to as “generic”, the string of letters applied for after the dot may include not only industry and product terms, e.g. (dot)sports or (dot)shoes, but may also include your client’s (dot)brand.

Entry into the (dot)brand arena is no small undertaking. A brand owner would of necessity have to develop its application with a qualified attorney and a qualified domain name registry operator. The ICANN application fee alone is U.S. $185,000 and the cost of preparing a full application is estimated at U.S. $150,000. This is because ICANN’s Applicant Guidebook is over 350 pages long and there are fifty detailed questions on the new gTLD application covering everything from the applicant’s financial stability to its intended use for the new gTLD.

Nevertheless, many larger brands, for example, Canon and Hitachi, plan to apply for their (dot)brand domains. In comparison to national and international advertising rates, the cost of owning and operating a proprietary domain can be effective, especially since the domain presents the opportunity to provide secure access to customers, suppliers, and distributors at the second (before-the-dot) level. Further, with the proliferation of new gTLDs, some brands believe that advertising their own TLD as the only source of authentic goods and/or services will be the best countermeasure to counterfeiting.

The application window for the first round of new unlimited gTLDs will open January 12, 2012 and close April 12, 2012. Because so many applications are anticipated, a second round window for applications is not expected to open for many months or even years thereafter. For these reasons, larger companies need to look at (dot)brand feasibility now.

Short of operating a proprietary (dot)brand, (dot)industry or (dot)product gTLD, the trademark owner also needs to be aware of the Rights Protection Mechanisms that ICANN has put in place for the new gTLDs:

  1. Sunrise registration is the right to obtain the second level domain name in an early registration process before the domain is opened up to the general public. It appears at present that registrars will not be required to issue Sunrise registrations to trademark holders unless the record of the registration is properly entered into the new Trademark Clearinghouse ("TC") by the owner or its representative. The TC will be a global trademark database operated by a third party under contract to ICANN. The TC operator will validate trademark records which the trademark owner will pay to enter. This differs from previous Sunrise registration periods for current TLDs in that entry into a central trademark clearinghouse has never before been required. So, for example, the registrar will not be required to sell your client its "brand(dot)its industry" unless the registered mark is entered into and verified by the Trademark Clearinghouse data.
  2. In the final Applicant Guidebook Trademark Clearinghouse provisions, not only must the registered mark be entered into the Trademark Clearinghouse, but proof of use will be required to support a Sunrise registration. (Proof of use has never been required in order to support a Sunrise registration in a currently-authorized TLD.) The standards for establishing proof of use have not yet been finalized, but clients can expect to have to sign an Affidavit and deliver at least an electronic specimen to the TC operator.
  3. Trademark owners who enter their marks in the Trademark Clearinghouse will get the benefit of “IP Claims Notification” during the first 60 days of the launch of a new gTLD. IP Claims notification is not dependent on proof of use, but only applies if the third party actually proceeds to register the domain in spite of having been notified of a trademark claim by the TC. Further, this notice only applies where the domain name is essentially identical to the registered mark. In other words, a third party who registers "your client’s brand(dot)your client’s industry” results in a notice, but no notice issues in the case of registration of "boycott-your client’s brand(dot)your client’s industry" or in the case of "your client’s house mark your client’s brand(dot)your client’s industry". Since the notification only lasts 60 days and only applies to essentially identical marks, it will be advisable to watch registrations in the relevant new gTLDs.
  4. Honoring of claims based on common law marks entered into the TC will be optional for the registry operator. As currently drafted, the registry operator is not required to provide Sunrise or IP Claims notification for unregistered marks even if entered into the TC unless they are the subject of a court order or specific statutory protection.
  5. Honoring of registered marks will have two further conditions as to dates: (1) the mark in question must be applied for prior to the publication by ICANN of the application for the particular new gTLD, whenever that occurs, and (2) the mark in question must in fact be registered prior to the signing of the Registry Agreement between ICANN and the registrar for the particular new TLD, whenever that occurs.
  6. A new remedy for dispute resolution provided by ICANN is the Uniform Rapid Suspension. This is similar to a UDRP proceeding but designed to be cheaper and faster. The complaint is limited to 500 words and a filing fee of U.S. $300 has been proposed. This remedy will only be useful for clear cut cases of abuse of trademark owners’ rights. Based on the final Applicant Guidebook as approved June 20, a complaint filed by a trademark holder pursuant to the new Uniform Rapid Suspension procedure must be supported by both (a) proof of use and (b) an allegation of bad faith supported by some reasonable evidence of bad faith. A URS victory does not result in the transfer of the domain name to the trademark owner. Rather, it results in the name being frozen for the period of the registration.

Thus, the Internet landscape will change dramatically in the near future. Practitioners who advise their clients of the above opportunities and risks now will avoid unhappy clients later.

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