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Focus: Wild wild Web – securing prime Internet real estate and protecting pre-existing trade marks

1 July 2011

In brief: Early next year, the domain name frontier will open up and eligible entities will be able to apply for their own generic top-level domains, presenting significant opportunities and challenges for businesses. Partner Tim Golder (view CV), Senior Associate Jesse Gleeson, Trade Marks Attorney Carissa Apps and Law Graduate Andrew Wilcock look at the issues.

How does it affect you?

  • Businesses must now consider whether they wish to register a generic top-level domain (gTLD) and/or domain names in new gTLDs, and how they will protect their pre-existing trade marks from opportunistic brand-jackers and cyber-squatters.
  • Businesses that wish to apply for a gTLD should decide on a string to apply for, and review the evaluation questions and criteria and registry operator agreement.
  • Once the application period ends, all businesses should review gTLD applications. In doing so, they should consider whether there is a basis to oppose an applied-for gTLD , whether they should apply for a domain name within any of the applied-for gTLDs once they 'go live' and whether they should register their key trade marks with the trade marks clearing house.

Approval of new gTLDs

The Internet's naming system is about to undergo a paradigm shift. The Internet Corporation for Assigned Names and Numbers (ICANN) last week voted to allow an increased number of gTLDs. Currently, there are 22 gTLDs, the most common of which are .com, .net and .org, and around 250 country code TLDs. From January 2012, eligible entities will be able to apply for their own gTLDs. Consequently, we will soon see Internet addresses with .brand, .industry, .interest and .place extensions.

Businesses should now think about various issues. Most importantly, they should consider:

  • whether they wish to register a gTLD;
  • whether they wish to register domain names in new gTLDs; and
  • how they will protect themselves against the registration of undesirable gTLDs and domain names within new gTLDs.

Securing new gTLDs

A .brand gTLD could be very useful indeed. A business could use it to strengthen brand protection and fight counterfeiting by staking out its own slice of prime Internet real estate. Additionally, new gTLDs have the potential to revolutionise navigational behaviour, so a .brand gTLD could prove to be a valuable marketing tool. That said, .brand gTLDs will be expensive and technically difficult to register and maintain, and it is unclear how consumers will respond to them.

Established corporations, organisations and institutions in good standing are eligible to apply for new gTLDs. Individuals, sole proprietorships and yet-to-be-formed legal entities are not. An applicant will have to pay a fee of US$185,000 in addition to annual registration fees of US$25,000. There will be other significant costs involved in setting up and maintaining the gTLD.

The gTLD application process is outlined in our previous Focus articles on the topic, The domain name floodgates are about to open! and YOURBRAND domain name applications starting soon. It should be noted that ICANN will evaluate applications to determine whether an applied-for gTLD will cause security or stability problems, for example, because it resembles an existing or reserved gTLD. ICANN will also assess the applicant's technical, operational, and financial capabilities to operate a registry. It should also be noted that governments (through ICANN's Governmental Advisory Committee) and the public will be able to comment on applications, and that a person with standing may formally object to an application.

If an application passes an evaluation, ICANN and the successful applicant will execute a registry operator agreement. If two or more applications for the same or similar gTLDs pass evaluations, ICANN will auction the gTLD.

ICANN expects that it will accept applications between 12 January 2012 and 12 April 2012. Businesses interested in applying for a new gTLD should now review the evaluation questions and criteria and the obligations contained with the registry operator agreement. We recommend allowing at least three months to conduct the necessary due diligence and to ensure applications are in order.

Securing domain names in new gTLDs

Domain names in appropriate new gTLDs could also be beneficial. If, for example, .'melbourne' is registered and becomes a popular navigational shortcut for Melburnians, a .melbourne domain name (i.e. www.yourbrand.melbourne) could also be a valuable marketing tool.

Applicants that execute a registry operator agreement will operate their own registries. Many of these applicants will offer domain names in new gTLDs for sale to the public. ICANN expects to execute registry operator agreements in early 2013. Information regarding availability, cost and registration procedures for domain names in new gTLDs will become available in due course.

Preventing and addressing undesirable gTLD registrations

The approval of new gTLDs gives rise to the possibility that opportunistic brand-jackers and cyber-squatters will exploit pre-existing trade marks. During the launch phase, brand-jackers and cyber-squatters may attempt to register gTLDs corresponding to pre-existing trade marks. After the launch phase, brand-jackers and cyber-squatters may try to register domain names corresponding to pre-existing trade marks in new gTLDs. Thus, Widgets Pty Ltd should be concerned with undesirable registrations at the top level, eg registration of the .widgets gTLD by an illegitimate third party, and – presuming that .retail was registered as a new gTLD – about undesirable registrations at the second level, eg registration of widgets.retail by a brand-jacker or cybersquattter. The new gTLD launch process and the registry operator agreements provide various rights protection mechanisms.

The high cost of registering a new gTLD is likely to deter many brand-jackers and cyber-squatters from lodging abusive gTLD applications. Nonetheless, businesses should monitor applications. If a business discovers that an applied-for gTLD would, if granted, infringe its trade marks, it may formally object to the application. That said, relief will not be granted unless the potential use of the applied-for gTLD by the applicant also takes 'unfair advantage of the distinctive character or the reputation' of a mark, unjustifiably impairs 'the distinctive character or the reputation' of a mark or otherwise creates 'an impermissible likelihood of confusion' between the applied-for gTLD and the mark.

To formally object to an application, a party with standing files a formal objection with the Arbitration and Mediation Centre of the World Intellectual Property Organization (the WIPO). A formal objection should include, among other things, 'a statement giving the specific ground upon which the objection is being filed [and] a detailed explanation of the validity of the 'objection and why it should be upheld'. WIPO will relay the formal objection to the applicant. The applicant may then withdraw the application, attempt to reach a settlement with the objector or file a response to the objection. If the applicant files a response, they trigger the dispute resolution mechanism, Expert Determination in WIPO. A WIPO panel will then consider whether the formal objection should be upheld.

For other grounds on which a party may formally object to an application, please see our previous Focus articles, The domain name floodgates are about to open! and YOURBRAND domain name applications starting soon.

If a business discovers that a gTLD that infringes one of its trade marks has proceeded to registration, it may utilise the post-delegation dispute resolution procedure (PDDRP) to take action against the gTLD operator (the operator). Relief will be granted on the same grounds as above.1 To utilise the PDDRP, a trade mark owner should file a written submission with the, as yet, unconfirmed service provider. The written submission should explain why the complaint is valid and why the complainant is entitled to relief. After the service provider has reviewed the application to verify that it is complete and meritorious, they will relay it to the operator. The operator may respond to the written submission. The service provider will then resolve the issue through expert determination. If the trade mark owner is successful, the service provider is empowered to terminate the gTLD operator's registry agreement.

Preventing and addressing undesirable domain name registrations at the second level

Because domain names are relatively inexpensive, brand-jackers and cyber-squatters are far more likely to register domain names within the new gTLDs. Registry operator agreements will require operators to offer a 'trade mark claims service' and a sunrise period during their launch processes. Businesses can utilise these to protect pre-existing trade marks. So, eg if you are in the motor industry and someone registers .car, you may seek to protect your brand from being registered by others as www.yourbrand.car (and seek to register that yourself).

A 'trade mark claims service' is a facility providing notice to domain name applicants that an applied-for domain name resembles an existing trade mark, as well as notice to trade mark holders that a domain resembling their trade mark has been registered. Participation in the trade mark claims service will discourage abusive registrations, as it will highlight to an applicant both that the application infringes another business's intellectual property rights and that that business is aware of the application. Participation in the trade mark claims service will also allow a business to monitor launch processes for all new gTLDs. That said, businesses should remain vigilant – the trade mark claims service will only catch applications that directly match a trade mark.

To participate in the trade mark claims service, a business should submit its trade marks to a 'trade mark clearinghouse'. The trade mark clearing house will be a database of pre-existing trade mark rights providing information to operators to support gTLD launches. The costs, procedures and dates for participating in the trade mark clearinghouse are to be confirmed.

A 'sunrise period' is the phase of a gTLD launch, occurring before the general availability phase, where trade mark owners may register domain names corresponding with their marks. A business can prevent abusive domain name registrations at this time by 'reserving' relevant domain names in new gTLDs. Naturally, the costs, procedures and dates for sunrise registrations will become available as individual gTLDs are registered.

If a business receives a notice from a trade mark claims service that a domain resembling their trade mark has been registered, or it notices that a domain name infringing their pre-existing trade mark rights has been registered in a new gTLD, it may utilise the uniform rapid suspension procedure to take action against the domain name holder. This process is intended to complement, and provide a cheaper and quicker alternative to, the uniform dispute resolution policy, ICANN's pre-existing process for resolving domain name disputes. In addition, if 'there is a substantial pattern or practice of specific bad faith intent by the registry operator to profit from the sale of trademark infringing domain names', it may use the above-described PDDRP to take action against an operator.

Steps to take now

Businesses interested in registering a new gTLD must now begin preparing themselves to ensure they are fully informed and ready when the application process opens. Owing to the stringent application requirements, it may take upwards of three months to prepare an adequate application. If the initial application round is missed or an applicant fails to meet the eligibility criteria, there may not be another opportunity to apply until 2013 (at the earliest), by which time another legitimate interest holder may have purchased the gTLD of interest.

There are a number of ways to start preparing:

  • take part in workshops run by local domain name registries and operators;
  • decide on a gTLD string to apply for (eg .LAW or .ALLENS);
  • review the evaluation questions and criteria and registry operator agreement; and
  • ensure your trade marks and key brands are adequately protected.

Once the application process closes, business should review gTLD applications, which will be posted on ICANN's website. In doing so, they should consider:

  • whether there is a basis to oppose an applied-for gTLD string, including infringement of trade marks;
  • whether they should apply for a domain name within any of the applied-for gTLDs once they 'go live'; and
  • whether they should register their key trade marks with the trade marks clearing house.

The opening of the domain name frontier presents significant opportunities and challenges for businesses. Those that are prepared are most likely to win out.

Post-script: .xxx launch dates confirmed

We advised that .xxx domain names will be available for registration in early September 2011, and that trade mark holders will be able to take advantage of a sunrise period to defensively register their trade marks, as explained in our previous Client Update: Warning! Your brand may be associated with adult content!.

It has been confirmed that the sunrise period will last from 7 September to 6 October 2011. Business interested in defensively registering ,.xxx domain names should contact their lawyers and/or domain name registrars.

Footnotes
  1. Please note that if the complaint against the operator concerns a pattern of abusive domain name registrations, a different standard applies – see 'Preventing and addressing undesirable domain name registrations at the second level'.

For further information, please contact:

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