Legal

posted by Henry
Oct 12

The domain name floodgates have opened

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In brief: It will soon be possible for companies to register their own generic top level domain names, presenting an unprecedented opportunity for trade mark holders. However, there are significant technical requirements and costs involved and the number of domain name spaces that cybersquatters could use to capitalise on other people’s trade marks could be significantly increased. Partner Tim Golder (view CV), Senior Associate Jesse Gleeson and Law Graduate Nadia Guadagno report.

How does it affect you?

  • Companies should decide if they wish to register a generic top level domain name (gTLD) or a domain name within a new gTLD registered by someone else. Companies should keep informed as to when the new gTLD application process opens and apply within the requisite period. In relation to the latter, companies should be aware of any ‘sunrise’ period that may apply to them as a trade mark owner, and otherwise consider protective registrations in new gTLDs when they become available.
  • Once the application period is closed, companies should also monitor the applications that will be posted on the Internet Corporation for Assigned Names and Numbers (ICANN) website to determine whether there are any applications for gTLDs that may infringe their trade mark and whether they should file an objection on that basis.

Background

gTLDs are generic top level domains, such as .com and .org. In some cases, a gTLD signifies the nature of the organisation operating a specific website. For example, a .com address usually indicates a commercial organisation and a .aero address is used in the aviation industry. There are currently 21 gTLDs.

Being a registrant of a gTLD is much more onerous than having a domain name within a gTLD. The registrant of a gTLD must operate a registry for that gTLD and, should they choose to allow others to apply for a domain name within that gTLD, they will need to set up an application process and agreements with ICANN accredited registrars.

In June 2008, we reported that ICANN had approved recommendations to introduce new gTLDs to the Internet’s addressing systems. ICANN has released for public comment various drafts of an applicant guidebook that provides detailed information about the rules, requirements and processes for applying for a gTLD. Recently, ICANN released the fourth draft of the Draft Applicant Guidebook for the new gTLD program, which incorporated improvements to the previous version based on public feedback. It is expected another draft will be published before it is finalised and the final version will probably be published next year.

Who can apply for a gTLD?

Established corporations, organisations or ‘institutions in good standing’ are eligible to apply for a new gTLD. Individuals and sole proprietors cannot apply. ICANN will also perform a background check on all applicants, which will consider issues such as corruption, terrorism, fraud, intellectual property violations and cybersquatting. ICANN has the discretion to deem an applicant ineligible on the basis of results of a background check.

Application and registration process

Applicants must first register under the TLD Application system. They must then supply a deposit and application fee for each application and complete the full application form with supporting documentation, which will address matters such as financial, technical and operational capability.

After the submission period has closed, ICANN will consider and evaluate the applications. All complete applications will be posted on the ICANN website.

The two main elements of the initial evaluation are string reviews and applicant reviews. String reviews concern:

  • whether the applied-for gTLD string is the same or so similar to existing TLDs, reserved names and other applied-for strings that it would cause confusion;
  • whether the applied-for gTLD would adversely affect the domain name system security or stability; and
  • in the case of certain geographical names, whether government approval is required and, if so, whether evidence has been provided.

Where the applied-for gTLD string is found to be the same or too similar to an existing TLD or a reserved name, it will not pass the initial evaluation. Where the applied-for gTLD is too similar to another applied-for gTLD string, applicants are encouraged to resolve the matter themselves and, failing such resolution, an auction is held for the particular gTLD string.

Applicant reviews concern:

  • whether the applicant has the requisite technical or operational capability to operate a registry;
  • whether the applicant has the requisite financial capability to operate a registry; and
  • whether the applicant’s registry services may adversely affect domain name system security or stability.

If applicants have successfully made it through the evaluation phase and any objection procedure (see below), they must execute a registry agreement with ICANN and satisfactorily complete a pre-delegation technical test. If the testing is not completed satisfactorily within the time period set out in the registry agreement, ICANN may elect to terminate the agreement. If the testing is successful, the applicant is eligible for delegation of its gTLD into the domain name system root zone. Once the applicant is delegated the gTLD, it becomes a registry operator.

These requirements are significant and will likely involve a significant investment in technical expertise. It is possible, however, that third parties will offer services managing new gTLDs to make the application process more accessible.

How much does it cost?

The evaluation fee is US$185,000, which is to be paid as a US$5000 deposit when registering to apply and the remaining US$180,000 is to be submitted with the complete application.

Additional fees include a dispute resolution filing fee that must accompany a formal objection and any response of the applicant to the objection. This must be paid to the dispute resolution service provider and it is estimated that the fees may be from US$1000 to US$5000 or more per complaint.

Dispute resolution

An independent dispute resolution process is initiated upon the filing of a formal objection during the evaluation stage. A formal objection may only be filed on the following four grounds:

  1. the applied-for gTLD is too similar to an existing TLD or another applied-for gTLD;
  2. the applied-for gTLD infringes the objector’s legal rights;
  3. the applied-for gTLD is contrary to morality and public order; or
  4. the applied-for gTLD is opposed by a significant proportion of the community to which the gTLD string may be targeted.

An objector must have standing. In relation to the above four grounds, those who can object, respectively, are:

  1. an existing TLD operator or gTLD applicant who is applying in the current round;
  2. the person or entity who holds the legal right;
  3. anyone; or
  4. an established institution that is associated with a clearly defined section of the community.

Trade mark protection

The owner of a registered or unregistered trade mark may object to an application for a gTLD on the ground that their legal rights are infringed (as above).

In addition, although there does not appear to be a ‘sunrise’ period where trade mark owners may apply for a gTLD, it is a requirement under the registration agreement that, in the start-up phase, a registry operator must implement a ‘sunrise’ period, which allows eligible rightsholders to register names in the TLD before anyone else, or a trade mark claims service, which will provide notice to potential registrants of trade marks that currently exist and provide notice to rightsholders of relevant names that have been registered.

A post-delegation trade mark dispute resolution procedure has also been proposed. Such a procedure would allow trade mark owners to take action against a gTLD registry operator where it believes its trade mark has been infringed. A registry operator will not be liable merely for having domain names within its gTLD that infringe a trade mark. To be liable, there must be affirmative conduct such as where the registry operator has acted in bad faith, with the intention of profiting from the systemic registration of infringing domain names (systemic cybersquatting) or is using the gTLD for an improper purpose.

Implications

Companies and organisations may register their company name, brand/trading name or trade mark as a gTLD (eg .ALLENS) or a domain name within a gTLD (eg ALLENS.LAW). There is an obvious marketing benefit to a company having its own gTLD. It provides a further means of attracting customers and makes it easier for customers and potential customers to locate a company’s website.

Owning the gTLD also gives that company significant control over the gTLD and the registration of domain names within it.

Given the substantial cost and technical requirements of setting up a gTLD, it seems relatively unlikely that a cybersquatter would register a gTLD corresponding to established trade marks. Accordingly, registering a new gTLD as a protective registration is unlikely to be justified when regard is given to the substantial costs involved.

The far more significant cybersquatting risk arises from people registering domain names within the new gTLDs. As the new gTLD program will see a proliferation of gTLDs, this is likely to significantly increase the potential number of domain names that could be registered to infringe trade marks or mislead web users. Companies should be vigilant in monitoring new gTLDs that are approved and considering whether protective registrations should be filed in those gTLDs.

Sourced & published by Henry Sapiecha

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