ICANN Approves Sweeping Change to Domain Name Policies

When ICANN approved new generic top-level web domains (gTLDs), they released a flood of new domain names and created a dramatic shift in the way that companies protect their brands and consumers find domains and trust them to represent legitimate companies.

Previously, there were only 22 gTLDs, including the familiar .com, .net and .org used by most businesses. In addition, there are a few hundred country code top level domains, such as the United Kingdom’s .uk, Japan’s .jp and Germany’s .de. ICANN’s decision opens the door for any qualified entity to create its own top-level domain, which is likely to result in many global brands creating house gTLDs (e.g., .sony, .disney, .nfl), and in groups establishing industry-specific or community-specific domains (e.g., .bank, .tech, .kids).

Opportunities and Obstacles

ICANN’s decision means that there may be some valuable opportunities for brand owners on the horizon. Under the present configuration, domain name squatters, competitors, and unrelated businesses or individuals with the same name have had to fight each other for rights to the coveted .com mark. The new plan opens up the possibility of brand owners moving away from .com and toward either their own gTLDs or gTLDs that are designed for their industry or community. For example, Delta Airlines owns delta.com, but Delta Dental might be able to obtain delta.med, if the health industry were to register and open up a .med gTLD to medical providers.

This opportunity may also create new market challenges. Brand owners who currently own the most desirable .com space will need to evaluate the likelihood that consumers in their sector will begin shopping through alternative gTLDs or will trust the authenticity of products or services registered through those alternative gTLDs enough to make presence in that gTLD a “must own.” At present, it is impossible to say what the impact of gTLDs will be on current search engine optimization or consumer habits. However, community-specific gTLDs, if regulated to exclude scammers, may become popular with consumers. In addition, consumer searches for URLs in a .wine category or a .car category might trigger new keyword advertising opportunities or the need to own an address with that top-level domain. When new gTLDs begin to roll out, this may create a brand new race for domain space among competitors with existing domains.

This race is not immediate. ICANN does not begin accepting applications for new gTLDs until January 12, 2012, and that period runs through April 12, 2012. After applications are accepted, ICANN will evaluate both the applicant’s technical, financial and operational ability to run a domain registry, and the potential for conflicts between the applied-for gTLD and other applications. ICANN estimates that the first gTLDs will not be rolled out until the beginning of 2013.

Instead, the question that brand owners and business operators should consider over the next few months is whether they want to seek registration of their own house brand as a gTLD or whether any industry group is proposing a gTLD that might affect their interests. Since the registrars of gTLDs will be able to set their own registration policies, a policy that would prohibit certain businesses from registering with a particular gTLD may be an area of substantial interest and dispute. For example, if the health care industry were to create a gTLD for the medical community, would it seek to exclude holistic health care practitioners by limiting registration within that gTLD to traditional health care providers? What about excluding vendors of medical-related services, such as medical equipment or temporary employees? ICANN’s application evaluation includes an opportunity for opposition to any proposed gTLD, but negotiation or lobbying with applicable industry groups in advance of the filing of such an application may yield a more favorable and amicable outcome within industry or community groups in which there is the potential for dispute about who belongs.

How Difficult is it to Register Your Own gTLD?

The prospect of creating your own gTLD may be tempting, but brand owners and industry groups should be mindful of the costs. The application fee is $185,000, and those who obtain registration will have to pay ICANN $25,000 per year in ongoing registration fees. In addition, registrants will be responsible for operating their registry and complying with the terms of their Registry Agreements with ICANN. While new registrars will be able to set their own registration policies, including restricting house brand gTLDs to only the use of a brand owner, they will still need to demonstrate to ICANN that they have the funds, the technical expertise and the willingness to comply with all applicable laws and to follow the registration policies they are proposing. ICANN is also looking for applicants who can demonstrate that they will immediately launch the new gTLDs, so a plan to reserve a gTLD for sometime in the future will be rejected.

Finally, ICANN’s stated goal in approving the new gTLD program is to create innovation and diversity among domain names, in order to eliminate current complaints about the lack of available domains to new registrants. The first round of gTLDs is limited to 500 gTLDs, so if an overwhelming number of applications are received, ICANN may hold back some of the house brands in favor of rolling out more broad-based gTLDs.

What About My Trademarks?

ICANN is establishing a Trademark Clearinghouse to prevent harm to owners of registered trademarks. ICANN’s evaluation process prior to approving any new gTLD is substantial, and the costs and technical requirements of becoming a registrar are high, so it is extremely unlikely that deliberate trademark infringement will be allowed in the gTLD. However, this does not prevent the possibility of more innocent confusion, and brand owners should check back with ICANN over the next few months to see when it adopts the final procedure for protecting trademark owners (which has not yet been determined).

As this process moves forward, trademark owners should also think about how this may affect their current trademarks. Many brands have adopted “.com” as a portion of their mark, but may need to evaluate whether they want to begin phasing in a different identity in the marketplace, in order to pave the way toward potentially being identified under a different gTLD.