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Patton Boggs Partners Offer Brand Owners Advice on Infringement Risks, Protection Mechanisms and Branding Opportunities Associated With New gTLDs

Wednesday, March 12, 2014

Tamlin Bason's Interview with George Borababy and Deborah Lodge  

George Borababy, a partner in Patton Boggs, specializes in trademark and copyright law. He counsels clients on their use and protection of marks; prosecutes applications for registration; coordinates the filing of foreign applications; and represents clients in litigating trademark and copyright infringement cases and in Trademark Trial and Appeal Board proceedings.  

Deborah Lodge, a Patton Boggs partner, specializes in trademarks, advertising, and Internet law. She has worked on many facets of the new gTLD frontier, including gTLD applications, objections proceedings, and Trademark Clearinghouse registrations. She helps clients to maximize brand protection while complying with laws governing advertising, social media and e-commerce.
 

Concerns Over New gTLDs
Bloomberg BNA:After years of discussion, ICANN's board voted in June 2011 to expand the gTLDs (120 PTD, 6/22/11). What were some of the concerns that brand owners had at the time about the launch of the new gTLDs, and what sort of protections did they want to see included in the system to prevent infringement and cybersquatting?

George Borababy: When the proposal to expand the number of gTLDs was announced in June 2008, a number of concerns were expressed by brand owners, the intellectual property community and even government officials. Most generally, there was concern that protecting brands and their reputations against infringement and damage, and protecting consumers from fraud and deception, would become exponentially more difficult and expensive with the increase in the number of Internet domain registries from approximately 22 (excluding country registries) to over 1,000. Under the existing regime, the tactic of defensive domain name registration (i.e., registering a domain name solely in order to prevent another from registering that domain) was at least feasible. Indeed, it has been estimated that as many as 80 percent of many corporate domain name portfolios consist of defensive registrations. Under the new program, it would no longer be practicable defensively to register a brand as a domain name in hundreds of domain registries.

Phishing, Cybersquatting and Typosquatting.

GB:In addition, brand owners had more specific concerns, including the following:

1. That the brand owner's brand would be used as a Second Level Domain by unscrupulous third parties who would use the website for fraudulent or misleading purposes such as “phishing” or re-directing traffic to fraudulent sites, or for the sale of counterfeit products, thereby causing serious damage to the reputation of the legitimate brand in the minds of consumers (202 PTD, 10/19/12).

2. Even under the pre-existing domain name regime, it is difficult to guard against domain names that employ a slight variant on a mark, such as a slight misspelling (typosquatting) or the use of plurals or generic terms appended to the mark. Such problems would increase many-fold under the expanded domain name system.

3. That a third party might register a brand as a gTLD and therefore preclude the brand owner from using its own brand as a Top Level Domain, or extract payment to do so. This would deny to the brand owner the very benefits that the TLD expansion was intended to afford.

4. That third parties would use the brand owner's brand as Second Level Domains in a variety of registries, and thereby exclude the brand owner from using its own mark as part of a domain name in potentially useful domain registries, or extract payment to do so. Again, brand owners would be denied the benefits of the new program.

5. That a different brand owner that uses the same mark (for example, “Delta” for faucets and “Delta” for airlines) might register that mark as a gTLD and preclude the other brand owner from using its own mark as a gTLD.

6. That a brand that is also a common descriptive or generic term could be registered as a gTLD by a third party seeking to use that gTLD for a generic site (for example “Coach” as a fashion brand vs. “coach” to designate an athletic coach or life coach).

7. That key industry terms could be registered as gTLDs, thereby preventing competitors from registering domains in that gTLD. For example, an insurance company might register <.carinsurance> as a gTLD and not permit other insurance companies to register domain names within that registry.

8. That the brand owner's brand and reputation might be damaged by the use of its mark as a Second Level Domain in a registry that is dedicated to criticizing brands, such as <.sucks> or <.gripe.>

9. That the brand owner's brand may be compromised by use as a Second Level Domain on a website that has unsavory connotations, such as< .porn> or <.sex>.

 

Rights Protection Mechanisms


BNA:What protections were added in the intervening years--between the 2011 announcement and the 2014 launch of the first new gTLDs--to address brand owners' concerns?

 

GB: In order to address some of these concerns, various protections were put into place after consultation with governments and representatives of brand owners and intellectual property stakeholders. Among these protective measures are the following:

1. As a practical matter, the cost of applying to register a gTLD, which involved a $185,000 filing fee plus professional and other fees and expenses, likely kept many potential “bad actors” out of the competition, at least at the gTLD level.

2. During the process of approving new gTLDs, ICANN instituted a procedure for Legal Rights Objections (“LRO”), by which trademark owners could object to proposed gTLDs that infringed their marks. As it turned out, very few such LROs were filed. Out of about 1,930 applications to register approximately 1,400 new gTLDs, only 71 LROs were filed. Of these, six resulted in withdrawal of the applications, and four resulted in decisions against the gTLD applicant. This suggests that third parties were dissuaded from trying to register other parties' brands as gTLDs.

3. ICANN instituted the Trademark Clearinghouse (“TMCH”) in order to give brand owners certain procedural advantages in preventing third parties from registering others' marks as Second Level Domains. More than 23,000 marks (as of January 21, 2014) have been registered with the TMCH (21 PTD, 1/31/13).

The TMCH provides mark owners with the following protections:

•  Early Registration during Sunrise Periods: Each new gTLD registry must offer a “Sunrise Period” of either 60 days (“End Date Sunrise”), or 30 days plus an additional 30-day pre-opening notice period (“Start Date Sunrise”), before the registry opens for general Second Level Domain applications. During the Sunrise Period, owners of nationally or regionally registered marks that are in actual use and that are registered with the TMCH may register those marks as Second Level Domains in that registry before the registry opens to the public (170 PTD, 9/3/13).

•  Warning Notices: If a new domain name applicant applies for a domain name that matches a mark that is registered with the TMCH, the applicant will be sent a notice warning of the potential conflict. Such warning notices are sent to domain name applicants only during the 90-day period beginning on the opening of general domain name registrations for each new TLD. The applicant may nonetheless proceed with the application and may be awarded the registration if it confirms that, to the best of its knowledge, the registration and use of the domain will not infringe.

•  Trademark Claims Service Notice: The Trademark Claims Service will notify a TMCH registrant if anyone registers a domain name that is an identical match to its registered mark. This notice period was originally for 60 days after the opening of each registry, but it has now been extended indefinitely. This notice will enable brand owners to take preventive action to avoid infringement or cybersquatting.

•  Abusive Domains: A TMCH registrant may also list as part of its registration up to 50 domain names that have been found by courts or UDRP panels to violate its rights. The warnings and notices will apply to these abusive domains as well (56 PTD, 3/22/13).

 


While there did not appear to be widespread trademark abuse in the process of applying for new gTLDs, a number of the brand owners' expressed concerns with the new gTLD program persist.

4. We would note that TMCH registration is not mandatory for trademark protection. Like any other member of the general public, a brand owner will still be able to register its marks as Second Level Domains (subject to availability) after the Sunrise Periods, although it will lose the priority that the Sunrise Period affords. Brand owners will also continue to be able to challenge infringing domain names through court actions, UDRP proceedings or other dispute resolution procedures.

5. ICANN instituted the Uniform Rapid Suspension Process (“URS”) as an additional and expedited dispute resolution process by which a mark owner may challenge the registration of a domain name that includes its mark as part of a Second Level Domain (183 PTD, 9/21/12).

6. ICANN also instituted a Post-Delegation Dispute Resolution Procedure (“PDDRP”) by which a trademark owner may challenge a gTLD domain name registry that is using its registry for improper purposes, such as to facilitate counterfeiting or infringement or to engage in cybersquatting (44 PTD, 3/7/12). A similar procedure, known as the RDDRP, applies with regard to community domain name registries.

7. Some new gTLD registries are implementing their own additional rights protection mechanisms. For example, some registries are offering blocking services--for an additional fee, they will not allow others to register Second Level Domains that are the same as the blocking mark. Some blocking services will allow mark owners to block phrases containing the mark--for example, <TMsucks.TLD>. They charge a fee for each blocked iteration. To take advantage of the blocking services, the brand owner must first register its basic mark with the TMCH.

Continuing Concerns.

GB: While there did not appear to be widespread trademark abuse in the process of applying for new gTLDs, a number of the brand owners' expressed concerns with the new gTLD program persist (31 PTD, 2/14/14). These include the following:

1. Most notably, the TMCH does not block infringing domain registrations. Thus, there is no simple or inexpensive means by which to prevent a mark from being hijacked on more than a relatively few of the new gTLD registries. Under the new system, there will be at least 600 “open” gTLD registries in which anyone may possibly register a domain name that incorporates a third party's mark. It is simply prohibitive for a brand owner to file defensive domain name registrations in all of these registries or to bring URS, UDRP or other proceedings against numerous domain name registrants.

2. While the TMCH provides some protection, it has a number of shortcomings, including the following:

•  As stated, TMCH registration does not prevent a third party from obtaining a domain name that includes a registered mark. It will give the brand owner notice of the new, infringing domain name. But to prevent anyone else from obtaining a domain name incorporating its mark in a particular registry, the brand owner must either register the domain name in that registry first or take subsequent action to challenge the offending domain name.

•  In general, only nationally and regionally registered marks are eligible for TMCH registration. A common law or unregistered mark is eligible only if the mark has been validated by a court or is protected by a statute or treaty.

•  To obtain a domain name registration during a Sunrise Period, an applicant must provide proof of actual use of the mark. Proof of actual use can be submitted during the TMCH registration process. In most jurisdictions, use is not a prerequisite to registration of a mark. Thus, some mark owners may be precluded from taking full advantage of the TMCH.

•  The TMCH provides protection only against exact matches. For example, the TMCH will not send notifications of plural or sound-alike domain name registrations. It is thus relatively easy for a cybersquatter or typosquatter to evade the TMCH protections.

3. The URS may be of limited efficacy, in that it is designed only for the clearest cases of trademark abuse and thus the burden of proof is higher than under the UDRP. In addition, the remedy is not a cancellation or transfer of the offending domain name, as under the UDRP, but rather a freezing of that domain name for the remainder of its registered term (or, for payment of an additional fee, for a further one year). At the end of that term, that domain name may again be registered. Nevertheless, the tunnel focus and speed of URS determinations may be an advantage to brand owners. The first URS decision was issued on February 12, 2014- shortly after it was filed. IBM challenged <ibm.guru> and <ibm.ventures>. The URS Examiner found that the domain names had been registered to disrupt IBM's business and to cause confusion. Seehttp://www.thedomains.com/ for a report on this case.


Until the next application period, brand owners should keep an eye on what kinds of branded gTLDs work and which do not, whether consumers become trained to try for a <.brand> first, instead of wading through Google ads, and even which branded gTLDs rank highest in search results.

4. Where a brand owner has registered its brand as a gTLD and later decides not to continue to employ that brand as a gTLD, ICANN reserves the right to assign, or “re-delegate,” that gTLD to another party, thereby causing the brand owner to lose control of its brand, at least as used in that domain. While ICANN has indicated that it will not effect any such transfer without the consent of the registrant, this remains an issue for <.brand> gTLD owners. ICANN has proposed special Registry Agreement provisions for< .brand> TLDs, including giving trademark owners some recourse after termination of their <.brand> registries, to increase the protections for trademark owners operating <.brand> TLDs.

5. There continues to exist, as under the prior regime, the problem of competing brand owners applying for Second Level Domains in the same gTLD registry. The new problem is that this concern is now spread over a vast array of registries rather than 20 or so under the previous system (81 PTD, 4/26/13).

6. There is some concern that taking no action in response to a TMCH notice of a conflicting domain may be seen as a failure to police one's mark. Yet a brand owner will be hard-pressed to act with regard to every registry.

gTLD Branding Strategies
BNA:What factors did a brand owner have to consider when deciding whether to apply for a <.brand> gTLD during the application process?

Deborah Lodge: In deciding whether to apply for a< .brand> gTLD, brand owners had to put on their visionary hats. They had to determine a) where online marketing was likely to go, b) what the brand's future marketing plans and channels were likely to be, and c) what the next generation of the Internet will look like. They also had to balance those projections against the considerable cost of applying for and operating a TLD. Some brands clearly have broad visions of integrating marketing, customer connectivity, as well as the future delivery of their products and services. Many brands also saw the new gTLDs as a worthwhile investment.

Open or Closed gTLD?
BNA:In terms of branding, does it matter if a trademark owner is operating an open or a closed gTLD?

 

DL: It matters greatly if a trademark owner operates its gTLD as a closed or open one. Under ICANN's rules, an “open” gTLD has to be open to anyone who wants to register a new domain name--subject to the domain name registration agreement of course. In a “closed” gTLD, the operator can set criteria to determine eligibility for domain name registration in that domain. So a trademark owner operating a closed TLD has control over the downstream registrations. For example, the trademark owner can limit the domain names to its distributors, or its brands, or its customers. Also, operating a closed <.brand> TLD can be used to provide assurances of legitimate merchandise and sales channels. A trademark owner could promote its <.brand> as a “one-stop shop” for all of its lines and all its brands, with second level domains for specific brands, customer feedback, outreach and other diverse websites--all under one branded umbrella gTLD.

No New Application Period Set.
BNA:If a brand owner didn't apply for a< .brand> gTLD this time around, when will the next chance to do so, and what sort of things should it be paying attention to in order to determine if it is worth it?

DL: ICANN has announced that it will have additional application periods. No new application period has been set as yet, however. ICANN at one point said its goal was to have another application period open a year or so after the initial application period closed. See http://urbanbrain.jp/en/2011/11/30/when-will-the-second-round-of-new-gtld-applications-begin. That was back in 2011, though. ICANN is still dealing with launching this set of gTLDs, so a new application period is still many moons in the future. Hopefully, ICANN will implement an appeals procedure for the objections decisions before the next round of gTLDs, as some objections decisions were inconsistent and seemed to be based on misunderstandings or misapplications of trademark principles. The criticisms leveled at ICANN over those inconsistencies tarnished the debut of the new gTLDs and threatened to undermine ICANN's reliability and credibility.

Until the next application period, brand owners should keep an eye on what kinds of branded gTLDs work and which do not, whether consumers become trained to try for a <.brand> first, instead of wading through Google ads, and even which branded gTLDs rank highest in search results.

Enforcement in New gTLD System.
BNA:Does a trademark owner that has secured a< .brand> gTLD have any enforcement benefit over a brand owner that chose not to apply for a new gTLD?

DL: Having a branded gTLD certainly signals a commitment to the brand and to the Internet. From an enforcement perspective, there should not be lots of enforcement within the< .brand> environs--because the trademark owner controls the distribution of the second level domains (basic domain names). There could be some third level and fourth level problems, but the brand owner should be able to police and address those fairly readily. Outside the <.brand> environment, the trademark-gTLD owner will be on the same footing as other trademark owners in addressing enforcement issues. As a practical matter, though, <.brand> owners are likely to be monitoring their brands on the Internet and to be participating in blocking programs. So they will likely be able to roll out the enforcement engines more quickly than trademark owners who have not focused on these new frontiers. A closed branded gTLD also could promote its gTLD by emphasizing that use of the< .brand> gTLD ensures authenticity--for example: you can trust< .brand> websites, or “if it is not in the< .brand> gTLD, it's not an authorized website for< .brand> products.” That would also be a way to warn consumers to be wary of illegitimate sites that are not under the< .brand> umbrella.


The Million Dollar Question is whether the new gTLDs will be just a hiccup in the Internet world.

BNA:Is it possible for a brand owner to enforce its marks throughout the entire new gTLD system? If not, what are some tips for refining their enforcement strategies to get the best results with the least expenditures?  

DL: The Trademark Clearinghouse--while not perfect--is a good first step in planning an enforcement strategy over the new gTLD system. The TMCH is not itself an enforcement system, but it gives notice of new direct-hit domain name registrations. The blocking mechanisms offered by Donuts and some other registries with multiple gTLDs also offer a way to guard against direct infringements. Enrolling a mark in a “block” (sometimes referred to as a “Domain Protected Mark List” or “DPML”) can be more cost-effective than registering a slew of “defensive” domain names. Again, there are some limitations, as the blocks apply only to the gTLDs controlled by the registry offering the block (such as Donuts). Enrolling key marks in a domain name watching system may also help. Of course, then someone has to review the watch reports and make enforcement decisions. The strategies will likely differ depending on the nature of the brand, how susceptible it is to infringement and counterfeiting, etc.

How Can Brand Owners Deal With 'Gray' Areas?
BNA:It seems likely that some gTLDs will be too attenuated for a brand owner to have to worry about, and at the same time some will present obvious concerns. But, what are some factors that should be considered to analyze the “in between” gTLDs--which of course will depend on the specific brand owner? For instance, assume that an automobile manufacturer will want to secure, or prevent others from securing, the company's name and the name of its models at the second level of a <.auto> TLD. And further assume that the same party will be less interested in securing second level domains in a <.property> TLD. The question is: how can the party narrow its focus to the gray area gTLDs, such as< .bike> or <.fast> that may be relevant?

 

DL: Great question. First, brand owners need to take a look at the spreadsheet of new gTLDs and highlight the ones of paramount interest--like <.auto> in your hypothetical--and plot out the timelines for those gTLDs--the Sunrise Periods and general opening times. I think that the blocking mechanisms will turn out to be a popular way for dealing with the “gray” areas. It will be impossible to police all the new gTLDs, but watching services and having a honed triage plan will help.

 

BNA:Your firm has written about the importance of brand owners taking advantage of the Trademark Clearinghouse. Is it feasible for a brand owner to register all of its marks with the TMCH? What would be some of the benefits of doing so?  

DL: A brand owner certainly could register all its word marks with the TMCH, although there would be a significant cost for robust portfolios. In addition to the cost, the TMCH registrations create new docketing deadlines, as they must be periodically renewed.

The primary benefit of registering all marks would be to get notice of identical matches for the TMCH, to be able to enroll the marks in blocking programs, and to take advantage of the Sunrise Period registrations when a desired new gTLD opens for registration. TMCH registration will not prevent an applicant from getting an infringing domain name--but it will give the brand owner prompt notice, so filing a URS complaint or taking other enforcement measures can be initiated promptly. It is more likely that brand owners will review their portfolios and register only their core trademarks and service marks with the TMCH.

Canary in the Coal Mine.
BNA:What other rights protection mechanisms should brand owners be paying attention to, and availing themselves of, during the early stages of this roll out?

DL: The URS may turn out to be more effective than we had anticipated. Although the only URS remedy is suspension of the offending domain name for the rest of the registration term, it may serve its intended purpose as an “ER” for clear infringements in the new gTLD field. The IBM case noted above--the first URS decision--took 7 days from filing to decision. The complaint was filed on Feb. 5, 2014, and the decision issued on Feb. 12. That is a speedy tourniquet.


I think the main problem for brand enforcement will be in new generic 'aggregation' sites - such as <.travel> or <.careers>.

BNA:Finally, what is the canary in the coal mine? That is, from a protection perspective, what sorts of things will you be looking at in these next few months to determine the effectiveness of the various protection mechanisms?  

DL: The Million Dollar Question is whether the new gTLDs will be just a hiccup in the Internet world. I think not--I think we will see a real expansion of the Internet, especially with branded gTLDs for communications companies, retail, and integrated companies whose brands are household technology icons. I think the main problem for brand enforcement will be in new generic “aggregation” sites - such as <.travel> or< .careers>. To assess potential problems with those and other gTLDs, we will be reviewing watch service and other reports with our clients, as well as notices from the TMCH and elsewhere. The launch of the gTLDs has made it more critical to have an integrated brand management and enforcement strategy. We hope that we do not hear many canaries, but the proverbial “Fat Lady” has not even begun to sing in this opera.

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