Will Mere Uncertainty Drive Brand Owners To Participate in ICANN's New gTLDs Effort?

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By Amy E. Bivins  

 

ICANN Trademark Jargon

Like everything else at ICANN, trademark-related discussions are laced with acronyms and buzzwords that can make communications nearly unintelligible to those unfamiliar with the relevant shorthand.

These terms of interest to brand owners come up most often:

ACPA. Anticybersquatting Consumer Protection Act. A U.S. statute that creates civil liability for cybersquatting against entities that register, traffic in, or use a domain name with a bad faith intent to profit, 15 U.S.C. §1125(d)(1)(A). U.S. brand owners always have the option of filing an ACPA lawsuit against a cybersquatter in lieu of pursuing the entity under ICANN's dispute resolution procedures.

IRT. Implementation Recommendation Team. A group of IP practitioners who, at ICANN's request, developed a report on trademark issues raised by the new gTLDs program, with recommendations designed to limit those risks. ICANN adopted some of those recommendations, including the trademark clearinghouse and a uniform rapid suspension system. But it rejected others, such as a globally protected marks list.

Trademark Clearinghouse. A new IP protection system for the new gTLDs program. The clearinghouse will offer authentication and validation services for trademark data, on which rights protection mechanisms in the new gTLDs will rely. At the second level, new gTLDs will be required to provide pre-launch IP claims services linked to marks contained in the clearinghouse for at least 60 days. If a domain is registered that matches a mark in the clearinghouse, the provider will send a notice to the trademark owner and registrant

UDRP. Uniform Domain Name Dispute Resolution Policy. A policy governing all domain name registrars, under which registrants agree that disputes may be resolved through arbitration at the National Arbitration Forum or World Intellectual Property Organization.

URS. ICANN's uniform rapid suspension system for the new gTLDs program--a faster alternative to UDRP actions for cases of clear-cut infringement. The program will be offered for second-level domains in the new gTLDs in conjunction with a trademark clearinghouse.

Love it or hate it, the Internet Corporation for Assigned Names and Numbers' new top-level domain program has arrived. No one can predict with certainty whether it will inspire next-generation marketing tools that every business will want to have or merely be the latest venue for a new wave of cybersquatting. Or something else entirely.


“If ICANN's goal was to create an environment of uncertainty so that brand owners rush to participate in Round 1, it could not have picked two better issues upon which to under-perform.”
Paul D. McGrady, Winston & Strawn LLP, Chicago

Uncertainty--rather than specific aspects of the ICANN new domains initiative--appears to be fueling most brand owners' fears about defensive registrations in the new gTLDs. Several attorneys, in recent interviews with Bloomberg BNA, expressed the following concerns:

• uncertainty about whether someone else with a legitimate claim to a similar mark might snatch a brand owner's opportunity if they don't apply for the matching domain;

• uncertainty about whether a well-funded speculator might stake a claim to a new top-level domain with the intent to profitably sell, rather than use, the domain;

• uncertainty about how broadly ICANN will view “string confusion,” a key phrase that could permit brand owners to shove applicants off domains that merely suggest rather than copy a trademark;

• uncertainty about when the planned second round of applications (17 ECLR 296, 2/15/12) will occur; and

• uncertainty about whether new top-level domains will ever become popular or useful enough to make the application for and maintenance of a registry worth the investment.

 

In a Feb. 6 call for comments, ICANN asked about stakeholders' perceived need for defensive registrations in the new gTLDs program. It pledged “to take steps that could remediate and alleviate the concerns on 'defensive' gTLD applications[,]” (17 ECLR 311, 2/15/12).

At this point, it is unclear what ICANN might do over the roughly six weeks between the close of the comment period and when the application window closes April 12 to address brand owners' concerns.

ICANN reserves the right to update the terms for new gTLD registry operators in the applicant guidebook, but applications are already rolling in. Those applications are being drafted with the existing rights protection mechanisms in mind, and changes could require applicants to take added steps, though what those steps might be is altogether unclear at the moment.

Comments are due Feb. 27.

Define 'Defensive'....

ICANN is seeking input on the source of stakeholders' concerns--chiefly, trademark owners--about defensive registrations in the new gTLDs program.

Leading up to the opening of the application window Jan. 12, “parties stated their perception that they will need to submit 'defensive' gTLD applications as a means to protect their trademarks[,]” ICANN wrote.

Many stakeholders have complained that, despite new IP protections built into the program, a lack of IP protections will require them to bear unreasonable burdens, including policing for unauthorized uses of their marks in what could be an astronomical number of new gTLDs, or register defensively.

In recent months, the Coalition for Responsible Internet Domain Oversight has been one of the more vocal advocates in calling for ICANN to implement more IP protections into the new gTLDs program. CRIDO, a coalition led by the Association of National Advertisers, has rallied support from a variety of major brands and industry groups, and repeatedly cited the potential for defensive registration burdens in the new gTLDs program (16 ECLR 1895, 11/16/11).

Lawmakers (17 ECLR 36, 1/4/12) and regulators (16 ECLR 2036, 12/14/11) have also referred to defensive registration risks in calling for ICANN to use caution in moving ahead with the program.

It could be argued that the need for defensive registrations at the top level for new gTLDs is lower than for the second-level risks in existing TLDs because of the $185,000 cost to even apply, the stringent requirements needed to clear the evaluation process and run a registry, and opposition processes built into the program.


“Most people are saying that risk is pretty low, but we can't be sure. There's a lot of money to be made in desirable domains.”
Mark V. B. Partridge, Partridge IP Law, Chicago

But what, exactly, are the “defensive” registrations that ICANN is asking about right now? Brand owners' concerns are certainly broader than asking whether or not they should register their brand name as a TLD if they have no intention of using it to run a registry, so that someone else does not register it.

It seems likely that ICANN will hear about more than that in the comments.

Brand Risks a Concern, but Fears Run Deeper.

The need to file a purely “defensive” registration--to get a .brand TLD so that no one else can register it--appears to be greatest for brand owners with marks that are used by another business in another industry or in another geographic area.


Trademark-Related ICANN Shorthand

Like everything else at ICANN, trademark-related discussions are laced with acronyms and buzzwords that can make communications nearly unintelligible to those unfamiliar with the relevant shorthand.

These terms of interest to brand owners come up most often:

ACPA. Anticybersquatting Consumer Protection Act. A U.S. statute that creates civil liability for cybersquatting against entities that register, traffic in, or use a domain name with a bad faith intent to profit, 15 U.S.C. §1125(d)(1)(A). U.S. brand owners always have the option of filing an ACPA lawsuit against a cybersquatter in lieu of pursuing the entity under ICANN's dispute resolution procedures.

IRT. Implementation Recommendation Team. A group of IP practitioners who, at ICANN's request, developed a report on trademark issues raised by the new gTLDs program, with recommendations designed to limit those risks. ICANN adopted some of those recommendations, including the trademark clearinghouse and a uniform rapid suspension system. But it rejected others, such as a globally protected marks list.

Trademark Clearinghouse. A new IP protection system for the new gTLDs program. The clearinghouse will offer authentication and validation services for trademark data, on which rights protection mechanisms in the new gTLDs will rely. At the second level, new gTLDs will be required to provide pre-launch IP claims services linked to marks contained in the clearinghouse for at least 60 days. If a domain is registered that matches a mark in the clearinghouse, the provider will send a notice to the trademark owner and registrant

UDRP. Uniform Domain Name Dispute Resolution Policy. A policy governing all domain name registrars, under which registrants agree that disputes may be resolved through arbitration at the National Arbitration Forum or World Intellectual Property Organization.

URS. ICANN's uniform rapid suspension system for the new gTLDs program--a faster alternative to UDRP actions for cases of clear-cut infringement. The program will be offered for second-level domains in the new gTLDs in conjunction with a trademark clearinghouse.


If an entity with a legitimate claim to use a mark applies, a brand owner may not be able to successfully challenge the application through the opposition proceedings. And if they don't know the other entity is applying, they could lose the opportunity to ever get the TLD if they choose not to apply now--or have to pay a steep price for it down the road.

Daniel L. Jaffe, executive vice president at the Association of National Advertisers, a leading critic ICANN's new domains initiative, said that even if the risk is small, “what we're talking about is companies protecting their crown jewel assets.” Many businesses have spent decades building their brands, and even a small risk of their brands being undermined is a huge risk, Jaffe said. “This is not something you can take major risks with.”

“We didn't start this,” Jaffe said. “Companies came to us and said this is a very bad situation--we do feel tremendously pressured to defensively register.”

Mark V. B. Partridge, Partridge IP Law, Chicago, noted that, for example, there can only be one “.apple.” So if both Apple Inc. and a coalition of apple growers were to apply, only one of the entities could get it. And if neither apply, someone else might.

“Say neither the growers nor Apple wanted to affirmatively register and use it--they might still feel compelled to register, so that they are not precluded from getting it later,” Partridge said.

Although another entity's use might be at least arguably legitimate, Partridge said he would categorize that type of registration as “defensive.” The more traditional idea of “defensive” registrations envisions infringing applicants and speculators, but Partridge said “defensive” registrations could include any registration motivated by an intent to keep someone else from getting the TLD.

The high application cost should cut down on speculation, but Partridge did not rule out the possibility. “Most people are saying that risk is pretty low, but we can't be sure. There's a lot of money to be made in desirable domains,” he added.

That risk could be particularly distinct in .industry-type TLDs.

Partridge pointed to “business.com.” The site, intended to operate as a search engine for small business and corporate information, was eventually sold for $345 million.


“What brand owners really need to be concerned about is not 'Do I need a .brand?' but 'Do I need to register my brand in every TLD?' ”
Christine Jones, Go Daddy Operating Co. LLC

“When you start thinking, a well-financed entrepreneur with a legitimate purpose like creating a directory could later try to sell it. That's not totally baseless,” Partridge added.

The risk is compounded, Jaffe added, for businesses managing multiple major brands. They have to make a decision about how many of those brands they want to protect in the top level, not to mention the burdens in the second level once the TLDs start being delegated.

Christine Jones, executive vice president, general counsel & corporate secretary at Go Daddy Operating Co. LLC, said that brand owners' concerns would be rightly directed at the second level, particularly related to whether or not they need to register in a .category-type TLD. “What brand owners really need to be concerned about is not 'do I need a .brand?' but 'do I need to register my brand in every TLD?' ”

So, for instance, McDonald's Corp. might want to register in .food, but might be less concerned in a domain like .hotel.

“That's the real concern,” Jones said. “That is what ANA is concerned about.”

It will become more clear how broad those decisions will have to reach in this round after ICANN posts completed applications May 1, Jones remarked.

IP Attorneys Hearing Concerns About Timing, Evaluation.

A major question brand owners are facing is whether or not they should apply now, or wait until a second round and see what happens with the first gTLDs that are delegated.

ICANN has pledged to conduct a second round of applications, but has to take several steps first.

Pursuant to obligations under its Affirmation of Commitments with the Department of Commerce, ICANN must organize a review of the program's competitive, consumer protection, and other effects one year after names have been delegated.

ICANN also must, pursuant to GNSO policy recommendations, specifically address the GAC requirement for assessment of trademark protections and root zone operation.

These processes could take years.

Paul D. McGrady, Winston & Strawn LLP, Chicago, said timing is a major concern raised by clients asking about new gTLDs. “This lack of planning on ICANN's part is causing concern that there will not be a Round 2 or that it will be years and years in the future and that competitors will have their .brands for years before they have another chance to apply[,]” McGrady said.

Partridge expressed a similar view. “If you don't apply now, when will there be another opportunity?” he said. “Companies face a big expenditure, or an uncertain risk, and for some companies that risk is simply unacceptable,” he added.

Another critical failure, McGrady said, is ICANN's failure to provide meaningful information about how strings will be compared for similarity.

The applicant guidebook states that string similarity review is one of the hurdles an application must clear to make it through the initial evaluation. The review will involve “a preliminary comparison of each applied-for gTLD string against existing TLDs, Reserved Names …  and other applied-for strings. The objective of this review is to prevent user confusion and loss of confidence in the DNS resulting from delegation of many similar strings.”

“The visual similarity check that occurs during Initial Evaluation is intended to augment the objection and dispute resolution process … that addresses all types of similarity[,]” the guidebook adds.


“We appreciate the opportunity to express our views, but taking comments is not the end of it. Having comment periods does not solve the problem.”
Daniel L. Jaffe, Association of National Advertisers

That description provides brand owners with little information about how their marks may be precluded in future rounds or even in the first round,” McGrady said. “If ICANN's goal was to create an environment of uncertainty so that brand owners rush to participate in Round 1, it could not have picked two better issues upon which to underperform[,]” McGrady added.

ICANN might take an expansive view of string confusion instead of a more practical, narrow view similar to that which the USPTO takes in examination, McGrady said. “A more narrow view would lead to fewer contention sets which leads to fewer auctions and less revenue for ICANN[,]” he added.

“Since ICANN has provided no practical guidance or comfort on these issues, and there are apparent economic motivators for ICANN not to provide the comfort or guidance, there remain practical risks to brand owners.”

Brand Owners Want More Than Listening Ear.

ICANN needs to take more steps to protect brand owners, Jaffe said. “We appreciate the opportunity to express our views, but taking comments is not the end of it,” he said. “Having comment periods does not solve the problem,” he added.

ICANN could still limit the number of applications to be approved in the first round, Jaffe said. A limited rollout would give time to see how the untested new IP protections, including the uniform rapid suspension system and trademark clearinghouse, work.

ANA has also urged ICANN to adopt a free, temporary “do not sell” list (17 ECLR 94, 1/11/12).

The idea of a “do not sell” list has been around for quite some time, Partridge noted. “The difficulty is, who gets on it?” he added. One option could be to allow brands with histories of cybersquatting to get on the list. A brand could get on the list by showing that they have been a victim of cybersquatting, and then the burden would shift to the applicant to demonstrate a legitimate use, he said.

Other steps ICANN could take would be creating a tiered registration process that is less expensive and extensive for defensive registrations, Partridge said, looking to ICM Registry's process for .XXX as an example (16 ECLR 1524, 9/14/11).

By Amy E. Bivins  


Call for comments at http://www.icann.org/en/public-comment/newgtlds-defensive-applications-06feb12-en.htm.