ICANN’s gTLD program and what it means to your business

A: There was a lot of discussion and concern leading up to the launch date about whether the launch would even happen due to last minute concerns being raised by certain U.S. government officials and private organizations. Now that the application window has opened, it seems unlikely that the program will be stopped, particularly in light of public comments from the relevant U.S. government agency (the National Telecommunications and Information Administration) indicating that it does not intend to seek to stop the program. My impression is that many organizations are now seeking to quickly evaluate the implications of the gTLD program if they had previously postponed evaluation of the program based on a belief that the program might not move forward.

A: Tough to answer; it boils down to trying to predict consumer behavior on the Internet over the next 10 years and whether consumers will begin to recognize the new .anything and .everything extensions as legitimate alternatives to current extensions such as .com. The fee to ICANN is clearly a big commitment and, in most cases, there will also be significant technical infrastructure related fees.

Companies that make the initial investment during the current application window might have a significant advantage in the marketplace if consumers recognize and use the new extensions; if consumers do not make the switch, it might not pay off. Several gTLD program advocates generally believe that over time, as consumers begin to see more and more live dot brand names, dot geographic names, or dot category names, there will be an increased recognition of the new extensions and increased use of second level domains within the new extensions. Once the applications are published by ICANN on May 1^st, we will see which companies are putting the resources toward them. Come early 2013, we will likely see new extensions going live and we will most likely start seeing advertising for the sale of second level names soon after. For example, if an organization acquires the dot baby gTLD, then this organization could sell second level domains like formula.baby, diapers.baby, etc.

Q: Are you getting a lot of questions from corporations with respect to the new gTLD program, and if so, what are the concerns?

A: I am. And a lot of companies are making internal decisions right now about whether to pursue gTLD applications. The typical question they are asking themselves is, “Should we apply for competitive or defensive purposes and, if not, how will the launch of other new gTLDs impact our online branding and brand protection efforts?”

Probably the largest initial concern for many organizations is whether there are potential opportunities for cyber squatting of a new gTLD and whether someone could register the organization’s brand names or company name at the “top-level” for cyber squatting purposes. The short answer is: probably not. It would cost too much for a cyber squatter, and the ICANN application process itself will explore the background of the applying company, as well as its financial and technical resources and plans for use of the gTLD, before approving any new gTLD. And, there is also an opposition procedure that will allow organizations to object to the issuance of a gTLD to a particular entity, which will be available once the applications are made public on May 1^st. So, there are mechanisms in place to avoid this type of threat on the top level domains.

There are more significant concerns, however, to the selling of second-level domains that may infringe trademark rights or be used to display or make available content that infringes copyrights. For example, if someone obtains the dot server gTLD and then they start selling second level .server domains to the public, companies that operate in this space may need to monitor the sale and use of these domain names for potential intellectual property infringements. This problem could be multiplied when 100’s of new extensions go live. There is no reason to panic, but it is important for all organizations to begin evaluating the potential implications of the gTLD program because part of a company’s strategy may involve consideration of applying for a dot company name domain so as to focus marketing efforts on the company’s .brand extension and to ignore irrelevant new extensions.

Q: Who controls second-level domains in a new gTLD?

A: An organization applying for a new gTLD can tell ICANN if it intends to use the registry as a closed registry (owned and operated by the company only), or make it open and allow others to use second level domains within the extension. The open or closed aspect of the gTLD will likely be incorporated into the applicant’s registry agreement with ICANN. The gTLD owner will be required to implement certain trademark protection mechanisms in relation to the issuance and use of second-level domains, but the gTLD owner will otherwise only be limited by its application and agreement with ICANN regarding how it uses second level domains.

A: Wiley Rein LLP [David’s firm] is taking a wait and see approach. A number of our clients are going to apply and some are not; it all depends on the industry, customer base, and cost/benefit analysis based on the intended use of the gTLD and possible issues that will arise when other new gTLDs go live. Several companies who have publicly announced purchasing the new gTLDs including Canon (who could give second level domains away to all its customers, i.e., Weslow.canon), Deloitte, and the American Bankers Association (applying for the dot bank gTLD). [David represents companies that are applying but that have not made those plans public.] Once the list is made public on May 1, 2012, then companies can oppose issuance of a particular gTLD and/or may file comments with ICANN raising issues regarding applications.

A: Each company or organization will have to apply for each specific gTLD. The application fee to ICANN is $185,000 each and, if awarded, another $25,000 each per year.  The Applicant Guidebook (rulebook) is 350 pages and describes how applicants must demonstrate their business plan and financial ability to run a domain registry, and must make the case for each string separately.

A: On May 1^st ICANN will publish a list of who has filed applications for new gTLDs, so it will be interesting to see all that have applied. The published applications will give organizations a sense of what the Internet may look like over the next few years and should allow for further online branding and brand protection strategy planning. Once the applications are published, opposition and comment windows will also open. Non conversional applications should go live in early 2013; for example; dot brands and non-controversial dot geographics and dot categories. For applications involved in opposition proceedings or litigation, it could take quite a long time for the disputes to be resolved. Given the potentially significant implications of obtaining a 10-year lawful monopoly over use of a gTLD, I would not be surprised to see a decent amount of litigation involving gTLD applicants and potentially even ICANN. ICANN has even budgeted a portion of gTLD application fees to be used to fund ICANN’s litigation defense in cases that may be filed. .

ICANN has refused to indicate when the next application window will open, and it could be as far out as 3 – 6 years, given that the current program has a six plus year history. ICANN is required by its contract with the U.S. government to evaluate and report on the completed current gTLD program, and it will presumably be another a year or two before a report is released. Then maybe ICANN will open another application window, but there is still too much unfinished at this stage to try to predict when the next application window will be-particularly in light of  ICANN’s refusal to speculate on this point.