Posted February 22, 2012
A generic Top Level Domain, or gTLD, is the name that appears to the right of “dot,” such as .com. The Internet Corporation for Assigned Names and Numbers (ICANN) has begun taking applications for new gTLD’s. With the deadline to apply for a gTLD fast approaching on April 12, 2012, many companies are wondering whether they should apply. In light of the many factors that a company must consider before applying, Cyveillance is unable to make a global recommendation to all of our clients. However, the basics about the new gTLDs, the benefits, and the drawbacks are discussed below:
How many gTLD requests is ICANN expecting in this first round of applications?
ICANN is expecting between 200 and 1,000 applications. Some experts are predicting that, based upon the number of applications it receives, ICANN may not hold another application round for several years after this initial offering.
What if someone else applies for the same gTLD that I apply for?
ICANN is encouraging resolution between the parties. If the parties cannot come to an agreement, the last resort will be an auction. See Section 126.96.36.199 gTLD Applicant Guidebook.
What is the cost of owning a gTLD?
Estimates are high – up to $2 million per year at first. The application cost starts at $185,000, which does not factor in additional costs related to dealing with objections, auctions, extended evaluations, legal issues, and technical issues. ICANN will charge a fixed quarterly fee of $6,250. Additionally, each domain name registered or renewed to that gTLD in excess of 50,000 will cost an additional $0.25 per domain. Domains transferred from other registrars will be counted. See Draft New gTLD Registry Agreement Section 6.1. Add on the expense of running and maintaining the registry for the 10 year life of the contract, and the costs can be very high.
How can running a gTLD benefit my company?
You will have more control over which, if any, franchisees or other partners can use your brand on the Internet. Moreover, customers will have more trust when navigating through a site that they know is authentic. Experts predict that gTLD’s will make it easier for consumers to find products and services.
What are some of the risks?
After committing to a ten year contract with ICANN, consumers may not gravitate toward the new gTLDs. If that is the case, then the cost of running a gTLD may outweigh the enhancement to your brand. There is also a risk associated with waiting on the sidelines. It is not clear when ICANN will hold another round of applications, so your company may get shut out if you decide to wait.
What if someone tries to take a gTLD that infringes my brand?
Public portions of applications will be posted on ICANN’s website around May 1, 2012. Although some companies out there are offering services to monitor the new domain name registrations, paying for what ICANN is giving out for free would be a waste of money. If someone applies for a gTLD with your trademark, then you can file a “legal rights” objection with a dispute resolution service provider (DRSP). You will have seven months to file an objection, and you will have to wait approximately five or more months for the decision. The cost, depending on the DRSP, will be approximately $1,000-$5,000 per party to file an objection and $32,000 – $122,000 to adjudicate the claim.
Will the new gTLD’s open my brand up to a whole new set of possible infringements?
ICANN has built in several protections for trademark holders, in addition to the existing Uniform Domain Name Dispute Resolution Procedure (UDRP). First, every gTLD will be required to register with a trademark clearinghouse that will provide a trademark claims service and a sunrise process. If a trademark holder registers with the clearinghouse, then the trademark claims service will notify a trademark holder if someone else tries to register a gTLD with its trademark. The sunrise process will give trademark holders the first opportunity to register domain names before registration opens to the general public. Second, the Uniform Rapid Suspension System (URS) will give trademark holders a fast remedy in clear cut cases of infringement. The URS will cost about half of the time and money the UDRP would cost; however, the prevailing party only gets the option to renew the domain name for a year after the current registration period expires. Third, the Post Delegation Dispute Resolution Procedure (PDDRP) will provide redress for trademark holders against a registry that engages in a pattern of abuse. Finally, ICANN will look at applicants’ criminal histories, will require robust WhoIS records, and will have a centralized zone file access system.
Companies must take an in depth look at whether the protections ICANN is offering will be sufficient and whether the cost of running a gTLD will enhance its brand.