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This article first appeared in Intellectual Property Magazine on 1 February 2012.
Applications for new generic top level domains (gTLDs) are now open. Leighton Cassidy explores whether the Governmental Advisory Committee’s predicted rush of last minute applications will materialise
After 10 years of debate, consultation and policy development, the application period for the Internet Corporation for Assigned Names and Numbers’ (ICANN) new gTLD programme finally opened on 12 January 2012. Since its conception, the programme has sparked fierce debate within the ranks of ICANN, inspired the formation of pressure groups intent on halting the programme altogether and provoked accusations of anti-competitive behaviour. To say the programme is controversial would be an understatement, and many of its detractors doubted the application period would open on schedule. However, now that it has, the concern is that the uptake of the programme may in fact be far greater than initially predicted. The Governmental Advisory Committee (GAC) recently expressed concern that there may be a wave of last minute applications, which would overwhelm its capacity for processing them when the window closes on 12 April 2012.
Batches
The system and time frame for processing applications was initially based on projections of approximately 300 – 500 applications in the first round, but at the US Senate's Commerce Science and Transportation Committee hearing on 8 December 2011, ICANN's senior vice president Kurt Pritz said that it was now expecting to receive around 1000 applications. The domain name registry VeriSign puts this figure closer to 1500 based on interest expressed so far, and there is further industry speculation that the actual number of applications could be much higher. Resolutions passed by ICANN on 8 December 2011 state that the solution for dealing with this volume of applications would be to process the applications in batches and to implement a "secondary time stamp" to determine the order in which the batches would be processed. The possibility of random selection to determine the order in which to process batches has been rejected (because it would constitute a lottery and therefore be illegal under Californian law) in favour of a system where "there is judgment required on the part of the applicant, ie, when to submit the secondary registration in order to increase the likelihood of prioritisation in an earlier batch (i)" . What this system will be, however, remains a mystery. So, until ICANN releases further details, brands should focus on deciding whether to apply and what precautionary measures to take in order to ensure their applications are processed.
Now or never?
It is difficult to quantify the likely number of applications because brands have been reluctant to publicly confirm whether or not they will be applying, and ICANN will not release the details of who has applied and for which domains until two weeks after the application window has closed. Despite demands from organisations such as the Coalition Against Domain Name Abuse (CADNA), ICANN has still not released the date for the second round of applications. This is pressuring some brands that would prefer to observe the success of the first round into applying now in case they are locked out of the process for several years. CADNA's president, Josh Bourne, described ICANN’s failure to commit to a date for the next round as having “created a sense of chaos among brands, who feel as though ICANN is forcing them into making a 'now or never' decision(ii)” .
Although the Applicant Guidebook states that ICANN aims to launch subsequent gTLD application rounds “as quickly as possible”, a second round of applications is by no means certain and will be deferred "until it is determined that the delegations resulting from the first round did not jeopardise root zone system security or stability.” Domain name specialist Affilias, predicts that it could be at least a decade until the second round opens(iii). In the absence of a definitive date for the second round, brands contemplating an application within the next decade have little choice but to enter into the first round in order to maintain their position within the domain space.
ICANN has been roundly criticised for failing to do enough to promote awareness of the introduction of new gTLDs. Although the IP sector has been debating new gTLDs for a decade, they only became a reality for businesses on 6 June 2011 when their introduction was approved by ICANN. Six months on, awareness of their ramifications only just started to reach board level in some organisations. This lack of awareness amongst key decision makers in some businesses may in part be explained by the fact that domain name management is typically seen as the preserve of the legal or IT functions. There is valid concern that once directors realise the marketing potential or defensive necessity of an application, they may issue last minute instructions to apply in order to preserve the brand’s position, regardless of whether a new gTLD will actually add value to their brand.
Some major brands have been committed to an application from the outset, whereas others ruled out the possibility early on because they consider their brand is sufficiently unique or that the investment required to apply and to establish a registry will not be justified by the likely return. However, in a recent survey that was conducted to gage the motives of brands(iv), the results found that 25% of respondents were still undecided as to whether they would apply, and it is the brands in this category that will determine whether the predicted rush actually occurs. Many would prefer to observe the uptake levels and lodge comments against any confusingly similar applications; but with no certainty about the second round, some are considering defensive registrations as a bare minimum to protect their brand’s reputation and prevent other organisations from registering that name.
Defensive tactics
To protect their trade marks, proprietors will be able to register certain marks in the Trade Mark Clearing House, which will be run by a service provider independent of ICANN. All new gTLD registries will be required to hold a Sunrise Period prior to making their new gTLD available for applications from the public. During this Sunrise Period, owners of marks registered in the Trade Mark Clearing House will have preferential rights to register that mark as a second level domain, provided they can prove that the mark is currently in use. However, the process only applies to identical trade marks and will not allow proprietors to block near misspellings of their trade marks, which could be just as damaging to reputation. In the first 60 days of a new gTLD being open to public applications, owners of marks registered in the Trade Mark Clearing House will also be notified if someone else registers a second level domain that is identical to their mark. For this post launch service, trademark owners will not be required to prove that the trademark is in use.
Opponents of the new gTLDs cite the release of the new .xxx top level domain (TLD), which is administered by ICM Registry and caters to the adult entertainment industry, as proof that the programme will result in a proliferation of expensive and unnecessary defensive applications. During the Sunrise B Period for .xxx, which allowed owners of registered trade marks outside the adult entertainment industry to block their marks from being registered as .xxx domains, there were 78,938 applications. The period had to be extended to 31 October 2011 due to the overwhelming response, demonstrating the reaction from brands determined to disassociate themselves from a potentially damaging domain. Two key owners and licensors of trade marks and domain names in the adult entertainment industry, Manwin Licensing International Sarl, and Digital Playground Inc, have now filed an anti-monopoly lawsuit against ICM Registry and ICANN, alleging that the allocation of the .xxx TLD to ICM Registry was anti-competitive and has created a monopoly through its presumptive renewal. Similar allegations may well be directed towards the new gTLD programme, and it is possible that similar legal action could yet delay its progress.
Winning over the critics
There are of course clear advantages to a gTLD application besides a defensive strategy and as these become apparent, more brands may be encouraged to apply. Major multi-nationals Cannon, Deloitte, Nokia and Hitachi have all publicly affirmed that will be making applications and many organisations of a similar size will likely follow suit. The application costs are less prohibitive for large organisations and the opportunity to create a network of easily navigable second level domains is most appealing for businesses with numerous sub-brands. Search Engine Optimisation (SEO); an increased online brand profile; the ability to create a private space for developers and corporate intranet; provision of affinity domains to partners and independent consultants; and increased consumer trust are all compelling reasons for organisations of considerable size to apply for a new gTLD. However, the potential for costs to deter many last minute applications should not be underestimated, even for large organisations. A recent survey(v) of 27 multinational companies found that 86% of respondents cited the initial and ongoing costs of running a registry as the main disadvantages of the programme. Restraints on budgets are unlikely to relax in the first quarter of 2012, so the predicted rush may in fact be stalled by financial caution.
Perhaps the most telling indication that a last minute rush may occur, is the fact that some brands are making applications for new gTLDs despite being members of groups which fiercely oppose the programme, such as the Coalition for Responsible Internet Domain Oversight (CRIDO), The Association of National Advertisers (ANA) and the Internet Advertising Bureau (IAB). In a recent article for Domainincite.com, Kevin Murphy cited NetChoice as an example of an organisation that had publicly expressed scepticism about gTLDs for the past few years, but then declared its support for the programme on the 8 December 2011(vi). This change in position puts high profile NetChoice members such as Yahoo, Expedia and Facebook (who are also members of the IAB) and eBay (which is also a member of the ANA) in the curious position of simultaneously supporting and opposing the programme, according to their affiliations. If even brands aligned to the programme's most vocal critics are considering making applications, a last minute rush seems likely.
Aside from the divided loyalties of their members, groups opposed to the new gTLDs have suffered a number of recent setbacks in their attempts to halt the roll-out of the programme. The US Senate Committee on Commerce, Science and Transportation was convinced by CRIDO and the ANA to hold a hearing on the new gTLD programme on 8 December 2011, but failed to find significant problems with its roll-out. The National Telecommunications and Information Administration (NTIA) has also expressed firm support of ICANN's programme as a multi-stakeholder process which inevitably would not satisfy all participants. CRIDO insists that it will continue to "aggressively fight" the programme even now that the application window has opened. But the chances of it delaying the process or impacting significantly upon the number of applicants looks less likely as the deadline approaches.
The application process
Brands should be mindful that there will be no way to gauge the uptake of the programme until the GAC begins to assess the applications. Even if details of application numbers emerge prior to the window closing or there are indications of a last minute rush, it will be too late by this stage for most brands to complete ICANN's rigorous application to a standard that would ensure their application's success. In light of this, even brands that are still undecided about the new gTLDs need to think seriously about the logistics of submitting an application now.
A brand's priority should be to ensure that their application will pass the Administrative Completeness Check, which the GAC will conduct when the period for submitting applications closes. This check will ensure that all mandatory questions have been answered, the required supporting documents provided and the evaluation fees paid. Applications must be submitted electronically on the TLD Application System (TAS) and applicants must register to access the TAS before 23:59 UTC 29 March 2012, when new user registrations will close. Applications will remain open until the deadline of 12 April 2012, but applicants who have not registered to use the TAS system by 29 March 2012 will not be able to access it and submit their application after that date.
The GAC will not begin examining applications until after the application period closes and has stated that there will be no advantage in submitting an application earlier. If, however, a last minute rush occurs, the services of specialist consultancies - to assist with applications - and Registry Service Providers (RSPs) - to build and operate the registries - are likely to be in high demand. Brands should therefore research and instruct these partner organisations as soon as possible, and consider shopping around to obtain the best deal from the variety of infrastructure packages being offered by RSPs to attract new gTLD applicants. Given ICANN's emphasis on prioritising security and stability, choosing an established supplier of TLD services is also important.
At 50 questions, the application is lengthy. ICANN expects that a typical response will stretch to roughly 200 pages, so significant resources will need to be allocated to its preparation. The best applications will be produced by a multi-disciplinary team comprised of heads from the organisation's marketing, legal, finance and IT functions whose contributions are co-ordinated by a project leader. Some answers must be supported by evidence and questions 45-50 require a business plan including financial statements, calculations and commitments. Certain information included in the application, such as the full names and permanent addresses of all the directors, will be made public and the responses to many questions will require legal sign-off. It is important, therefore, that businesses allow enough time to obtain all the necessary permissions and approvals. In his webinar on completing the application, Dominic Speller(vii) from Melbourne IT estimated that a typical organisation will take on average 6 – 12 weeks to get an application ready. Brands seeking to register gTLDs for particularly generic words will need to invest more time in answering the questions on the mission and purpose of their gTLD application, and utilise the wording of their answers to pre-empt and deflect possible objections.
The extensive six module Applicant Guidebook provides comprehensive instructions on the application process, but we believe brands are likely to need assistance from a specialist consultancy for some or all of the application. Running a gTLD requires a significant funding commitment to meet the initial and ongoing costs and brands must have a solid plan to operate the registry for a minimum of ten years under their agreement with ICANN. Brands should also be realistic about the impact that a large volume of applications would have on the estimated time frames for their new gTLD registries to be functioning. If the applications are processed in batches, the predicted 9 month period for processing a straightforward application could be significantly delayed. For a more complex application - initially expected to take around 20 months - such a delay to the establishment of the registry could leave a brand's marketing strategy on a significantly different course to that anticipated.
Next Steps
Even though the applications for the new gTLD programme are finally open, its future is hardly more certain than at its launch 8 months ago. There is still a risk that the programme will be overwhelmed by applications, delayed by the administrative burden of processing them or stalled by its critics and the process for dealing with batches is as yet entirely unclear. Given such uncertainty some brands may be hesitant about taking any action at all, but those contemplating an application should consider the following practical steps:
- Register to use the TAS system before 23:59 UTC on 29 March 2012.
- Remain alert to ICANN's clarifications on the system generally and more particularly on the procedure for obtaining a secondary time stamp.
- Prepare the application in good time and ensure it is completed as fully as possible.
- Employ a specialist consultancy to assist with and/or review the application to increase its chances of being accepted.
Leighton Cassidy is a partner in Fieldfisher's Trademark and Brand Protection team. His practice includes domain name strategy advice, world wide trademark registration, protection, enforcement, exploitation and commercialisation, settlement and co-existence agreements, appearing at hearings before the UK-IPO, appeals to the High Court, international trademark filing, prosecution and clearance, registered and unregistered design rights, bringing and defending trademark oppositions, invalidity and revocation actions.
With thanks also to Kathryn Boyd, trainee solicitor at Fieldfisher.
(i) ICANN Board Resolutions passes 8 December 2011
(ii) Written proposal from CADNA to ICANN 18 November 2011
(iii) Afilias press release 2 December 2011
(iv) Field Fisher Waterhouse LLP gTLD Survey: 'The new gTLDs - protecting your .brand online' 13 December 2011
(v) Managing IP gTLD Survey 'gTLDs are just too expensive' Managing IP October 2011 (page 13)
(vi) Kevin Murphy's article entitled ‘Companies that both support and oppose new gTLDs’ published on 8 December 2011 at Domainincite.com
(vii) Dominic Speller's webinar for Melbourne IT entitled ‘What information does a gTLD application contain?’