Canada: ICANN Announces New Expansion Of The Internet Domain Name System

The Internet Corporation for Assigned Names and Numbers ("ICANN"), the body in charge of managing the Internet domain name system, recently approved a series of recommendations which could dramatically change the Internet landscape.

Starting in 2009, corporations, individuals and communities will have an opportunity to apply for new generic top level domains that are particularly suited to their brands, businesses or interests. This means that the number of domain name suffixes could increase significantly, with clear implications for all involved in the Internet community.

WHAT IS A GENERIC TOP-LEVEL DOMAIN?

A generic top-level domain (also known by the abbreviation "gTLD") is a string of letters which constitutes the suffix of a domain name. ICANN has accredited 21 gTLDs, the most common of which are .com, .net and .org, in addition to 249 country code top level domains (or "ccTLDs"), including .ca, .de, and .fr.

To date, Internet users have been able to register second-level domain name, such as brand.com or genericword.net> within existing top-level domains. Following ICANN's recent announcement, this is about to change, as users will be given an opportunity to operate their own gTLDs:

Under the current system

Starting in 2009

* www.brand.com/customers
* www.brand.ca

* www.customers.brand
* www.canada.brand

* www.cars.com

* www.sports.cars
* www.vintage.cars

* www.xyzmovie.com

* www.xyz.movie

WHAT DOES IT MEAN FOR BUSINESSES WITH AN INTERNET PRESENCE?

ICANN's plan will create new opportunities for business, but will also raise new challenges with regard to the enforcement of intellectual property rights on the Internet:

  • The possibility of applying for and operating new gTLDs will offer clear opportunities for trademark owners looking to improve their brand recognition on the web. The availability of customized domain name extensions will lead to new marketing options, as it will soon be possible to build websites within .brand registries (e.g., www.sales.brand, www.investors.brand, www.customers.brand, etc.). This will also enhance user security, as all domain names within a gTLD will remain under the control of the registrant entity.

  • New business opportunities will also arise from the use of extensions describing fields of commercial activity or products, such as .banking, .grocery, .sports, etc. Businesses associated with such fields or products will want to consider their involvement in such new gTLDs.

  • On the flip side, however, more gTLDs will mean that more monitoring will be required to protect and enforce intellectual property rights, and especially to guard against "cybersquatting" (namely the unauthorized use of trade-marks in domain names by third parties).

HOW WILL IT WORK?

ICANN has not yet adopted a definitive application procedure for new gTLDS. However, according to preliminary reports, businesses looking to secure their names, brands or other words as gTLDs will need to go through the following application process:

  • Application: any interested person or entity (whether private or public) will first need to file an application with ICANN.

  • Evaluation of the Application: the application will go through an independent review process. Such process will evaluate both the technical suitability of the gTLD applied for and the organizational, operational, technical and financial capacity of the applicant.

  • Contention: if the same gTLD is applied for by more than one applicant, an independent process will take place to determine which applicant will be entitled to it, either through an auction or a comparative evaluation process aimed at weighing the merits of the various applications.

  • Agreement with ICANN: the successful applicant will execute an agreement with ICANN setting the terms and conditions for operation of the new gTLD.

  • Operation: after a new gTLD has been accredited by ICANN, the registrant will need to be in charge of its technical operation, in accordance with ICANN standards.

HOW MUCH WILL IT COST?

In order to recoup the costs of developing the new system, but also to keep away domain name speculators and cybersquatters, ICANN has announced that the cost of registering and maintaining a new gTLD will be high:

  • Registration of a new gTLD will cost from US$100,000 to US$500,000.

  • In addition, gTLD registrants will need to provide the necessary technical infrastructure for the operation of the registry. The cost associated with running such infrastructure will depend on the size of the operated network.

However, within certain business models, these costs may be recouped by the sale of second-level domain name registrations within the operated gTLD.

HOW WILL INTELLECTUAL PROPERTY RIGHTS BE PROTECTED?

After an application for a new gTLD is received, there will be a period during which interested third parties will be given an opportunity to object to its creation. According to preliminary reports, the grounds for such objections will be that the gTLD applied for:

  • ... is confusingly similar to an existing gTLD;

  • ...infringes on existing legal rights of others;

  • ... raises substantial opposition from a significant portion of the community which the gTLD is targeting; or

  • ... is contrary to generally accepted norms relating to morality and public order. The objection period will ensure that entities which do not intend to apply for new gTLDs reflecting their names or brands will be in a position to oppose third party applications for same.

The objection period will ensure that entities which do not intend to apply for new gTLDs reflecting their names or brands will be in a position to oppose third party applications for same.

WHAT IS THE TIMELINE?

Because of the financial and technical resources involved in the operation of a gTLD, businesses who might be interested in securing their own Internet top-level domain should start planning now. ICANN has announced the following timeline:

  • Third Quarter of 2008 – First Quarter of 2009: consultation period and adoption of final application procedure.

  • End of First Quarter of 2009: ICANN will start receiving the first applications.

  • End of 2009: the first websites within the new gTLD will be online.

CONCLUSION

ICANN's decision to allow private and public entities to register new and customized gTLDs could have a profound impact, both on the way businesses operate on the Internet and on their intellectual property enforcement strategies. While we are still months away from the beginning of the application period, the time to start planning for this important development is now.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.

Ogilvy Renault is the International Legal Alliance's Canadian Gold Award winner for 2008 in M&A and Corporate Finance.

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