The Internet Corporation for Assigned Names and Numbers ("ICANN") voted on Monday to increase the number of generic top-level domain names (gTLDs). Under the new proposal applicants will be able to apply for a domain name suffix comprising almost any word and in any language.

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The Internet Corporation for Assigned Names and Numbers ("ICANN") voted on Monday to increase the number of generic top-level domain names (gTLDs). At present there are 22 gTLDs (e.g. .com, .biz, .org), as well as approximately 250 country-level domain names (e.g. .uk, .fr). This vote follows the announcement of the proposal to expand the number of gTLDs in 2008.

Under the new proposal applicants will be able to apply for a domain name suffix comprising almost any word and in any language. The approval is expected to significantly increase the number of domain name suffixes. This will enable organisations to use a script that better reflects the language of their business and it will assist internet users who use a different alphabet to the Roman letters currently used in domain name endings.

Timeline and Costs

Applications will be accepted from 12 January next year. In the initial 3 month sunrise period companies will only be allowed to apply for a new domain suffix if they can demonstrate that they have a legitimate claim to the name comprising the suffix. The decision opens up a potentially valuable method of branding for companies, as the opportunity to customise a domain name could help enforce the distinctiveness of a brand. However, this will come at a price. It will cost $185,000 to apply for a gLTD, and this figure is expected to increase significantly once fees and the ongoing cost of running the domain name are included. The most popular domains, where a number of companies have legitimate claims to the same name, will go to auction, which may further increase the price to secure a particular domain name.

It also creates a potential new avenue for cybersquatting, along with the resulting risk for companies and costs in protecting and defending their trade marks. ICANN will check whether applicants have a history of cybersquatting before approving applications. Furthermore, businesses will be able to notify ICANN of potentially concerning domains.

The Application Procedure

In order to assist ICANN in making their assessment, applicants will be required to complete an application form containing approximately 50 questions. The full proposed New gTLD Applicant Guidebook can be found here (note that this is subject to change). The Guidebook, based on extensive public consultation, outlines the requirements and the evaluation process. It is expected to be comprehensive and will be routinely updated as the process is implemented.  It is split into six 'modules' which cover various areas including, among others, evaluation and objection procedures. To review the Guidebook by module, see here. Additionally there are Explanatory Memos and Supporting Material that accompany the Guidebook, which in general deal with the background to the Guidebook and the reasons for the revisions to it. The first results under the evaluation process at ICANN are expected in November 2012.

Uptake from Brand Owners

It remains to be seen how much appetite there will be for taking up this opportunity. At a cost of $185,000 per application, companies may decide that there is not sufficient additional benefit to make the application. This will especially be the case where companies already have a strong online presence and a well recognised domain name. However, companies may consider that obtaining and securing a complete brand portfolio, including as many significant domain names as possible to prevent incurring any threat from cybersquatters, may justify the initial cost.

The benefits of maintaining and running such internet real estate is that a company is given full control over its brand and it is afforded the best rights protection.  It is a useful marketing tool that enhances consumer trust and confidence, thereby lessening the risk of any confusion. Employed correctly, it is a strategy that could be a cost-saving measure in the long-run and protects the solidity of the brand.

However, such defensive practice by a company may be very costly, leading to an increase in budget for domain name registration and related advice. Many domain names registered defensively may not even be used. Additionally, more internal resources would be required to maintain a large portfolio and it is questionable whether there is much difference in asset value between a full collection of domain names as opposed to a few key ones.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 23/06/2011.