Australia: Domain Name System Revolution Part 3: Update on the Introduction of the New gTLD Scheme to the Internet Domain Space

Type : Focus Paper

Introduction

In November 2010, we prepared a paper on the proposed introduction of new generic top level domain names (gTLDs). Nearly two years on, this paper takes another look at the new gTLD scheme to track its progress and to address what clients can do to prepare for its commencement.

This paper will broadly cover the launch of the new gTLD scheme, including who has applied, where the application process is currently at, what precautions brand owners need to take and how they can go about protecting their intellectual property rights. Key issues to take from this paper for clients, is whether clients will want or need a new gTLD and if so what steps should be taken now, and what steps may also need to be taken to protect their intellectual property as the new gTLDs are rolled out.

Particular points addressed in this paper include:

1. Why there is a need to introduce new gTLDs;
2. An analysis of the gTLD application process;
3. Who should consider applying for a gTLD; and
4. What precautions brand owners and IP rights holders need to take.

Domain Names Refresher

The technicalities of domain names were covered in considerable detail in our previous paper, but following is a brief overview.

What are Domain Names?

A domain name is simply the address for a website on the internet. A domain name consists of a precise combination of letters, which are linked to a unique series of numbers (the IP address) used to locate a particular website.

The Domain Name Space (DNS) makes using the internet easier by allowing a familiar string of letters (the domain name) to be used instead of the arcane IP address. It is a mnemonic device that makes addresses easier to remember.

Domain names may consist of words which have the capacity to generate (or infringe) trade mark rights, as they can be used to indicate or identify the originator of the information on a website.

Domain names are made available for anyone to register by entities called registrars, such as CrazyDomains, Melbourne IT and NetRegistry.

Domain names go "live" when they are "delegated". Delegation is the process of making a domain name "visible" on the internet. The process of delegating a domain involves telling the system where to look for that domain by nominating DNS servers and their IP addresses.

Who Governs the Availability of Domain Names?

The Internet Corporation for Assigned Names and Numbers (ICANN) is the international body which governs naming and addressing practices under the DNS.

ICANN is a U.S. based non-profit, private sector corporation with participants from all over the world. Before the establishment of ICANN, the United States Government controlled the domain name system of the internet.

ICANN originated in 1998, when the U.S. Department of Commerce issued, a Green Paper entitled "A Proposal to Improve the Technical Management of Internet Names and Addresses". The Green Paper proposed for discussion a variety of issues relating to DNS management, including private sector creation of a new not-for-profit corporation managed by a globally and functionally representative board of directors.

ICANN's purpose is to keep the internet secure, stable and interoperable. It has the chief responsibility of coordinating the following key functions of the internet:

1. management the DNS;
2. allocation of IP address space; and
3. assignment of protocol parameters.

What Are Top Level Domains (TLDs)?

The hierarchy of domains descends from the right to the left of the elements in a domain name.

A TLD is a domain name at the highest level in the hierarchical DNS. For example, in the url "www.example.com", the TLD is .com.

The online world is presently defined by 22 different generic top level domains (gTLDs) such as .net and .com and approximately 250 country code TLDs (ccTLDs) such as .au and .uk.

What Are Second Level Domains (2LDs)?

Below the TLDs in the DNS hierarchy are the 2LDs and third level domains (3LDs). For example, in "addisonslawyers.com.au", addisonslawyers is the 2LD of the .com TLD.

2LDs commonly refer to the organisation that registered the domain name. There can also be fourth and fifth level domains, and so on, with virtually no limitation.

What Are gTLDs?

A gTLD is one of the categories of TLDs for use in the DNS comprising of generic words. Currently the gTLD namespace consists of 22 gTLDs, being:

aero	air transport industry.
arpa	technical infrastructure purposes
asia	from Asia/For Asia
biz	businesses
cat	Catalan linguistic & cultural community
com	unrestricted (but intended for commercial registrants)
coop	cooperatives
edu	educational institutions
gov	government entities
info	unrestricted use (but intended for informational sites)
int	organisations established by international treaties between governments
jobs	the international human resource management community
mil	U.S. military
mobi	mobile content providers and users community
museum	museums
name	for registration by individuals
net	unrestricted (but intended for network providers, etc.)
org	unrestricted (but intended for organisations that do not fit elsewhere)
pro	all professionals
tel	for individuals and businesses to store and manage their contact information in the DNS
travel	travel and tourism community
xxx	online adult entertainment

Background to the New gTLD Scheme

The number of possible domain names available within the current DNS is limited. Essentially, there is an impending world shortage of registerable domain names under the TLDs that presently exist.

In June 2008, ICANN announced plans to introduce to the internet landscape, in addition to the 22 pre-existing gTLDs, the allocation of an unlimited number of new gTLDs, including, for the first time, non-English character set international domain names (IDNs).

The new gTLD scheme was finally approved in June 2011. The gTLD scheme in its present form came after a detailed and lengthy consultation process with the global internet community represented by a wide variety of stakeholders, including governments, individuals, civil society, business and intellectual property constituencies, and the technology community.¹

The scheme enables companies and other entities to apply for gTLD strings which are essentially arbitrary. These gTLD strings will generally fall into the categories of brands, communities, geographical regions or generic terms, such as .VIRGIN, .TOURISM, .SYDNEY and .HOLIDAY.

The scheme will initiate a huge expansion of the DNS which will exponentially increase the pool of available domain names. As a result, we can soon expect to see a fundamental shift in the way domain names are registered and managed around the world.

Applying For a New gTLD

The final version of the ICANN Applicant Guidebook, published on 4 June 2012, sets out the rules governing the new gTLD scheme and the procedure for applying for a gTLD string. It is a complex document, over 350 pages long and is available online.²

The application window for the first round of new gTLDs opened on 12 January 2012 and closed on 30 May 2012. There will, however, be further opportunities to apply for new gTLDs.

An applicant for a new gTLD is required to submit to ICANN a detailed application that outlines its business purpose and how the domain is intended to be used. Applications are subject to a rigorous evaluation process, beginning with background screening. Background screening covers general business diligence and criminal history as well as any history of cyber-squatting behaviour.

Then follows further evaluation stages, including a review of the applicant's operational, technical and financial capacity to run a registry business. The proposed gTLD is also scrutinised by an evaluation panel to ensure that it does not pose any security or stability concerns, and that it is not confusingly similar to an existing (or applied-for) TLD.

Item	Amount
Initial evaluation fee (N.B This fee is partly refundable if the application is rejected)	US$185,000.00
Application that requires extended review	US$50,000.00
Filing an opposition to an application	US$1,000.00 to $5,000.00
Conducting a dispute resolution hearing	US $32,000.00 to $122,000.00 or more
Ongoing registration costs (per quarter)	US$6,250.00

As the above table demonstrates, the official ICANN fees associated with securing a gTLD could run into several hundreds of thousands of dollars, particularly if a dispute arises between the applicant and a third party. Once legal fees are added, the actual costs may even run into the millions. As such, the decision to make an application should not be taken lightly.

Objecting to a gTLD Application

With the launch no longer a theoretical possibility, more controversy is surrounding the new gTLD scheme than ever before. The proposed introduction of the new gTLD scheme has created a sharp divide between those who view it as an opportunity for diversity, choice, competition and innovation and those who see it as an unnecessary burden on rights owners. In particular, brand owners are concerned that the perceived advantages of the scheme will be outweighed by increased risks of cyber-squatting and trade mark dilution, as well as the increased financial burdens associated with monitoring the web and enforcing intellectual property rights against infringers under the new gTLD system.³

An objection filing period has been built into the new gTLD scheme to allow stakeholders to protect certain rights and interests. For example, if someone has applied for your brand or trade mark as a gTLD string, you can formally object to that application. An objection must be filed with a designated Dispute Resolution Service Provider determined by the ground on which the objection is being made. The objection will then be considered before a panel of qualified experts in the relevant subject area.⁴

The period for filing formal objections against a newly applied-for gTLD began on 13 June 2012 and is set to remain open until 12 January 2013.

Parties wishing to object to an applied-for gTLD must file a formal objection with a Dispute Resolution Service Provider5 on any of the following approved grounds:

1. String Confusion Objection: the applied-for gTLD character string is so similar to an existing TLD or to another applied-for gTLD string that user confusion would likely result if both TLDs were delegated.
2. Legal Rights Objection: the applied-for gTLD string infringes the existing legal rights of the objector. Further details on this objection option will be dealt with below in this paper.
3. Limited Public Interest Objection: the applied-for gTLD string is contrary to generally accepted legal norms of morality and public order that are recognised under principles of international law.
4. Community Objection: there is substantial opposition to the gTLD application from a significant portion of the community to which the gTLD string is targeted.

Public Commentary and the Viewpoints of Various Stakeholders

Adequacy of Protection Measures for Rights Holders

Many concerns have been voiced by various stakeholders throughout the development of the gTLD scheme, including, quite significantly, by the Judiciary Committees of the United States Senate and House of Representatives. The initial concern of the Judiciary Committees was the need for ICANN to implement more substantial protection mechanisms for trade marks and consumers to avert would-be cyber-criminals from abusing the system. ICANN have since introduced the Trade Mark Clearing House which will be discussed later in this paper.

Acknowledgment of Regional Names

The Ministry of Foreign Affairs of Argentina tabled a concern with ICANN regarding an applied-for gTLD that included the word "Patagonia", being a region in southern Argentina. Argentina objected to the application proceeding to acceptance, arguing that to do would set a precedent for future gTLD application rounds allowing other regional names to be "captured" by brands or private companies.

Extension of Period for Public Comment

The Intellectual Property Constituency of the Generic Names Supporting Organisation requested that the deadline for public comment be extended on the basis that the information regarding the applied-for gTLDs released by ICANN for review amounted to more than 100,000 pages of material, and would take considerable time to review and analyse towards providing comments about the material for ICANN.

The U.S. Association of National Advertisers also requested that ICANN extend the deadline for public comments, to allow it (and other stakeholders) adequate time to evaluate the risks and merits of each of the 1,930 applications originally filed in order to have the opportunity to submit its views to ICANN for consideration.

The Judiciary Committees also wrote a further letter proposing an extension of the time allowed for public comment, to which the International Trade mark Association (INTA) also lent its support. As a result of these complaints, as well as the concerns voiced by various other stakeholders, ICANN extended the public comment deadline to 26 September 2012. Further details on this public comment process is provided below in this paper.

Languages Employed for ICANN's Official Communications

Brights Consulting Inc, an intellectual property consultancy with its headquarters in Japan tendered an official request that ICANN include Japanese as one of the official language used for translation and interpretation. This pinpoints a broad and significant issue, which is a major disadvantage for non-English speaking stakeholders under the new gTLD scheme, which affects the majority of the global internet community.

Batching Process

ICANN initially announced that it could process no more than 500 applications at a time, and that it had therefore established a procedure called "digital archery" to divide in the new gTLD applications into separate batches for evaluation. The issue of how the applications are to be batched and evaluated is significant because it will determine the order in which the new gTLDs will go live.

Digital archery was heavily criticised by ICANN's Intellectual Property Constituency. A number of complaints were also made by the prominent Australian registrar, Melbourne IT, opposing the implementation of the digital archery method.

Particularly, there were concerns about the increased likelihood under the digital archery method of more contentious strings with multiple applications being placed in the first batch, which are more likely to be operated for the purposes of maximising revenue from second level registrations. This raises the issue of the requirement for brands to file defensive registrations at the second level, which is one of the main criticisms trade marks owners have against the new gTLD scheme.

In light of such criticism, as well as the technical problems plaguing the complicated system, ICANN terminated the digital archery portion of the batching process on 27 June 2012.

The issue of how applications will be batched is yet to be resolved. Independent consultancy bodies are currently performing test evaluations to promote consistent application of evaluation criteria.

Where Are We Today?

ICANN published the list of new gTLD applications on 13 June 2012. There were 1,930 applications made, including:

1. 84 community-based applications;
2. 66 applications for geographic names; and
3. 116 IDNs.

Almost one third of the applications appear to be for .BRAND domains. The regional breakdown of applicants is as follows: North America 911; Europe 675; Asia-Pacific 303; Latin America 24; and Africa 17.

According to the ICANN website, a total of 751 applications were filed for 230 strings that are exact matches with at least one other application. Examples include .APP, .BLOG, .CASINO, .GAME, .HOTEL, .LAW, .POKER, .PROPERTY, .RACING and .REALESTATE

The list of applications provides the first proper indication for brand owners and their legal advisers of the extent of the brand protection issues they are likely to face in the online space in the future. A detailed list can be found at http://www.newgtldsite.com/new-gtld-list/. Some interesting examples are as follows.

Examples of IDN gTLDs that have been applied for:

Examples of branded gTLDs that have been applied for:

String	Applicant	Locality
AFL	Australian Football League	Australia
LIVESTRONG	Lance Armstrong Foundation	USA
MCDONALDS	McDonald's Corporation	USA
MONASH	Monash University	Australia
PLAYSTATION	Sony Computer Entertainment Inc	Japan
SEVEN	Seven West Media Ltd	Australia
SYDNEY	State of New South Wales, Department of Premier and Cabinet	Geographic
TAB	Tabcorp Holdings Limited	Australia
VIRGIN	Virgin Enterprises Limited	Switzerland
YELLOWPAGES	Telstra Corporation Limited	Australia

As for generic word gTLDs, Google has made application for 101 words including .SHOP, .WEB and .CLOUD. Amazon also applied for 76 gTLDs. Donuts Inc, a domain name Registry, has applied for 307 gTLDs.

What remains to be seen is how these generic word gTLDs will ultimately be used and how 2LDs will be made available. If third parties are permitted to register domains, including other companies' brands at the second level within those domains, this poses a significant brand protection risk.

What Lies Ahead on the new gTLD Path? – Important Dates

The current timeline for the new gTLDs currently stands as follows:

30 May 2012: first application window closed ↓ 13 June 2012: beginning of the public comment period and objection period ↓ 26 September 2012: public comment period closes ↓ January 2013: objection period closes ↓ June/July 2013: the new gTLDs will begin to go live

When to Consider Applying For a gTLD

ICANN is yet to announce when the next application window will open, but now is the time to start preparing for the next round of gTLD applications, by monitoring and researching how the current applicants are deploying their gTLDs.

Any established public or private organisation that meets eligibility requirements anywhere in the world can apply to create and operate a new gTLD. Applicants must, however, demonstrate the operational, technical and financial capability to run a registry.

A party may apply to register its company name, brand name or trade mark as a gTLD (eg .ADDISONS) or, as is already the case, a 2LD (eg ADDISONS.LAW). There is, however, an obvious marketing benefit to a brand having its own gTLD. It provides a further means of attracting customers and makes it easier for consumers to locate the brand website.

Proponents of the gTLD scheme have highlighted the following further advantages:

1. Control: if you become a new gTLD registry operator, you acquire a monopoly over that domain (e.g. ".DAIRYFARMERS"). This can be useful for a brand owner wishing to indicate to internet users which sites are legitimate sites of the brand. This may also help to stamp out the sale of counterfeit goods through unauthorised sites.
2. Brand strengthening: a gTLD can assist a brand owner in strengthening the association between the brand and its location on the internet, and more generally in enhancing branding, revenue, security and user interaction.

These advantages, however, need to be balanced with the potential concerns and disadvantages. For example, some of the onerous duties required of registry operators under the gTLD Registry Agreement include monthly reporting to ICANN, the ongoing protection of the legal rights of third parties, submit to random audits, and cooperate with ICANN studies.

Issues For Brand Owners to Consider (Applying or Not)

Many stakeholders have questioned the value of the new gTLD scheme to those whom it was designed to assist, in particular, brand owners. Some of the main concerns of brand owners are considered below.

IP Infringement

First and foremost, intellectual property rights can be infringed in the case where a commercial competitor registers the same or similar .BRAND gTLD to your brand name. In a case such as this, it may be difficult for the aggrieved party to succeed in a legal rights objection against the competitor.

Cost and Time

The costs associated with registering a gTLD are so high that many brand owners are likely to be priced out of the scheme altogether. Cost is arguably the greatest impediment to generalised uptake of new gTLDs. ICANN also suggests that a straightforward application could take up to nine months. This would involve a two month administrative check, five months for the initial evaluation and the objection filing period, and two months for delegation to the DNS root zone (i.e. the internet).

However, if an application is more complicated, the process could apparently take up to 20 months. This is where, in addition to the process outlined above, the application involves an objection filing, dispute resolution, extended evaluation, and string contention.

Cyber-Squatting

The problem of cyber-squatting is endemic, and will be infinitely increased by the release of a potentially unlimited number of gTLDs. Brand owners face being forced into this expensive process by defensively registering gTLDs for their brands in order to ensure their rights are not infringed. Whether this is a realistic possibility in light of the cost of registering a gTLD remains to be seen.

Consumer Confusion

The release of an unlimited number of gTLDs brings with it the risk of an exponential growth in the number of confusing "parked" pages. A "parked" domain name is one that has been registered but is not being used and does not resolve to an active website.

The possibility of the introduction of an unlimited number of new domain names brings with it the possibility of unlimited "parked" pages. This places an immense burden on brand owners, who will now have to be more vigilant than ever in monitoring the use of their trade marks online. Furthermore, there is an added danger of trade marks becoming diluted or non-distinctive online, a position which may not reflect marketplace reality.

How Can Brand Owners Protect Themselves?

Review and Analyse the List of Applied-for gTLDs

Trade mark owners should carefully review the list of applied-for gTLDs that was released on 13 June 2012 in order to determine if there is any conflict with pre-existing trade mark rights. This is a good precaution for brand owners to take as the list of applied-for gTLDs has not been approved by ICANN yet. In addition, businesses should also check for generic word gTLDs which may cause concern and need to understand how their existence may impact their businesses going forward.

Submit a Comment to ICANN

Following the publication of the ICANN list on 13 June 2012, interested parties may submit comments related to proposed new gTLDs to ICANN for consideration by the independent evaluators assessing each application. Trade mark owners can submit comments regarding potential trade mark infringement, dilution, and related concerns posed by particular applications for gTLDs. Public comments received before 26 September 2012 will be put before the evaluation panel performing the initial evaluation reviews of all pending applications.

gTLD Pre-Delegation Dispute Resolution Mechanisms

Separate from the public comment procedure, a formal objection process will be available to trade mark owners prior to the approval of an applied-for gTLD. The formal objection period is due to close in January 2013. The procedures for the objection process are as set out above in this paper.

Probably the most relevant ground of objection for trade mark owners is the Legal Rights Objection (LRO). ICANN has appointed the World Intellectual Property Organisation (WIPO) to be the exclusive provider of dispute resolution services when a third party files a formal LRO to a pending application.

An LRO can be filed in the following circumstances:

1. where the gTLD takes unfair advantage of the unique character or the reputation of the objector's registered or unregistered trade mark, intergovernmental organisation (IGO) name or acronym; or
2. without justification, the gTLD impairs the distinctive character or the reputation of the objector's mark, IGO name or acronym; or
3. where the gTLD creates an impermissible likelihood of confusion between the applied-for gTLD and the objector's mark, IGO name or acronym.

The LRO process offers a good option for trade mark owners who believe that their trade mark rights could be encroached upon by a particular gTLD which has been applied for. The objection process involves a USD$10,000.00 arbitration fee. The applicant of the challenged gTLD is also required to pay a USD$10,000.00 arbitration fee, otherwise the objection will be deemed successful.

The sole remedy available for an LRO is the success of the objection. Monetary damages are not available through this process.

Apply to Register Trade Marks

A trade mark registration provides many valuable benefits. A trade mark registration provides a brand owner with the exclusive right to use the mark in connection with the goods or services specified in its registration.

Registering a trade mark may also offer protection for brand owners as the new domain name system becomes a reality (including access to useful sunrise pre-registration periods). Brand owners who are using, or intend to use, a trade mark in connection with the offering of goods or services and have not yet applied to register the trade mark, should consider doing so now.

In connection with the new gTLD scheme, a trade mark registration will help to strengthen and reinforce a brand owner's trade mark rights. It will also establish ownership of a particular trade mark and, therefore, standing to submit an LRO or other challenge to an applied-for gTLD or 2LD.

Uniform Domain Name Dispute Resolution Policy

The Uniform Domain Name Dispute Resolution Policy (UDRP) is the process established by ICANN for the resolution of disputes regarding the registration of internet domain names. The UDRP currently applies to all TLDs and some country code top level domains.

For domain names registered using the new gTLD which infringe upon a brand owner's trade mark rights, the UDRP remains available to resolve domain name disputes.

Under the UDRP, domain name disputes are typically resolved in approximately 45-60 days and the associated filing fees are relatively low (approximately US$1500 to resolve a dispute involving up to five domain names). WIPO has stated that the UDRP is "the only proven mechanism in place to absorb the impact of gTLD expansion".⁶

Uniform Rapid Suspension

A further protection mechanism that brand owners can look to in connection with issues arising with 2LDs is the Uniform Rapid Suspension System (URS). The URS is intended to be a faster, more cost-efficient complement to the UDRP. It is intended for more serious cases of trade mark abuse. Unlike the UDRP, which allows a trade mark owner to obtain the transfer of a domain name that infringes upon its trade mark rights, the sole remedy available under the URS is the temporary suspension of a domain name for the duration of the registration period.

It is noted that while the URS substantive criteria mirror that of the UDRP, there is a higher burden of proof for complainants.⁷

Trade Mark Clearing House

ICANN will be establishing a Trade Mark Clearinghouse (Clearinghouse) to serve as a single database of authenticated, registered trade marks. The Clearinghouse is intended to eliminate the need for trade mark holders to register their marks in many different jurisdictions as new gTLDs are introduced (as 2LDs). Trade mark owners can register their marks with the Clearinghouse.

The Clearinghouse is expected to play an important role in ensuring ongoing protection of trade mark rights under the new scheme. All new gTLD applications will have to be screened by the Clearinghouse to be successful. If a trade mark owner has not applied to register a gTLD, registering trade marks with the Trade Mark Clearinghouse is an important step in protecting brand owner's trade mark rights in the new gTLD world. It is envisaged that by registering in the Clearinghouse, brand owners will gain first access to their 2LDs for those registered trade marks under mandatory sunrise periods. Further, others proposing to seek a 2LD in a gTLD will also receive clear notification of the existence of a relevant trade mark in the Clearinghouse and trade mark owners will be notified if their trade mark is registered as a 2LD by someone else.

Every new gTLD operator will be required to utilise the Clearinghouse. The Clearinghouse will be available globally and have the capability to validate trade mark data from multiple global regions. ICANN has announced that the Clearinghouse services will be organised and provided jointly by Deloitte and IBM. Their primary services to rights holders, consisting of trade mark authentication and validation of proof-of-use, are expected to cost less than USD$150.00 per submission.

The Clearinghouse is not currently in existence. It is anticipated that the first new gTLDs may not be operational until at least January 2013. As such, the Clearinghouse may not be operational until the end of 2012.

Conclusion

There are still major concerns surrounding the very real potential for the violation of trade mark rights as a result of the new gTLD scheme, which remain relevant even for those who did not apply for a gTLD in the first round. Brand owners and businesses should be familiar with the processes and options for enforcing their rights, in preparation for future application rounds.

Brand owners and businesses need to begin the work of protecting brands in respect of the new gTLD scheme now. Initially, brand owners will want to assure themselves that none of the applications conflict with their own brands. In the event of a potential conflict, brand owners should consider making a formal objection before the objection period closes on 13 January 2013.

Brand owners should also review their existing domain name protection strategies in light of the new gTLDs and respective 2LDs. Brand owners should therefore identify the gTLDs likely to be most relevant to their business operations and start making decisions now about which of their key trade marks they will register with the Clearinghouse and plan budgets accordingly.

There is a significant volume of information available surrounding the new gTLD process. In this paper we have only been able to touch briefly on some of the key issues. We will be working to stay on top of developments and keep clients updated with further information as the process unfolds. If you have any queries about the new gTLDs please contact Karen Hayne of our Intellectual Property Group.

Footnotes

¹ Also contributing to this policy work were ICANN's Governmental Advisory Committee (GAC), At-Large Advisory Committee (ALAC), Country Code Names Supporting Organization (ccNSO), and Security and Stability Advisory Committee (SSAC).
² http://newgtlds.icann.org/en/applicants/agb
³ http://www.worldtrademarkreview.com/Issues/Article.ashx?g=3ddc7d6e-83ce-40ac-9aa1-6af115063a5f
⁴ Set out in Module 3 Objection Procedures of the http://newgtlds.icann.org/en/applicants/agb
⁵ The list of official Dispute Resolution Service Providers is available at: http://newgtlds.icann.org/en/program-status/objection-dispute-resolution
⁶ http://www.wipo.int/export/sites/www/amc/en/docs/wipointaudrp.pdf.
⁷ http://www.wipo.int/amc/en/domains/rpm/.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.