The Internet Corporation for Assigned Names and Numbers (ICANN), the organisation in charge of assigning and coordinating Internet identifiers, has opened a first application round for the registration of new generic top level domains ("New gTLDs") on 12 January 2012. Domain names with a New gTLD are internet addresses ending with a name or brand (in case of a brand, New gTLDs are also referred to as ".brand" or "dot brand" gTLDs) in addition to the domain names with one of the 22 existing TLDs, such as .com, .org or .net (see also our previous newsletter on this topic).
The preliminary registration window closes on 29 March 2012 and all applications must be filed on 12 April 2012. The following evaluation process will take between 9 and 22 months depending on the problems raised by the application. The application is laid down in an Applicant Guide Book. After this first round, most probably other rounds will follow.
ICANN's New gTLD programme will allow undertakings, organisations and institutions to become the registrar of all the domain names ending on the New gTLD that they have applied for instead of applying themselves for a domain name with the ICANN accredited registrars for the existing gTLDs.
On the one hand, this means that undertakings, organisations and institutions will be in charge of the entire technical and operational management of running a gTLD, a crucial element that will be taken into account throughout the ICANN evaluation process alongside other elements such as the financial guarantees to pay the considerable fees related to a New gTLDs (i.a., an upfront evaluation fee of USD 185,000). Applicants can outsource a considerable part of these tasks to external experts, which can deliver assistance on specific points (e.g., in the field of IT or legal services) or assure turnkey solutions.
On the other hand, for applicants - and especially large brands - , owning a New gTDL offers several advantages and interesting opportunities. As they are the registrars for the domain names ending on their .brand, (e.g. LEGO for all domain names ending on .lego), they define their own registration policy for these names.
Furthermore, in principle none of these names can be "squatted" or acquired otherwise without the consent of the brand owner as the .brand is highly unlikely to be squatted or acquired by someone that has no legitimate rights on the New gTLD. Indeed, ICANN has foreseen safeguards during the evaluation process, especially for trademark owners, to object to a New gTLD infringing legitimate rights. This means that acquiring a .brand has the potential to create a safe zone for the brand owner and its customers. Indeed, once Internet users are familiar with the phenomenon of .brand domain names (and no doubt about it that they will be in a relative short time because of the efficient marketing campaigns of major brands having their own New gTLD), they can be sure that a domain name ending on .citibank for instance, is a genuine website of Citibank or of one of its affiliates or agencies.
This also means that major brands can create their own domain names for each of their specific products under their .brand (e.g., www.minutemaid.coca-cola). This avoids a brand owner to be obliged to apply for each product for several .com domain names in the most likely variations (e.g., www.minutemaid.com, www.minute-maid.com, www.minutemade.com) as well as for the domain names with the most relevant country codes (ccTLDs) (www.minute-maid.be, www.minutemaid.nl, ...) in order to avoid the (typo) squatting of these domain names.
Although time is running short to make some major amendments to the applications that are close to be registered, it should seriously be considered to register and to file the application on behalf of a Luxembourg company. Indeed, there are several sound reasons to do so:
- First of all, Luxembourg has made significant investments in infrastructure to position itself as an e-hub, which has attracted a large number of major actors on the e-market place (Amazon, Skype, iTunes ...), as well as skilled IT personnel and other support staff and experts.
- Furthermore, since 2008 Luxembourg applies an advantageous tax regime to income derived from eligible IP rights, which explicitly covers domain names and, according to the actual position of the Luxembourg tax authorities, also the New gTLDs. Under this tax regime, the net income derived from the New TLDs and domain names in general (including capital gains realized at the time of disposal) benefit from a 80% exemption. As it relates to resident corporates and Luxembourg branches of non-resident companies, this results in a taxation of the income at an effective tax rate of maximum 5.76%. In addition, the New TLDs and domain names are exempt from net worth tax.
This might be particularly interesting for major brands having a wide network of independent dealers, such as car brands. They apply the tax regime to the fees received for the registration of a .brand domain name by their official dealers (e.g., www.[dealername].bmw). Another example could be for a significant part of the banking sector to apply for the New gTLD ".bank" through a joint-venture set up in Luxembourg, which could benefit from the Luxembourg IP tax regime on the revenues it would obtain from banks applying for a .bank domain name.
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.