X-rated Domains

A new top-level domain (“TLD”), .XXX, is scheduled to launch in September 2011. This new domain is targeted at the adult entertainment industry but trademark owners not involved in that industry need to be mindful of the launch and the sunrise period under the launch in order to safeguard their trademarks.

The rights protection mechanism for the launch period under the .XXX registry will allow trademark owners to apply to opt-out of .XXX. Opting out means that the brand owner’s trademark will be excluded from registration as a .XXX domain. The sunrise period will run for up to 30 days commencing with the launch in early September 2011. The opt-out provisions are aimed at those who are not involved in the adult entertainment industry. In order to apply to opt-out of .XXX , the applicant must be the owner, licensee or assignee of a registered trademark. The trademark registration must issue prior to applying for the opt-out – in other words, an owner of a pending trademark application will not qualify. Note as well that the trademark needs to be an exact match, e.g. an acronym for the trademark will not qualify, unless there is a trademark registration for the acronym.

The cost to apply for opting-out will be approximately $200-$300 per application (i.e. per mark). This fee is a baseline fee set by the ICM Registry (the registry for the .XXX TLD) but as trademark owners will have to apply to opt-out through domain name registrars, there will be additional fees charged by such registrars.

For those owners who are successful in blocking their marks from .XXX, the corresponding domain name will resolve to a page indicating that the domain is not available for registration, or some similar informational message.

While there will be post-launch rights protection policies (which will not be introduced until 2012), trademark owners should take a proactive approach rather than a reactive one if they want to prevent others from registering a .XXX domain that infringes their mark.

Internet Landscape Expands – ICANN approves Launch of new gTLDs

At its June 20, 2011 meeting, the Board of Directors of The Internet Corporation for Assigned Names and Numbers (“ICANN”) approved the new generic Top Level Domains (“gTLDs”) program. With the new gTLDs, a brand owner will be able to register its BRAND as .brand.

ICANN will now embark on a four-month global education campaign regarding the new gTLD program. Applications for new gTLDs will be accepted from January 12, 2012 to April 12, 2012. ICANN estimates that the lifecycle for a straightforward application will be approximately nine months, including ICANN’s administrative check, the initial evaluation and transition to delegation of gTLDs to the Internet root.

While many are excited about this expansion of the domain space, others are greeting it with caution. Major brands such a Canon and Hitachi have already indicated their intention to apply for new gTLDs. There are risks and benefits associated with both applying for a new gTLD and inaction. For example, the initial launch of the new gTLDs will be the first round and a second round may not open for four or five years. There is the possibility of being locked out of the process, perhaps permanently, if a company’s brand is taken by a third party, until the second round.

In evaluating whether to apply for a new gTLD, applicants should consider the significant costs in terms of both time and finances. The application fee for a new gTLD will be $185,000. Other costs include those involving consultants, whether legal, technical, or both, in preparing an application; the annual fee of $25,000 payable to ICANN for a threshold of 50,000 domains (plus $.50 per domain per year above the threshold); and registry service provider charges. The application process is complex and may take many months to complete. Additionally, the term of a registry contract between ICANN and a gTLD applicant is ten years, with the costs associated with fees, registry costs and management during that term.

Recommendations:

• Evaluate – Companies and trademark owners should evaluate and develop a strategy suitable to their needs. Such an assessment should include participation from representatives of a company’s legal, marketing, IT, and executive management teams.
• Participate – Companies may wish to partner with others in their industry, whether to apply for a community gTLD, for example for a generic industry term, such as .furniture or .coffee or to consider possible objections to third party applications for gTLDs.
• Monitor – Now that the launch of the new gTLDs is certain, companies should monitor the progress. Once ICANN publicizes gTLD applications, trademark owners may want to object to another party’s gTLD application but there will be specific timeframes within which such objections may be filed. There are four grounds on which objections may be filed: string confusion; legal rights, limited public interest; and community.
• Protect – There will be rights protections mechanisms in place for trademark owners, such as a Trademark Clearinghouse, a sunrise registration service, a trademark claims service and Uniform Rapid Suspension. While helpful, there are limitations to such rights protections systems and the details are still being worked out. As more details are ironed out, we will provide additional information on the various rights protection mechanisms available.