Chiara Chiapuzzo is an Assistant Legal Advisor at Kellogg Company in Italy and a member of the Editorial Board of MediaLaws: Law and Policy of the Media in a Comparative Perspective, www.medialaws.eu. The re-posting of this analysis is part of a cross-posting collaboration with MediaLaws.
Starting from January 2012, companies and individuals will have the possibility to register any word, generic or branded, as a generic top-level domain name (“gTLD”). Top level domains refer to the last part of the domain name, the word to the right of the “dot” in the Internet address, i.e. “com” in “.com”. Registration period is one year and registered words will start appearing in effect at the beginning of 2013.
Today they are only 22 top level domain names, but soon the list might become endless. Companies will be able to buy the company name, brand, or kind of goods sold and attach it to a URL. For example, instead of http://www.cocacola.com/, the famous brand may have http://www.cocacola.soda/ or http://www.cocacola.drink/, etc. as a domain name. Also such words as as .milan, .cheese or .vintage may be registered.
The change has important implications for users and brand owners. It could affect inter alia availability of information, freedom of expression, trademark and privacy protection and consumer expectations. The change is now at the centre of heated discussions and protests carried out by advertisers, public relationists and market researchers.
ICANN and Reasons Given for Its Decision
The change is due to a decision made by ICANN, the Internet Corporation for Assigned Names and Numbers last June. ICANN is a non-profit corporation “for charitable and public purposes” under the California Nonprofit Public Benefit Corporation Law, created in 1988 by the US Department of Commerce.
One of ICANN’s responsibilities is to allocate domain names and IP addresses, a core role in the Internet eco system. Internet governance is quite different from any other governance around the world: it reflects a global reality, but it is still managed according to US law.
According to ICANN, the reasons behind the decision to liberalize gTLDs are to unleash innovation and global creativity, which could be restricted by scarcity of domain names and a lack of competition and opportunities. ICANN claims that the new naming system will be safer and more intuitive and allow users to recognize legitimate websites more easily.
ICANN has also expressed the intention to rule the liberalization with rigor, preventing the birth of Internet plates that infringe intellectual property rights (trademarks, geographical names), morality or public order. At least partly for this reason each application process will last nine months applying a questionnaire of 300 pages and a number of significant responsibilities.
Not for Everyone – Prices and Registration
Registration of a new gTLD is going to cost $185,000. For the most interesting and requested domains, there is going to be an online bidding process, so the price could be significantly higher.
Once acquired, a gTLD will cost approximately $25,000 a year. In addition, there is going to be a number of additional costs, legal costs in particular, in order to file for a new gTLD as well as managing the possible disputes or security issues.
It is entirely unclear why the price is so high. ICANN claims it necessary to finance the review of applications, but the last round of TLDs were at a fraction of that cost. It is also unclear what ICANN will do with the money, considering it is a not for profit organization.
The Opponents Arguments
Organizations representing brand owners and advertisers are opposing the ICANN program. Brand owners will have to police and monitor potential infringements of the brand, as the change could possibly lead to increase of cybersquatting as a form of infringement. Cybersquatting means registering, trafficking in or using a domain name with a bad faith intent to profit from the goodwill of a trademark and offering to sell the domain to the owner of the trademark at an inflated price. The more brands a company has the more new domains it will have to register to avoid cybersquatting by others.
Also the European Commission expressed its concerns through a white paper, saying that any new gTLDs should have received support by the global public interest.
The change could also lead to consumer confusion and disorientation. Consumers feeling less confident with the new domain names might lead to general lack of trust in the online environment. Moreover, Google search has at times replaced domain names. The growing notion among big advertising agencies and brand marketers is that as search engines find answers instantly, there’s no real need to enter a domain name in the browser and therefore domain names are far less important.
This reform will also result in increased power or influence being held by the arbitration panels that decide disputes involving internet domains.
Generally, the procedures for cancellation or re-assignment of a trademark are conducted according to the rules of the UDRP Policy (Uniform Domain-Name Dispute Resolution Policy). However, UDRP was created to deal with cybersquatting and the rules might not be entirely applicable to the new scenario. All the mandatory prerequisites of a UDRP procedure set in paragraph 4 (which are i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights, and ii) you have no rights or legitimate interests in respect of the domain name and, iii) your domain name has been registered and is being used in bad faith) might not be met – especially the prerequisite of bad faith might be problematic in many gTLD disputes. Given the high cost of the registration it is unlikely that someone will buy a name just to resell it, but on the other hand there is a risk of confusion between companies with similar brand names but operating in different sectors.
In this respect, the “Information for rights holders” paper released by ICANN seems to anticipate the problem specifying that the corporation will provide rapid relief to trademark holders for the most clear-cut cases of infringement and offer cheaper and faster responses than the existing UDRP. Also, there will be a Post-Delegation Dispute Resolution Procedure (PDDRP) that will address a registry operator’s bad faith intent to profit from systemic registration of infringing domain names.
One can only speculate on what the consequences and practical implications of the new domain name system innovation will be. What is certain is that ICANN is contractually bound by the US Department of Commerce to act in the public interest and promote consumer trust. It is also required to ensure that decisions are accountable and transparent (section 3 (a) of the National Telecommunications and Information Administration (NTIA) Affirmation of Commitments).
In light of all the protests, unclear consequences of the new system and the relatively limited information campaigns carried out to inform the public, it seem questionable whether these goals and obligations are met. Perhaps it would have been appropriate to consider the implications for business and consumers more thoroughly, proceed slower in the process of liberalization and wait for a stronger consent by internet users.