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Brand Owners Beware of New Perils and Prepare for New Opportunities

By Kathleen T. Petrich and Robert C. Cumbow*
July 5, 2011

The Landscape

Get ready for another domain name gold rush!  New generic and branded domain names will soon be available--but this time there will be new challenges and significant costs associated with the process.

All businesses now know that having a Web presence and often directly offering goods/services through the business Web site is a must in the 21st century.  Instead of accessing a specific business owner’s Web site by typing in a formal and convoluted Internet protocol (IP) address, such as 207.68.166.247, domain names enable consumers look for a specific business by typing in a user-friendly character-string (e.g., microsoft.com) to enable a computer on the Internet to find another computer.

Back in the mid 1990s we saw a rush to grab everything .com, .org, and .net (other early top level domains or .tlds included .edu for universities and .gov for the U.S. government).  ICANN, (Internet Corporation for Assigned Names and Numbers), the organization that oversees the huge and complex interconnected network of unique identifiers that allows computers on the Internet to find one another, continued to pump out new generic .tlds (such as .aero, .pro, .coop, .biz and .info), country codes (such as .ca for Canada), and regional codes (such as .eu for the European Union).  There are or will be soon about 306 tlds available, including the new .tld .xxx for the adult entertainment industry approved last March.

New Peril .xxx?

Nothing seems to get brand owners up in arms faster than finding that their brand is associated with a porn site.  Trademark owners were up in arms over past .tld expansions as they created cyber opportunities for others to filch their trademarks, but became generally pacified by ICANN’s adopting a uniform domain name dispute resolution proceeding (UDRP) to help legitimate trademark owners get back their domains when used illegitimately and in bad faith by others.  In addition to post registration, ICANN also adopted sunrise periods in which legitimate trademark owners could object or block (through registration) objectionable use of a trademark in a new .tld domain pre-registration.  In the case of the new .xxx tld, trademark owners can essentially co-opt their trademark from being on the .xxx registry by reserving their trademarks in the sunrise period beginning in September 2011.  As an extra precaution, trademark owners can pre-reserve on sites such as http://domains.icmregistry.com/.  So, brand owners who want to block their brands from use as porn site domains will want to take action in the sunrise period beginning in September or early “pre-registration” now.

New Opportunities or Expensive Cyber Vanity Plate?

Now, ICANN has thrown open all generic domain extensions ? and the granddaddy of them all: “.brand” ? (in other words, your own private brand or name) ? but for a fee, and a whopper of a fee at that.  Here are the highlights, which are subject to a fair amount of continued tinkering:

Bottom line:  this is a big expensive process.  Some in the legal community are bandying about a number in the $500,000 range for the entire process, not including the business resource allocation time to assist with the preparation of the application and assembling requested documents, such as financial reports.

This raises the question:  Should a business pay the outrageous sum of $185,000 for the initial application filing fee (not to mention the very large legal fee that could accompany the 100-or-so-page application) when they can get a .com domain name for $11.99 (bulk price) from GoDaddy?  Is this the equivalent of an expensive “vanity vehicle license plate”?

Most businesses would likely say the cost isn’t worth it.  In these days of increasingly sophisticated and reliable Web search technology, few consumers type a domain name into a browser to find a particular business, but rely more heavily on search engines, such as Google, to reach a particular business or brand.  Further the technical requirements will be much more strenuous to operate a “private registry” than merely registering a single domain on a .com registry.  ICANN will want to know that an applicant has the technical expertise to meet the requirements.  To date, only one business has publicly stated its intent to go after the “.brand” domain extension, and that is Canon (wanting.canon).  Presumably Canon has the technical savvy to meet the requirements, in addition to having the necessary funding.

But what if the goal is to get a bigger share of the online market space?  What if the business plan adopts the use of distributors that can more easily be tracked/managed or a way to better police counterfeits?  What if customers can immediately feed into the .brand account for a myriad of goods/services?  Then, the prospect of a $500,000 or so expense may well be worth it in comparison to extensive and expensive online marketing and advertising and as a means to more cost effectively deliver the business’s goods and services to online consumers.

Once Canon obtains its .canon registration and others trickle in, will there be a sufficient interest for legitimate businesses/organizations to jump in?  In other words, will Coca Cola, the holder of the most valuable trademark (estimated in some reports to be worth over $70 Million in 2010 by Interbrand) really want to sit on the sideline and not register .coke or .cocacola?

And what about entire industries, developing or not?  What would it be worth to have .bank or .software or .smartgrid top level domain?  How could information and goods/services be distributed to consumers/potential consumers under vast new swaths of cyber real estate?

Finally, will the availability of these new “name your own” .tlds provide an attractive alternative to battling with competitors and cybersquatters for similar second-level domains in the .com and other existing generic .tlds?  Or will businesses still have to spend time and money policing their trademarks in the older .tlds even after spending big bucks to adopt one of their own?

Many of these questions will likely be resolved over the next year.  But for those with strong financial backing and good Web business plan/marketing plan, the opportunity to get an exclusive .tld (generic or branded) may be very attractive and more than a mere “vanity plate.”

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If you should have any questions or wish to discuss issues specific to Intellectual Property please contact any of the following members of the Graham and Dunn Intellectual Property Team:
 
Kathleen T. Petrich 206.340.9672 or kpetrich@grahamdunn.com
Robert C. Cumbow 206.340.9619 or rcumbow@grahamdunn.com
*Research assistance credit (and appreciation) goes to Graham & Dunn summer associate Jonathan Smith

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