Opinion: .unlimited? Pros and cons of the new generic TLDs

Beginning in the last quarter of 2009, and after three years of drafting and discussing proposals, the Internet Corporation for Assigned Names and Numbers (ICANN), which is the governing body for Internet domain names, will receive the first applications to sell an unlimited number of new generic top-level domain names, or gTLDs, those letters that come after the dot in a Web address, such as .com, .org and .net.

Currently, there are only 21 gTLDs available, but after the new proposal is implemented by ICANN, anyone who wants to register will be able to have an individual or corporate gTLD, including brand names (.coke), business categories (.hospital) and geographic locations (.arizona). This new proposal truly opens a new world of possibilities for the expansion of names, including internationalized domain names (IDN), which are used to designate any character other than the 26 Latin letters (a-z), 10 digits (0-9) or the hyphen symbol (-).

What do I need to do?

The path to obtain a new gTLD could be as simple as a four-step application-and-approval process, or as complicated as a lengthy evaluation that includes objections, additional proof of standing and legal endorsement, and dispute resolution proceedings.

Generally, the process of applying is as follows:

  1. Submit application and pay fee.
  2. Await initial evaluation by ICANN.
  3. File and resolve any objections in front of the Arbitration and Mediation Center of the World Intellectual Property Organization; except for objections based on morality, which are administered by the International Chamber of Commerce. There are only four grounds for objections:
    1. String confusion: Occurs when a string so nearly resembles another that it is likely to deceive or cause confusion. For a likelihood of confusion to exist, however, it must be probable -- not merely possible -- that confusion will arise in the mind of the average reasonable Internet user.
    2. Legal rights: The applied-for gTLD infringes upon existing legal rights of objector.
    3. Morality and public order: ICANN has yet to define the applicable morality standard. This has been a controversial issue considering that accepted standards of morality vary throughout different cultures and over time. There are also considerations of international law in regards to freedom of speech and obscenity that are not uniform and that have not allowed the ICANN to reach a conclusion.
    4. Community: Opposition by a particular community.
  4. Technical tests and delegation of new gTLD into root zone.

Initially, the application is open solely to companies and organizations. ICANN will not consider applications by individuals or sole proprietors. Applying companies and organizations must provide proof of good standing and legal establishment, financial records and other supporting documentation depending on the type of industry.

How much is this going to cost me?

The application evaluation fee for each gTLD may be cost-prohibitive for some companies, especially those in developing countries. The starting cost per evaluation is $185,000, an amount that could increase exponentially if there are contentions and the applicant for the gTLD needs to pay extra fees for dispute resolution filing and adjudication, re-reviews, and evaluations. As expected, ICANN's application fee has been highly criticized. According to ICANN, however, the fee was determined after consideration of several factors such as: (a) desire to create a fully self-funding gTLD system, (b) costs associated with the thorough implementation of new policies, and (c) forecasts of costs and volumes despite the absence of historical data. Nonetheless, hoping to encourage participation in the new gTLD system and to improve confidence in ICANN's idea of equal access to the Internet across the globe, alternative schemes like creating different rates per categories of developed, underdeveloped and developing countries have been discussed during ICANN's last revisions to the financial side of the application process.

Why is this important and how would this affect me or my company?

Although many may consider the idea of an unlimited well of creative ideas as an exciting opportunity to develop brands and individualized Web sites, many others are already concerned with the costs and consequences of such an ambitious expansion. The following are general pros and cons of this proposal:

Pros:

  • gTLDs can provide a new way for people to express themselves on the Internet while creating new competition.
  • This option can accelerate the shift to an expanded IP addressing scheme.
  • The new framework may facilitate consumers' navigation on the Internet.
  • Because of the costs and complexity of the new gTLD process, new gTLDs will likely reduce domain tasting and domain kiting, which are the practices of applying for a domain solely for market testing during a few days. In a departure from the current process, applicants will have to argue their rights to a name and make a business case for it before being awarded the domain.

Cons:

  • This development could force companies to spend millions in defending against cybersquatters and fraud.
  • There is a high cost of application and need to apply for TLDs for all trademarks a company uses.
  • It is likely that disputes between companies with similar names, even if in different fields, will increase.
  • A gTLD that is a company's registered trademark will not be automatically reserved.
  • Unlimited new gTLDs increase chances for trademark dilution and consumer confusion.
  • There will be a greater challenge for Web filtering applications suppliers whose products depend on keeping a URL database up to date.

Deanna Conn is a partner and Victoria Tandy is an associate at the law firm of Quarles & Brady LLP, practicing in the firm's intellectual property practice. They specialize in counseling clients on intellectual property matters and Internet-related transactions, including domain name disputes and Internet regulatory developments. Conn can be reached at deanna.conn@quarles.com or (520) 770-8715 and Tandy at victoria.tandy@quarles.com or (602) 230-4604.

Copyright © 2009 IDG Communications, Inc.

  
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