New generic TLDs: Association of National Advertisers throws a tantrum

As the IPKat has reported, the new generic Top Level Domains (TLD; the part in a domain name after the last dot) which allow private entities to administrate TLDs of their choosing (subject to rules and regulations) are almost certain to come. And it's not like they have been approaching in stealth mode, either, because the Internet Corporation of Assigned Names and Numbers (ICANN) has been soliciting opinions on the proposal for years.

The US Association of National Advertisers (ANA), an interest group representing, well, advertisers, and therefore brand owners, has in an open letter to ICANN dated 4 August 2011 expressed its grave concerns over the proposed new generic TLDs. Some of these concerns are not unfounded, and certainly familiar to brand owners:

• Misappropriation of Intellectual Property – The experts cite a key concern of misappropriation of intellectual property rights, including the “costs of domain watching, defensive registrations, litigation or other measures to end misappropriation, and costs due to misappropriation that is not blocked (e.g., lost profits due to sales of counterfeit goods or brand dilution).”
• Defensive Registrations – As noted, brand owners may be compelled to file defensive registrations, i.e., “registrations undertaken to protect legitimate trademark or intellectual property rights from misuse, not registrations undertaken as the ‘defense’ of one’s business against increased competition on the merits.” This cost alone could be in the hundreds of thousands of dollars per brand name, creating a multi-million dollar liability for major corporations and a multi-billion dollar cost to the industry.
• Domain Navigation Dilution because Consumers have More Places to Look – The experts note that the “introduction of additional gTLDs may increase the costs of Internet navigation by increasing the number of potential domains over which a user may search. To the extent that such effects arise, they can dilute the value of existing domain names as navigation devices. The costs associated with such dilution include the costs of defensive registrations . . . and the costs due to dilution that cannot be mitigated.”
• Harm to Internet Users from Increased Cybersquatting – One of the most incipient and costly challenges to the adoption of any new TLD is the prospect of cybersquatting and the substantial costs associated with preventing and policing it, which are already well into the billions. With respect to cybersquatting, the experts note, “In addition to harm in the form of increased search costs consumers may suffer more direct harm from increased cybersquatting. This direct harm may result from malware, phishing, and the unknowing purchase of counterfeit goods.” While the experts opine that such a result “may” occur, history proves that cybersquatting will occur just as it has with every TLD that has ever been administered by ICANN.

ANA's letter ends with a thinly veiled threat of litigation ("Should ICANN refuse to reconsider and adopt a program that takes into account the ANA’s concerns expressed in this letter, ICANN and the Program present the ANA and its members no choice but to do whatever is necessary to prevent implementation of the Program and raise the issues in appropriate forums that can consider the wisdom, propriety, and legality of the Program.")

While some of ANA's concerns are justified, it does seem a bit late to voice them now, particularly given the lengthy process that led to ICANN's decision on 20 June of this year to implement the program. During the process, interested parties could express their concerns, and most of the points raised by ANA were raised. Whether ICANN's response to these concerns has been satisfactory is another question. In any case, ICANN has responded in equally strong terms to the strongly worded letter by ANA, calling ANA's assertions "incorrent or problematic" and accusing ANA as mischaracterizing the ICANN process. ICANN asserts that the concerns of trade mark owners have been addressed by

Establishment of a Trademark Clearinghouse as an information repository performing specific information collection and data validation services. A model for such a clearinghouse, as well as a mandatory Sunrise period and mandatory Trademark Claims service, have all been incorporated into the program. The Sunrise period means that rightsholders will have the first opportunity to secure domain names as desired. The Trademark Claims service provides notice to rightsholders where matching names are registered during the initial launch period. The Trademark Clearinghouse is designed to create efficiencies for trademark holders, so that rights information need only be submitted and validated once, and for other parties in the registration process, by creating a centralized source of information.

Implementation of a Uniform Rapid Suspension (URS) system as a cost-effective and timely mechanism for brand owners to protect their trademarks and to promote consumer protection on the Internet. The URS is a complement to the existing Uniform Domain Name Dispute Resolution Policy (UDRP), and will allow for rapid suspension of a registered name in clear-cut cases of infringement. Intellectual property stakeholders, governments, and representatives from multiple other stakeholder groups, spent significant time refining the details of this proposal so that it would be an efficient, low-cost, and meaningful tool for rightsholders.

Establishment of post-delegation dispute mechanisms to attach liability to (i) Registry Operators that operate a TLD in a manner that is inconsistent with the representations and warranties contained within its Registry Agreement, or (ii) Registry Operators that have a bad faith intent to profit from the systemic registration of infringing domain names (or systemic cybersquatting) in the Registry Operator’s TLD. For example, a Trademark Post-Delegation Dispute Resolution Procedure (PDDRP) has been incorporated into the Registry Agreement, and provides another tool for rightsholders.

Requirement for maintenance of a “thick” (more detailed) Whois database in all new gTLD registries, and a requirement that this information is readily available to those who qualify through a centralized source, making it easier to locate wrongdoers than in the current environment. These requirements have been incorporated into the Registry Agreement.

While there may be more hiccups to come, this Kat still thinks the new gTLDs are here to stay, and trade mark owners should better acquaint themselves with the technicalities rather than hope that the (admittedly potentially harmful) new TLDs will not materialize.