The Trademark Clearinghouse and new gtlds - ICANN update

The rumours that the world will end in 2012 might be far-fetched but for brand owners the introduction of new gtlds will change the online world as we currently know it.  Those non-believers are likely concerned with the mechanisms for the protection of their trade marks when ICANN finally introduces the new regime (see IPKat posts here and here).  

Doesn't look much like a calendar to me



Fortunately, we are now a step closer to knowing precisely what are the ins and outs following the recent ICANN meeting in Toronto.  In attendance was Jim Bikoff of Washington, DC, firm Silverberg, Goldman and Bikoff, who has sent this report (with this Kat's comments in red):

Many of the working sessions focused on Rights Protection Mechanisms, particularly how to complete details of the Trademark Clearinghouse ( the "Clearinghouse") and the Uniform Rapid Suspension System ("URS") before the new gTLDs are delegated in 2013.  There are a number of implementation details that are still under discussion.   The major points are set forth below.

Trademark Clearinghouse

The Trademark Clearinghouse will serve as a central repository of rights information.   Recordal in the Clearinghouse will qualify the rights owner to register domain names that correspond to their marks in the Sunrise Registration Period.  Recordal in the Clearinghouse will also qualify the marks for the Trademark Claims Service, which will notify the owner if someone has registered an exact match of the mark [but not, presumably a similar mark].

The Clearinghouse has three core functions:

1.  Performing verification of the trademark data; 

2.  Maintaining the database of verified data; 

3.  Interacting with Registries and Registrars to support the Sunrise and Claims services.

To date, ICANN has not yet released the final implementation details of these core functions, even though a final model was due before the meeting in Toronto.  Instead, ICANN has only released implementation suggestions for two narrow functions: proof of use and matching rules for trademarks with special characters.  Members of the community, particularly the Intellectual Property Constituency ("IPC") have demanded that ICANN release the implementation model as soon as possible, to allow enough time for meaningful community input [and, presumably, to allow brand owners enough time to save their pocket money to pay for registration in the Clearinghouse].

The timeline to work out the details of how the Clearinghouse will function is tight.  Clearinghouse providers Deloitte and IBM are testing the Clearinghouse during the fourth quarter of 2012.   ICANN also plans to have the system live for interface with trademark owners (for registration and verification) in the first quarter of 2013.  The community is skeptical that this timeframe is realistic, and ICANN, Deloitte and IBM are now under the gun.

The Registry and Registrar Stakeholder Groups have also put pressure on ICANN to develop a Clearinghouse interface that is centralized, protects data from bad actors, and is easy to use and implement.  ICANN staff has proposed a model which is decentralized (i.e.: each Registry would maintain the data  itself), primarily because they believe that centralizing the Clearinghouse would potentially create a "single point of failure" issue within the registration process.  For example, if the Clearinghouse experienced a technical glitch, no one would be able to complete registration because the Clearinghouse would not be able to generate the proper information to Registrars to complete the mandatory claims notification query.  Proponents of the centralized interface system (which has majority community support at this point) claim that any such failure would be very rare, and claim that a centralized system would, in fact, keep trademark data safer, which is a major concern for the IPC [surely modern information technology is sophisticated enough to cope with this.  Processing power doubles every 18 months and WIPO and OHIM have coped for years].

The development of the Registry interface is due to be completed by the fourth quarter of 2012, and ready for testing during the first and second quarters of 2013.  Again, given the rift between the community, the Registries/Registrars and ICANN staff/TMCH providers, this timeline is ambitious.

The biggest issue for rights owners in relation to the Clearinghouse is the inability of the current model to address the concerns that the new gTLD program presents.  The IPC, along with the Business Constituency ("BC") and with the support of the Internet Service Provider Constituency ("ISPC") have developed key suggestions for improving the Rights Protection Mechanisms as a whole, including the Clearinghouse.  These suggestions are as follows:

1.  Extend Sunrise Launch Period from 30 to 60 days with a standardized and centralized interface mechanism; 

2.  Extend the Clearinghouse and Claims Notices for an indefinite period (from 60 days) and ensure the process is easy to use, secure, and stable; 

3.  Complete the URS as a low cost alternative and improve its usefulness - if necessary, ICANN could underwrite for an initial period; 

4.  Implement a mechanism for trademark owners to prevent second-level registration of their marks (exact matches, plus character strings previously determined to have been abusively registered or used) across all registries, upon payment of a reasonable fee, with appropriate safeguards for registrants with a legitimate right or interest; 

5.  Validate contact information for registrants in WHOIS; 

6.  All registrars active in new gTLD registrations must adhere to amended RAA for all gTLD registrations they sponsor; 

7.  Enforce compliance of all registry commitments for Standard applications; 

8.  Expand the Clearinghouse Claims Service to cover at least strings previously found to have been abusively registered [or used].

ICANN's new CEO, Mr. Fadi Chehadé, has made completion of the Clearinghouse a strategic priority for ICANN.  Rights holders are extremely concerned about the perceived shortcomings of the Clearinghouse and the relatively small window of time that the community has to resolve these issues.

Uniform Rapid Suspension System

The development of the URS hit a snag earlier this year when it became clear that no provider could develop the system at the cost target of $300-$500.  The URS was conceptualized as a faster and cheaper version of the UDRP, designed for cases of clear-cut infringement.   But as the community continued to participate in the development of the URS, adding safeguards for potentially legitimate registrants, appeals mechanisms, translation services, panel appointment, etc., the costs became equal to, if not greater than the UDRP. The meetings in Toronto focused on identifying the barriers to providing the URS at a low cost, without sacrificing the key elements required by those who support intellectual property rights and those who are concerned about Registrant rights.

Before the meeting in Toronto, ICANN put out a new Request for Information to the community in order to solicit any suggestions that would make the URS cheaper.  At the session on the URS, presentations were made by WIPO, the National Arbitration Forum, and members of the IPC.  All three panelists identified some of the major cost drivers of the URS as follows:

 *   Expert panel appointment in all cases;

 *   De novo expert review for up to 30 days;

 *   Procedural complexity (significantly more moving parts);

 *   Multiple enforcement layers;

 *   Translation services.

[maybe adopting a 'loser pays' principle with fixed costs might help to deter 'opportunistic registrants'.]

Suggestions for cutting costs ranged from ICANN subsidies (which has been routinely dismissed as ultimately unsustainable), default decisions without panel appointment, using the URS only for default decisions and proceeding to a UDRP in contested cases, using technology to streamline the processes and scaling the safeguards/appeal mechanisms back.  In addition, a potential new provider was identified who advised the attendees that he could provide the desired system within the cost target range. ICANN will pursue discussions with this potential new provider [it seems paramount to have a simpler, cheaper, quasi-automated mechanism for blatant infringements with an appeal structure rather than an 'all singing and dancing' URS which functions the same as UDRP].

The meeting on the URS was more of a brainstorming session than an actual results - driven discussion, because the Request for Information is still pending.  We expect the URS discussion is a lower priority to ICANN than the Clearinghouse, as the latter needs to be in place well before the delegation of new gTLDs, while the URS only has to be in place after the gTLDs are launched.

Registrar Accreditation Agreement and WHOIS Data

The RAA is a contract that governs the relationship between ICANN and its accredited Registrars. In order to participate in registering domain names in the new gTLD program, Registrars must sign the new RAA, which is in its final stage of negotiation. Parties to the negotiation include various international and national law enforcement agencies, the Government Advisory Committee ("GAC"), data privacy watchdog groups and Registrar representatives. Mr. Chehadé has said that RAA should be completed by the end of this year.

The primary point of disagreement in negotiations involves verification and accuracy of WHOIS data, which is very important to rights holders. Many cybersquatters hide behind inaccurate WHOIS data and privacy/proxy registration services to avoid detection and prosecution.

Law enforcement officials want WHOIS data to be completely verified before the domain name resolves to an active website, retained for two years after the life of the registration, and re-verified annually. They are willing to compromise that the website can resolve if Registrars commit to verifying the information (phone number AND email address) within a short time frame, with the threat of suspending the domain name if verification is incomplete. Law enforcement officials also advocate for an accreditation system for privacy and proxy services, which would allow registrants to hide their identity ONLY for to-be-defined legitimate purposes, with the caveat that law enforcement officials can have access to the registrant information upon a showing of good cause (such as illegal activity or cybersquatting).

Some ICANN community groups, such as the Non-Commercial Stakeholder Group ("NCSG") oppose such verification and accreditation, citing the right of registrants to remain anonymous and keep their data private [is this proportionate to the rights of brand owners to not have their property misappropriated?]. ICANN's Registrar Stakeholder Group believes that some requirements of the new RAA in relation to WHOIS violate the law in areas where data privacy protection is particularly [overly?] strict, such as the European Union.

Earlier this month, an EU data protection watchdog group called the Article 29 Working Party, which is an advisory group to the European Commission, released a letter stating that some law enforcement demands, notably the retention requirement, and the annual re-verification, may place Registrars in violation of EU data privacy and protection laws. ICANN responded to the concerns by suggesting an "opt-out" procedure for those Registrars that are placed in the position of violating local laws or violating the RAA.

Intellectual Property owners and Registrars located outside of Europe were not receptive to the idea that Registrars within Europe would be given a free pass on these important issues. Indeed, the Intellectual Property Constituency ("IPC") expressed concern that an "opt-out" mechanism would drive Registrars en masse to Europe, so that they can take advantage of the exception [how cynical].

The European Commission representative to the GAC distanced the EU from the Article 29 letter stating that "[The Article 29 Working Group is] there to give advice and they, and we, are very clear that they are independent of the European Union. This is not an EU position." While the NCSG quickly condemned this statement, saying that the GAC representatives are purposefully ignoring data privacy officials in favor of law enforcement demands that are aligned with intellectual property concerns.

As with the Trademark Clearinghouse, completion of the RAA is a strategic priority for ICANN staff and leadership.  Rights owners can expect progress this year.

It is good to see that the Trademark Clearinghouse is being given priority, but concerning that the costs of the rapid suspension scheme are creeping up.  This Kat hopes that the timeline for launch is extended sufficiently for the proper rights protection mechanisms to be put in place.