The promise and pitfalls of expanding gTLDs

The largest expansion of the generic top level domain (gTLD) space to date is looming ever closer and remains the subject of international public consultations and discussions among Internet stakeholders aimed at resolving the many crucial issues and concerns raised by the new gTLD programme before its anticipated launch this year.

The implications of this impending gTLD expansion are of great significance for trademark and brand owners, with both positive (increased diversity, innovation and competition) and negative (increased potential for violation or abuse of trademark rights) effects. Consequently, an understanding of the issues and how to make the voice of IP rights owners heard is crucial to ensuring that trademark rights are adequately protected when the new gTLDs are rolled out.

The eight original gTLDs (including .com, .net and .org) were increased to the current total of 21 by two previous application rounds for new gTLDs in 2000 and 2004, when gTLDs such as .biz, .coop, .mobi and .asia were introduced. There are also approximately 250 country code TLDs (ccTLDs), such as .ca and .us, which are generally under the management of the appropriate national group and/or government. Currently, all TLDs are in ASCII (Latin) characters only.

The new gTLD programme could introduce an unlimited number of new gTLDs, including Internationalized Domain Names (IDNs), into the domain name system (DNS). The decision to implement the programme was made in June 2008 by the board of directors of the Internet Corporation for Assigned Names and Numbers (ICANN), a not-for-profit California corporation created by the US Department of Commerce to provide technical and policy oversight, and manage the DNS.

The board based its decision on the recommendations of the Generic Names Supporting Organization (GNSO), ICANN’s policy development body, which consists of a number of stakeholder groups, includingthe Intellectual Property Constituency (IPC).

The GNSO’s recommendations were the culmination of almost two years of extensive work and consultation with all stakeholders, including governments, individuals, technology experts, business and intellectual property constituencies, and other bodies within ICANN, such as the Governmental Advisory Committee and the Security and Stability Advisory Committee.

From 2008 to date, the GNSO has continued its extensive eff orts to develop concrete processes for new gTLD applicants and rights protection mechanisms for IP owners. Many issues remain unresolved however, including, unfortunately, how best to adequately safeguard trademark rights.

In the current DNS environment of fewer than 300 TLDs and only 21 gTLDs, there were more than 1.6 billion Internet users worldwide and 192 million domain name registrations across all TLDs in 2009. Well over half of these registrations were in gTLDs. This represented a seven percent increase on the 2008 figures and a 25 percent increase on 2007.

The new gTLD programme is expected to result in even greater expansion due to increased diversity, choice and competition. From the perspective of trademark owners, the positive aspects of such growth are at risk of being significantly outweighed by the difficulties they will face in protecting their brands online. Given the level of cybersquatting and other forms of cybercrimes in the DNS as it currently exists, the burden for many trademark owners of protecting their rights online could quickly become unmanageable unless appropriate rights protection mechanisms (RPMs) are implemented.

Brand owners and intellectual property experts have expressed considerable concern about the impact of a DNS with hundreds, if not thousands, of TLDs on trademark security. In the current DNS, many owners of well-known marks are faced with dozens of legal actions, Uniform Domain Name Dispute Resolution Policy (UDRP) cases and numerous other efforts to settle disputes involving domain names, all of which negatively affect the rights enjoyed by the brand owner in their trademarks.

In addition to the very large number of legal disputes they must prosecute in order to protect their marks, many are forced to keep huge stables of defensive domain names so that others cannot have them. Some major companies own and maintain between 20,000 and 30,000 defensive domain name registrations.

The reasonable concern of these trademark owners is that if there are hundreds or thousands of new TLDs, the potential for cybersquatting or the need to obtain and hold defensive registrations could reach levels that are extremely high and carry serious financial and administrative consequences.

In addition, while often overlooked in discussions about the dangers to trademarks in the DNS environment—now and as envisioned for the future—one of the real victims is the public. The misuse of domain names defrauds members of the public.

They are directed to sites under false pretences, they purchase goods that are different from those that they want and they are the victims of other fraudulent behaviour based on misuse or misappropriation of trademarks. In an environment that is unchecked and unpoliced, the potential for damage to the public and to well-known brands and their owners is grave.

In recognition of this danger, in 2009, ICANN’s board approved the creation of a committee of experts to consider the overarching trademark problems created by the introduction of an unlimited number of new gTLDs.

The committee, called the Implementation Recommendation Team (IRT), comprises an international group of recognised experts in the fields of trademarks and domain names with considerable experience and understanding of the DNS, ICANN and the UDRP (including the author Jonathan Cohen, the only member from Canada). The IRT presented a set of recommendations to ICANN’s board in Australia in June 2009, which contained a series of proposed mechanisms designed to reduce the incidence and severity of trademark abuse in the new gTLDs.

In its recommendations, the IRT attempted to create a “tapestry of globally effective solutions” that took into account the interests of many different stakeholders and would collectively result in benefits not only to trademark owners, but to gTLD registry operators, registrars, registrants and consumers, as well as ICANN itself.

Specifically, the IRT proposed the following mechanisms to protect trademark rights in new gTLDs: