23 May 2018

Going to the Next Level

Although the EU General Data Protection Regulation and its effects on access to registrant data has been at the top of the Internet policy agenda, the issue of how to administer the next round of applications for new generic top-level domains (gTLDs), remains.  It’s unclear when the Internet Corporation for Assigned Names and Numbers (ICANN) will open a new application period—but that doesn’t mean brand owners shouldn’t be prepared.

In 2012, nearly 600 brands took advantage of the opportunity to register their own “dot brand” domain name—before any brand had been able to demonstrate the actual benefits, notes Roland LaPlante, Senior Vice President and Chief Marketing Officer at Afilias (USA).

This was the first time ICANN had invited new TLD applications on such a large scale and, as of early 2017, around 550 of these companies have launched their dot brand TLD, he says.

The program may not have been originally envisioned to work as a defensive tool, but the majority of brands did purchase new TLDs defensively, rather than because of choice or creative opportunities, Mr. LaPlante says.

The benefits of dot brands have been promoted as increased security and enhanced consumer trust, and brands have the opportunity to use TLDs in a creative way, such as a marketing campaign or product launch, which sets them apart from the competition.

While brands have been generally conservative in rolling out their own TLDs, several have moved their major Internet presence to their dot brand. For example, Mr. LaPlante notes, banking group BNP Paribas has undertaken extensive marketing campaigns using its .bnpparibas TLD as the main address.

According to Mr. LaPlante, creative use of dot brands is not happening on a large scale just yet, but it’s something that will probably happen in the next few years.

This may also drive brands that were left out of the first round of new gTLDs to seek to level the playing field and petition ICANN to open a new round soon.

He adds that brand owners have gained from other new TLDs.

“The biggest example is the re-branding of Google to Alphabet at www.abc.xyz. Many companies have taken advantage of the new geographical TLDsand niche TLDs such as .lgbt and .organic/.bio,” says Mr. LaPlante.

Cost Burden

Brands have not, however, welcomed the opening up of the domain name system on the second level (i.e., web addresses underneath the TLD), cautions David Taylor, Partner at Hogan Lovells LLP (France).

“Most see it as a cost burden, and an unwanted one at that. It is almost impossible for a brand owner to register its brand or brands across all the new TLDs—this is cost-prohibitive,” he says.

Mr. Taylor adds that even the sunrise periods, which give an advanced period for trademark owners to apply for a term within a TLD, have been little used compared to the situation in previous launches such as .eu and .asia.

“It comes down to cost, and there are just too many new TLDs out there, so brand owners have to be selective and be on the lookout for infringement and abuse,” he says.

Alison Simpson, Portfolio Marketing Director at MarkMonitor (USA), adds: “As the number of second-level TLDs continues to increase, so, too, does the opportunity for online criminals or "squatters" to register TLDs that can be used to impersonate a genuine brand.”

Although it might seem counterintuitive, defensive registrations can deliver value for brand owners, according to Ms. Simpson.

She says: “With the number of Uniform Domain-Name Dispute-Resolution Policy (UDRP) disputes continuing to increase, it can often be more cost-effective for brands to defensively register a domain during a sunrise period rather than pay a large amount of money to recover a domain they might want in the future.”

A record number of 3,074 cases were brought under the UDRP in 2017. Mr. Taylor comments: “Of course, more cases are not surprising given there are now more domain name registrations, but there does appear to be proportionally more trademark infringement in new TLDs than legacy TLDs.”

For second-level domains, brand owners should look into registering any name that has a “close nexus to their business,” says Ms. Simpson.

“Short, memorable URLs that are geo-specific, buzzworthy, or specific to niche markets provide fun and unique marketing opportunities. Some TLDs, such as .bank and .insurance, also give customers the confidence that they’re about to visit a website that’s safe and secure,” she says.

Back at the top level, it’s important to keep in mind that legal or IT departments, not marketing teams, manage most dot brand purchases, so a defensive approach is to be expected, adds Mr. LaPlante.

“As chief marketing officers take a greater role in address selection for new products, revised branding, and new target activities, the new TLDs will grow in value as an offensive tool,” he says. “However, they cannot add value if they are locked up in the legal portfolio with no awareness in the marketing team.”

Mr. Taylor adds that while many brands did consider new TLDs with a defensive mindset, “in reality, with the very high application fee of US $185,000, there was little chance of infringement and third parties registering at the top level.”

He believes the situation has evolved since then, with most of those who have applied for a dot brand being happy that they did.

“People will trust dot brands in a way that they may not trust other TLDs, which is good for brands,” Mr. Taylor declares.

However, he cautions: “There remain serious questions as to whether the safeguards that have been put in place to protect consumers have worked in some non-dot brand new TLDs.”

He explains that there has been an increase in malicious domain name registrations, especially  in the new TLDs. Domain names registered for malicious purposes often contain strings related to trademarked terms, which is a serious issue.

Brand owners should carefully consider the potential of applying for a dot brand in the next round, whenever that may be.

Following the progress of the current dot brands and learning how to make yours successful is the best way forward, Mr. LaPlante concludes.

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