What’s a gTLD and Why Would My Client Want One (or Not Want One)?

by Victoria Burke

Professionals who handle trademarks for clients are waiting for Internet Corporation for Assigned Names and Numbers (ICANN) to post a listing of applicants for new gTLDs (generic top-level domains).  Originally, the reveal date was slated to be April 30, 2012.  However, a computer glitch in the TLD application software forced ICANN to shut down the acceptance of applications before the cutoff date.  While ICANN continues to wrestle with its technical issues, the company has not provided a new reveal date.

When it comes to the prospect of new gTLDs, your clients may have varied viewpoints.  One reaction might be, “Yay!  A whole new frontier to explore!” Or your client may view it as–to quote Dr. Sheldon Cooper from The Big Bang Theory— “Oh, what fresh hell is this?”  Either way, gTLDs are not going away.

Let’s start with the basics:  Firstly, a gTLD is what appears to the right of the second “dot” in a web address.  (For example, in the address: http://www.example.com, the “com” is the gTLD.)  Currently, there are twenty-two distinct gTLDs.   The most common are .com, .net, and .org. Secondly, registering a gTLD is not the same thing as buying a domain name.  Notably, if an applicant succeeds in registering his or her gTLD, then the applicant will become an operator of a domain registry based upon this gTLD.  Metaphorically, the applicant will effectively control his or her own (internet) sandbox and will be the gatekeeper of who is allowed to play in his sandbox.

The new gTLDs will be comprised of a string of three or more characters and will be “community-based” or “open.”  This next generation of gTLDs will no longer be confined to Latin characters.  The doors are now open for gTLDs characters to be in Cyrillic, Japanese, Arabic, etc.  However, a remaining limitation is that numbers and dashes will not be accepted because only letters are allowed.  According to the ICANN glossary, a “community-based” gTLD is “operated for the benefit of a clearly delineated community.”  For that purpose, only a representative of the named community can submit an application for this type of gTLD.  Examples of possible “community-based” gTLDs are .bank, .nyc, etc.  Branded gTLDs are not considered community-based. The other type of gTLD available, “open” gTLD, will have an open registration that is not limited to a defined community.

For a client, the process of securing a gTLD is a costly endeavor.  The costs involved include a $5,000 registration fee deposit per application and a $185,000 evaluation fee (the deposit is credited against this fee).  Plus, each gTLD requires an annual fee of $25,000. Many speculate that the high upfront cost to register each gTLD will deter most cyber squatters and infringers.  Notably, the high evaluation fee does not necessarily translate into a windfall for ICANN; the organization is setting aside $60,000 from every application fee in anticipation of future litigation costs dealing with the changes.

Some people are left scratching their heads because they can’t imagine why anyone would need to think beyond the current .com-dominance.  Most people are accustomed to using .com when typing in a company’s web address.  Yet, that way of searching for a company’s website may become a thing of the past.  Since technology is dynamic and ever changing, it’s uncertain what the future holds for searches like this. For example, major search engines could reprogram their algorithms to rank new gTLDs higher in their display results.  Also, speaking/voice applications – such as Apple’s iPhone 4’s “Siri” – could eliminate the necessity of keystroke searches.

Although some clients may want gTLDs, they should truly consider if it is the right fit and the right time.  Clients who simply want to reserve a gTLD will not be eligible to do so.  Although defensive filing is motivating many brand owners, this may not be a viable course of action for them; ICANN requires applicants to provide a plan containing specificity regarding launch and operation.  For example, an applicant must provide ICANN with a three-year financial plan and certified financial statements.  On the technical side, the gTLD registrant will now have the power to grant second-level domain registrations.  (A second-level domain is placed to the left of the TLD, with a dot separating the two.  For example, in http://www.financial.bank, “bank” is the gTLD and “financial” is the second-level domain.)  With that power comes great responsibility.  For this reason, ICANN requires an applicant to demonstrate that it has the operational and technical capabilities to run a registry.  This includes providing Domain Name System (DNS) services such as security and stability, as well as having contingency plans in the event of service failure.

In lieu of applying for his or her own gTLD, a client may be better off filing an objection when threatened by another applicant’s string.  Once ICANN reveals the existence of an applicant, then the “objection time period” will begin to run and will last approximately seven months.  There are four grounds for objections:  (1) string confusion, (2)  legal rights, (3) community, and (4)  limited public interest.  Objection procedures will be handled by Dispute Resolution Service Providers (DRSP).  ICANN will step in only for exceptional circumstances.

Some concerns remain.  Firstly, who will be allowed into or excluded from certain gTLD communities, and who will make this determination?  For example, if “.bank” is granted a community-based registration, it’s unclear who will police the criteria for membership.  What if several large banks decide to limit membership to ten banks, and Wells Fargo is not included?  Secondly, industry keywords will need to be monitored because of the effect they can have on industry participants.  Examples of industry keywords as gTLDs are .games or .computers.  Thirdly, the gTLD applications of an industry competitor will need to be monitored in order to anticipate the evolving marketplace and consumer appeal.

There are many tangibles and intangibles that are associated with this newly open frontier, so I recommend reading ICANN’s New gTLD Applicant Guidebook 11 January 2012.  Pop the 349 pages into your eReader this weekend and head to your favorite coffee shop…familiarize to strategize.

Victoria Burke attained her juris doctor degree from Southwestern Law School and was recently admitted to practice in California.  Her area of interest is intellectual property with an emphasis on trademarks and copyrights.  She is a member of the executive committee of the Beverly Hills Bar Association IP/Internet & New Media Section.

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