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ICANN Approves New gTLD Launch

June 21, 2011

On June 20, 2011, the Internet Corporation for Assigned Names and Numbers (ICANN)-a not-for-profit public-benefit corporation that coordinates the Internet's domain naming system-approved the introduction of new generic top level domains (gTLDs) in unlimited numbers.  New domains may launch as early as November 2013.  This decision comes on the heels of ICANN's approval of an application for the .xxx domain registry in March.

Today's Internet space is limited to only 22 gTLDs (such as .com, .net, .org and .info) and numerous country code top level domains (ccTLDS such as .us and .ca).  Now, companies will be able to apply to own their own gTLD registry.  The four-month initial application period will begin on January 12, 2012, and is limited to only 1,000 domain name extensions.  ICANN anticipates that applications in the first round will include .canon, .eco, .green, .berlin and .paris.  In addition, the new system provides for gTLDs written in native characters, such as Arabic, Chinese, Greek and Cyrillic.

The cost to apply for and maintain a gTLD is not insubstantial and probably beyond the reach of most franchisors-ICANN requires an application fee of $185,000, plus a $25,000 annual fee to operate the registry and the possibility of per-domain fees.  ICANN has approved an auction system for conflicting gTLD strings, which could escalate the costs for a popular extension exponentially.  Experts have estimated that the cost to obtain and operate a gTLD, including setting up the technical and other infrastructure and ongoing maintenance, could run well into the seven-figure range.  Organizations considering applying for a new gTLD should first determine whether the significant investment is worth the potential marketing boost, and then work with an expert in the area to start collecting the large amount of information that will be required of applicants.  Companies should note that, although ICANN expects to offer more application periods in the future, no other rounds have been scheduled-and they may in fact be years in the future.

The dramatic increase of available domains opens a host of issues for brand owners.  Companies will have new opportunities to strengthen their brands by applying for their own gTLDs. With the introduction of new gTLDs, the number of fronts on which infringers may attack also will increase.  Accordingly, trademark owners also could face expensive challenges in defending their marks.  The approved guidebook includes some protections for trademark owners-including a Trademark Clearinghouse to check applications against established brand names and a rapid suspension system for domains found to be infringing trademarks.  However, the details of the protection mechanisms are subject to ongoing negotiations, and companies seeking to protect their brand names on the Internet will need to be prepared to take advantage of these systems.  For example, under the current version of the Applicant Guidebook, inclusion in the Trademark Clearinghouse requires that the mark be registered and actually in use; validated through a judicial proceeding; or protected by statute or treaty.  Thus, common-law trademarks under United States law are not eligible for inclusion in the Clearinghouse.

Franchisors should monitor the gTLD launch closely.  If any important brands or company names currently are not protected through trademark registration, a new filing program may be necessary in order to qualify for the Trademark Clearinghouse. Franchisors also should examine whether their registered marks are in use in at least one country in which they have a registration.  They also must plan to review the gTLD applications list in order to object to any applied-for strings that may infringe on trademark rights.  We will monitor the continued evolution of the gTLD program and will keep you advised of developments as they occur.