Five Steps to Protect Your Interests Online

Five Steps to Protect Your Interests Online

Among those participating in this new virtual land rush are traditional brick-and-mortar manufacturing businesses such as General Motors, Bridgestone and Honeywell.

The Internet Corporation for Assigned Names and Numbers (ICANN) met in Prague in late June shortly after revealing 1,930 applications for new generic top level domain names (gTLDs) -- the name to the right of the “dot” in web addresses. Among those participating in this new virtual land rush are traditional brick-and-mortar manufacturing businesses such as General Motors Co. (IW 500/4), Bridgestone Corp. (IW 1000/113) and Honeywell International Inc. (IW 500/37).  What’s going on here?

ICANN, the California-based nonprofit corporation responsible for the management of domain names on the Internet, will spend several months evaluating and approving these applications. In the end, the process will dramatically expand the current array of top level domains beyond the familiar .com, .net, and .biz when they come on line beginning in 2013. 

However, such a dramatic change in the organization of the Internet will affect everyone. If your firm produces parts for the auto industry, will you now need to establish a presence on an .auto domain as well? What if one of the approved top-level domains uses one of your trademarked brands?

The applications were not for the faint of pocket, requiring a $185,000 filing fee for a lengthy and detailed application filed with technical and financial information to show the ability to operate the new domain.  A new company, Donuts Inc., led by a team of experienced Internet insiders, filed 307 applications.  You do the math.

Many applications were filed for industry terms such as .bank, .industry, .auto, .beauty, and .tech.  There were five applications for .baby, including one filed by Johnson & Johnson Inc. (IW 500/19); thirteen for .app; and three for .wow.  Overall, 230 letter strings had more than one applicant, which will lead to negotiation and potential auctions to assign the name.  Each name is unique and ultimately there can be only one of each letter string added to the domain name system (DNS). The complete list can be found at www.icann.org.

A number of industry leaders filed applications for their well-known names and brands.  General Motors applied for .CADILLAC, .CHEVROLET and .GMC, while Ford went for .LINCOLN and .FORD. 

Why Enter This Space? 

So far, the plans for utilizing these new domain names are unclear. In some instances, the applications may be defensive -- they simply want to ensure that no one else gets the name.  The applicants may have filed in the initial round out of concern that there is no set date for a second round, so they filed now to avoid being left behind.  Others may have already developed business models for using these domain names in new ways.

In most instances, the application filed by brand owners and manufacturers are for closed registries, meaning the applicant will own all of the domain names within the domain. This is in contrast to the existing domains such as .com, .net and .biz, which are open registries seeking to generate revenue by selling domain names to third parties.

The closed systems could be used in a variety of ways. A company like J.P. Morgan Chase might use the domain name “.CHASE” to create a specific website for each of its account holders, e.g., “johndoe.chase.”  A retailer such as Amazon might use its domain “.AMAZON” to create a website for each of its products. 

Companies concerned about the integrity of email may enhance stability and security by promoting its domain as a more secure form of email, letting customers know that they can trust messages from “.FORD”, for example.  Other brand owners may find value in having websites and email branded with their name.

The applicants for these new domains face a lengthy evaluation process before coming online.  A public comment period is now open, allowing interested parties to file comments on the applications for consideration by the evaluators. 

Conflicting names will be placed in contention sets for resolution by the competing applicants. If they fail to reach an agreed solution, there will be an auction with the domain going to the highest bidder.  Formal objections can also be filed against the applications on various grounds, including:

(1) an objection that the proposed name is confusingly similar to an existing domain
(2) a legal rights objection based on conflicting trademark rights
(3) a community objection based on the interests of a broader community in the proposed name
(4) a moral rights objection

Once the new domains are lost, brand owners will face concerns over names at the second level -- the space to the left of the dot.  Many brand owners have long been victims of cybersquatters who prey on well-known brands to attract online traffic to pay per click advertising sites or counterfeit product sales.

Companies should be creating an action plan for dealing with the launch of new domains. 

Five Steps to Consider

1. Create a dedicated new TLD team to evaluate and address your company’s needs. This team should include internal representatives of legal, IT and brand management, as well as outside counsel who is knowledgeable about the new rules and procedures.  One of the tasks of this team would be to evaluate the position of major competitors who are filing for new top level domains.  Are they seeking branded domains?  If so, how may those be used to gain an advantage in the market?  Are they seeking domains based on an industry term?  If so, how will that affect others in the industry? 

2. Consider comments regarding domains that affect your interests.  It may be useful to file comments on domains that may affect your company’s interests, or join with others to file comments.  Some companies will prefer to stay off record and engage in direct discussions with the applicants to ensure that their interests are not adversely affected. 
 
3. Prepare to use the Trademark Clearinghouse to record rights. One of the new mechanisms to help protect trademark rights in the second level involves the creation of the new Trademark Clearinghouse.  This will permit brand owners to record trademark rights in one location for use by all of the new TLD registries, instead of the multiple filings that took place in the past.  There are two key benefits of using the Clearinghouse. 

First, if a second level domain name application matches the recorded trademark, the applicant and brand owner with receive a Claims Notice informing the applicant of a potential trademark conflict.  Second, brand owners who register with the Clearinghouse will also have an opportunity to obtain Sunrise Registrations in the new domains, before registration is open to all applicants.  Operated by Deloitte and IBM Corp. (IW 500/10), the Clearinghouse is scheduled to start recording rights in October 2012.
 
4. Take action to fight cybersquatters in the new domains. The guidelines for the new top level domains require all registry operators to adopt a new dispute procedure called the Uniform Rapid Suspension System, or URS.  Based on the existing Uniform Dispute Resolution Procedure, or UDRP, created for the .com domain, the URS is intended to provide a quicker, cheaper method to take down clear cases of infringing domain names. 

The costs and other details of the procedure are still uncertain and as yet no one has been given a contract to run the system.  The remedy available under the URS is takedown, not transfer of the domain name.  The existing dispute resolution mechanisms will still be available as well, for those seeking additional remedies.  The UDRP remains available for brand owners seeking a transfer of the domain name.  Brand owners seeking injunctions and damages can resort to actions in federal court under the Anti-Cybersquatting Consumer Protection Act.
 
5. Educate your management and legal team about the new procedures and challenges online.  The ostrich – “head in the sand” – strategy is tempting but unwise.  The effective path through this changing online world will begin with a firm understanding of the available options, costs and risks.  Outside expert legal advisers can be tapped to help with this education.

Participating in this new online world, and protecting rights in it, involves opportunities and risks.  Given the large number of new domains that could begin operation in 2013, small costs multiplied over numerous registries may be a significant expense. 

Failure to take effective actions may result in the loss of valuable trademark rights, sales and consumer confidence in your brand. 

Now is the time to create and effective strategy and budget for dealing with these issues. 

Mark Partridge is the founder of Partridge IP Law, a Chicago-based law and IP strategy firm (http://www.partridgeiplaw.com). He has worked in intellectual property law for more than 30 years and was named one of the top trademark lawyers in the 2012 edition of The International Who’s Who of Trademark Lawyers.

 

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