The Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit governing body that oversees the Domain Name System, approved a plan that will bring dramatic changes to the Internet naming system. It will now allow the registration of hundreds of new much more specific Internet domain name endings, known as generic top-level domains (gTLDs). With applications for the new gTLDs being accepted beginning in January 2012, any company considering applying should begin the process now.
Under the existing gTLD regime, Internet domain names must use one of the 22 gTLDs (.aero, .arpa, .asia, .biz, .cat, .com, .coop, .edu, .gov, .info, .int, .jobs, .mil, .mobi, .museum, .name, .net, .org, .pro, .tel, .travel and .xxx) or one of the country code top-level domains (ccTLDs) (such as .us or .uk) that have been previously approved. Under the newly announced program, domain addresses can end with almost any word and any combination of characters, providing businesses, governments and communities with the ability to end their Internet addresses with a name of their own choosing. This action could result in brand-specific gTLDs such as .coke or .ford; geographically related extensions such as .boston or .nyc; and industry-related domain extensions such as .law, .sports or .news.
ICANN predicts that the new regime will have far-reaching impact: “New gTLDs will change the way people find information on the Internet and how businesses plan and structure their online presence. Virtually every organization with an online presence could be affected in some way.” See www.icann.org/ (6/20/11 press release). ICANN believes the changes will be beneficial, “provid[ing] a platform for the next generation of creativity and inspiration,” according to Peter Dengate Thrush, chairman of ICANN’s board. Id. The new gTLD regime will begin on January 12, 2012.
The Application Process
The details of the new gTLD system are set forth in the gTLD Applicant Guidebook, a 352-page ICANN publication that provides a detailed guide to the application process. The proposed final Applicant Guidebook is available at www.icann.org/.
ICANN plans to accept applications for the first round of new gTLDs from January 12, 2012, to April 12, 2012. The initial application round is open only to established corporations, organizations or institutions. Individuals and sole proprietorships must wait for the second round. Applicants must demonstrate the operational, technical and financial ability to run a domain name registry and to comply with the associated requirements. Applicants must identify their directors, officers, partners and major shareholders, and ICANN will perform background checks on the entities and individuals. Applicants must also provide documents proving their legal status and financial statements covering their most recently completed fiscal years.
ICANN will assess the applications pursuant to its Applicant Guidebook, which outlines the criteria and requirements for seeking a new gLTD, and features the 50 questions that all applicants must answer. ICANN reserves the right to deny applications based on this criteria. Grounds for objections include:
• The gTLD string infringes existing legal rights of a trademark owner(s)
• The gTLD string is confusingly similar to an existing TLD or another applied-for gTLD string
• The gTLD string is contrary to generally accepted legal norms of morality and public order
• There is opposition to the gTLD application from a significant portion of a targeted community
ICANN says it will post the public portions of all gTLD applications within two weeks of April 12, 2012, and will post the results of its initial evaluations of the applications in November 2012. Given this timeline, new gTLDs approved by ICANN and not formally objected to by other parties could begin to go live in early 2013.ICANN will process gTLD applications in “batches,” with the first batch limited to 500 applications and subsequent batches limited to 400 applications. ICANN expects to issue at least 300 new gTLDs per year and will not issue more than 1,000 new gTLDs per year.
The downside to this new program is the price. A company, government or individual that wants to create its own domain suffix must pay $185,000, including an initial $5,000, to apply. There is also a $25,000 annual fee to run the registry, in addition to the actual expenses of setting up and operating a registry, including those associated with software, hardware and telecom services. Because of the expense of this process, which could reach millions of dollars, the applicant pool will likely consist of large brands focused on protecting themselves from brand infringement or creating a competitive advantage.
Businesses will have to decide whether this application fee, the cost and time of preparing the detailed application, the effort of technically maintaining a domain, and any future marketing of the new domain address to an unfamiliar audience are worth creating a domain name brand.
What Should Individual Businesses Do?
Keeping ICANN’s projected timelines in mind, companies should consider whether they want to invest the time and resources to apply for new gTLDs. If they do, they should familiarize themselves with the Applicant Guidebook, the application form and the required documentation.
Obviously, the critical decision is whether there is an appropriate business reason to apply for a gTLD. Market positioning and long range business goals must be evaluated alongside the costs associated with this opportunity.
For more information on this alert, please contact one of the lawyers listed below:
This article was originally published by Bingham McCutchen LLP.