ALM Properties, Inc.
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Trademarks at Risk
The Internet's address system is about to undergo its largest expansion since it was first created in the 1980sa change that will force companies to do more work and spend more money to protect their brands, lawyers say.
Many brand owners and organizations have already taken steps to protect themselves by formally objecting to some of the almost 2,000 new applied-for top-level domains (TLDs) that are under review by the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization that coordinates domain names and is overseeing the expansion. TLDs are the string of characters to the right of the "dot," such as .com and .net; there are currently only 22 such domains.
The expansion allows companies and organizations to create their own TLDs. Some of the applied-for strings are brand-based domains, such as ".nikon," ".americanexpress," and ".chrysler." Others are concept- and industry-themed domains, such as ".insurance," ".art," and ".wine." Another group includes city and community domains, such as ".nyc" and ".paris." Regardless of the type, some companies examined these new domains and saw trouble.
"You don't have to be a trademark lawyer to figure out there will be controversy," says Peter Brody, a partner at Ropes & Gray who specializes in intellectual property.
Roughly 274 formal objections against new first-level domain applications have been filed, according to ICANN. An estimated 67 of these objections concerned "string confusion"two or more entities applying for the same or very similar domain string. About 13 separate applications were initially filed for the domain ".app," for example, and 11 were filed for ".home, according to ICANN's records." Even ".law" got in on the act, with six separate applications filed for that domain.
Another 113 objections were filed by a so-called community of interest, ICANN said. This category covers objections to a proposed domain on the grounds that the applicant doesn't adequately represent the interest of that community. The sportswear company Patagonia Inc., for example, filed an application for a top-level domain but objections have been filed by various representatives in Argentina and Chile, who argue that Patagonia is a region in South America and the company's application has no support from the relevant national or regional governments.
Finally, 71 objections were filed by entities claiming that a proposed domain string infringes their trademark or legal rights. "If a proposed string is even close to your brand name, it could hurt your business," Brody says. "So companies with registered trademarks would file an objection if they felt a proposed domain was confusingly similar to their brand."
The TLD application process was open to anyone, but most of the applicants were corporations, major Internet stakeholders, or Web speculators. This was not surprising, as there was a hefty price tag (nearly $200,000) for each TLD application, plus annual maintenance fees for those that succeed in obtaining a domain. The dispute resolution process entails additional fees.
And that process is also complex. ICANN has said that conflicts arising from community-based objections, for example, will be resolved through a scoring system that will determine which is the more worthy party. For situations where an entity objects to an applicant's domain string on the basis that it is identical or confusingly similar to its trademark, ICANN will use a different dispute resolution process. And for standard applications where two or more applicants are seeking the same domain, the domain owner may be determined through an auction.
ICANN will release the new domain names gradually, and companies will have to remain vigilant about protecting their marks in these new Internet domains, attorneys say. Hoping to make that process easier and discourage the kind of pesky cybersquatting that has plagued the Internet domain system, ICANN has launched a Trademark Clearinghousea registry for second-level domains (SLDs) designed to help companies and individuals protect their rights as the new top-level domains roll out. SLDs are those characters to the left of the "dot" in a Web address."By opening up hundreds of new domains, there's potential for even more cybersquatting," says Jonathan Gelchinsky, a partner and trademark expert at Finnegan, Henderson, Farabow, Garrett & Dunner.
The Trademark Clearinghouse is intended to serve as a central repository for trademark data. Companies can register their marks with the clearinghouse for an annual fee of up to $150 per name they want protected, and receive notice when someone else has registered for an SLD name that is identical to that mark.
If a company also wants to have the opportunity to register its mark as an SLD whenever a new TLD is launched, it can opt in to take advantage of a "sunrise period" that will give it notice 30 days in advance of the standard notification period.
Brand owners with many different marks will have to be especially vigilant about monitoring, attorneys say. They should know the trademarks they want protected, look at the TLDs being released, and decide where they might want to apply for SLDs associated with the marks.
"It's a brand owner's nightmare," says Joanne Ludovici, head of the global trademark prosecution practice at McDermott Will & Emery. "About 1,400 new [TLDs] will be released, and companies have to look out for all of them."
Many companies have yet to figure out what trademarks they want to register and which TLDs and SLDs will be relevant so they can more easily monitor for infringement and enforce their rights if necessary, says Lena Carlsson, vice president of domain strategy at??? CSC Digital Brand Services, a domain name management and consulting company. "They are still only vaguely aware of the impact this is going to have," she says. "But it's the biggest expansion of the online name space we've ever seen, and it opens up a lot of new challenges."
Lawyers say the new system means that all brand owners, including those with only one or two trademarks, will have to spend more money and time monitoring domainseven in TLDs that have nothing to do with a trademark holder's industry. "Everyone is looking at an added layer of cost and complexity moving forward," Ludovici says. "It's an added expense and burden, and we don't know if the benefits will outweigh the costs."
While companies would be wise to examine their IP portfolios and figure out a strategy to protect their marks in light of the new domains, they should note that the new system won't protect them against lawsuits down the road, lawyers say. While new domain owners are required to notify entities with a mark registered in the clearinghouse of applications for an SLD that conflict with that mark, they are not obligated to deny the applications. And they are only required to provide brand owners with notice for limited times.
"Litigation is likely to followjust like it did with the dot-coms," Ludovici says. "But this time there are many more domains, so the litigation will likely be on a far larger scale."