Drilling for opportunities on the internet: Exploring ICANN's new gTLD program

Richard Donnell, Vorys, Sater, Seymour and Pease, Washington, DC

In today's competitive marketplace, all businesses must have an online presence to promote their products and services, including a robust website to inform and engage customers, investors, analysts, and others. The domain name used with a website (e.g., OGFJ.com) ideally corresponds to the company name or brand, so it is easily recalled by the public and conducive to advertising and marketing activities.

When the preferred domain name is taken in the desirable .COM space, the available alternatives are often less than ideal. This shortage of prime real estate on the internet, at least for those willing to pay for the privilege of having their own custom domain extension, may no longer be an issue after this year.

The new gTLD program

The domain name system, or DNS, is about to undergo a significant change that will affect all businesses with an online presence. The Internet Corporation for Assigned Names and Numbers (ICANN), the organization that oversees the DNS, approved an expansion program that allows for the introduction of hundreds (and potentially thousands) of new "generic top-level domains" (gTLDs), the three or more letters that appear to the right of the last "dot" in a domain name. Examples of existing gTLDs include the familiar .COM, .NET, and .ORG domain extensions.

The new gTLD program allows a business or organization to create and operate its own custom domain extension. Instead of using a domain name such as COMPANYNAME.COM or TRADEMARK.COM, a business can create and control its own unique domain ending that corresponds to its brand, such as .EXXON or .SHELL.

ICANN began accepting applications for new gTLDs on Jan. 12, 2012, and the application period will remain open until April 12, 2012. The application requires detailed information on the applicant's business and proposed use of the gTLD and its financial, technical and operational ability.

New gTLDs must contain between 3 and 63 letters (alphabetic characters A-Z) and may include Internationalized Domain Names (IDNs) comprised of non-Latin characters such as Chinese or Arabic. The initial application fee is $185,000 per gTLD. In addition, successful applicants must pay an annual fee of $25,000 and bear the costs and expense related to operating a "registry" – the master database of all domain names registered in the gTLD.

Potential uses of a new gTLD

An applicant that successfully applies to operate a new gTLD controls who can register second-level domains within the gTLD. Each application for a new gTLD must be designated as a "standard" or "community-based" application. Many applications by brand owners will be standard applications to operate a "closed" gTLD for internal business purposes. Applications designated as community-based will be operated for the benefit of a specific community and subject to additional requirements to verify that the applicant represents the community referred to by the gTLD.

A number of the new gTLDs, however, will be less restrictive. The operator of a new gTLD comprised of a generic term for a common interest or activity may sell domain registrations to the general public.

A new gTLD can be incorporated into a company's marketing strategy and will allow for greater control over its online presence. The use of a new gTLD may also have security benefits if the public recognizes that domain names and websites within a specific gTLD are associated with a trusted source. Similarly, if the operator of an industry-specific gTLD verifies the credentials of all registrants, a website within that gTLD would indicate that the business meets certain industry or professional standards.

It is expected that many new gTLDs will be directed at specific industries or interest groups, with domain registrations limited to members of the relevant industry or group. For example, the operator of .DRILL may target exploration and production companies or the .LNG extension might be directed at contractors and service companies involved with liquefied natural gas. A public company such as Transocean Ltd. could apply for .RIG, which relates to its business activities and its ticker symbol, or The Organization of the Petroleum Exporting Countries could apply for .OPEC and restrict use to its members.

New gTLDs that correspond to a generic term rather than a brand or company name will be of particular interest to businesses in the industry referenced by the proposed gTLD. Examples of potential new gTLDs that would be relevant to the oil and gas industry include .OIL, .GAS, .CRUDE, .WTI, .BRENT, and .ENERGY.

It is possible that ICANN will receive multiple applications for the same gTLD, which triggers an auction process with the new gTLD going to the highest bidder. When the application period closes in April, ICANN will publish the list of applicants and the applied-for gTLDs.

Trademark protections

The availability of new gTLDs should encourage innovative business models and create new opportunities for brand owners to connect with their customers. On the other hand, the launch of hundreds of new gTLDs will likely cause headaches for businesses forced to monitor and enforce their trademark rights and protect their brands in hundreds of new gTLDs.

The new gTLD program mandates certain trademark protection mechanisms specifically created for brand owners. ICANN adopted procedures to protect trademarks within the new gTLDs and object to applications for new gTLDs that are confusingly similar to trademarks. In addition, gTLD operators must provide certain trademark protection services prior to launch of a new gTLD and during the initial period when registrations within the gTLD are made available to the public. Unfortunately, many of the rights protection mechanisms are only required for a limited period when a new gTLD is first launched.

Another brand protection measure in the new gTLD program is the creation of a Trademark Clearinghouse, a database and central repository for information on trademark rights where brand owners can record their marks. Trademarks registered with the US Patent and Trademark Office, or the equivalent authority in other countries, are eligible for inclusion in the database. The Trademark Clearinghouse will be consulted in carrying out the rights protection mechanisms required under the new gTLD program.

What to do next

If your organization intends to apply for a new gTLD, discussions with stakeholders from IT, business, legal, marketing and other departments must begin now. Many businesses will reasonably decide that the significant cost of acquiring and operating their own gTLD does not make economic sense. Others companies may apply as a defensive measure to secure their brand or because they see an opportunity to have a unique domain extension that may not be available again. In any case, all businesses should utilize the trademark protection and dispute resolution procedures available to guard their trademarks; develop a strategy for defensive domain name registrations in the new gTLDs; and take advantage of priority registration services in gTLDs relevant to their business or industry.

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