The Massive Impact Generic, Top_Level Domains (gTLDs) Could Have on Your Business and Why You Should Be Aware and Concerned

You may be asking yourself, what is a “gTLD”? A gTLD is one of categories of top-level web domain designations of which there are currently 22. These are the .com, .org, .edu, .biz suffixes that end a web address like amazon.com

Top-level Domains are coordinated by ICANN, the Internet Corporation for Assigned Names and Numbers. ICANN was formed in 1998 and is a not-for-profit corporation with participants from all over the world. Their role is to develop policy on the Internet’s unique identifiers.

In June of this year, ICANN unveiled plans that would allow the expansion of generic top-level domains, beyond the existing 22, to include just about anything, taking us from “.com” to “.whatever”. For example, instead of a typical URL like Amazon.com, the gTLD can now be “.amazon” and Amazon could then offer distinct URLs by product, like books.amazon or movies.amazon. Or Amazon (or some other company) could register a non-branded gTLD like “.books” and “Amazon.books” could be the URL. As it stands today, this scheme could go into effect within a few months.

Some marketers might welcome this change and the domain name branding possibilities it creates. Many have been quite vocal in their opposition to the scheme. This week, the Interactive Advertising Bureau (IAB) in the United States, as well as the Association of National Advertisers (ANA) registered their opposition to the plan suggesting that it could well cost advertisers hundreds of thousands (possibly millions) of dollars. In addition, there does not seem to be consensus in favour of this scheme among a myriad of stake holders (business, academic, government and agencies_. The ANA has stated that “The paucity of support suggests an overwhelming rejection of ICANN’s assertions that there would be ‘benefits’ for business and industry at large.”

How will this affect Canadian businesses and brands? The IAB believes that the scheme “which could include domain endings that focus on specific trademarked brand names such as .coke, .molson, .rbc, .facebook or .timhortons, would come at an extremely high cost to publishers and advertisers, and would also offer “cyber squatters” an opportunity to harm a brand’s integrity and/or profit greatly from their bad-faith domain registrations.”

To protect your brand from cyber squatters, you currently have the following options:

 
1- Secure your own gTLD whether it be a .yourbrand or a .yourproduct or .yourproducts, meaning several gTLDs. By the way, the ICANN evaluation fee is USD $185,000 which must be paid prior to the beginning of the process. There is also an additional $25,000 USD annual maintenance fee. However, according to Cassels Brock Lawyers, “these fees are just the tip of the iceberg and the real costs may be in the millions*.” (Please references below)

2- Continually monitor the actions of third parties who are trying to register new gTLDs. This means potentially taking legal action to defend your company’s legal rights and trademarks. Defending a trademarked gTLD may be both costly and complicated (for example, while a “.Kleenex” domain may refer to an obvious trademark, VISA, the credit card brand may have more trouble defending the “.visa” domain if a group of immigration lawyers attempts to obtain it_.

The monitoring does not stop there. What if a company successfully secures a non-trademarked, product domain name like “.cars”, “.car”, “.auto” or “.auto”? Is FORD then obligated to register multiple domains with the holders of these gTLDs in order to secure bmw.cars, ford.auto, ford.car and so on?  Can or will the holders of the “.cars” domain register “ford.cars” to a company other than Ford?

3- Register your complaint with ICANN directly at http://www.icann.org/en/contact/ and encourage Canadian organizations like the IAB Canada,ICA, CMA, ACA and others to get involved with the goal of delaying, modifying or reversing the ICANN decision.

4- Two or more of the above.

The situation may change in light of all the protest, but until then it is very important that your company’s management, marketing, e-commerce, web and legal teams are aware of this situation and well informed. Included below is the ICANN announcement of June 20, 2011 as well as some important voices in the growing international chorus of opposition to the controversial ICANN Top_Level Domain Program.

ICANN Announcement

ICANN Approves Historic Change to Internet’s Domain Name System
Board Votes to Launch New Generic Top_Level Domains
20 June 2011
Singapore | ICANN’s Board of Directors has approved a plan to usher in one of the biggest changes ever to the Internet’s Domain Name System. The Board vote was 13 approving, 1 opposed, and 2 abstaining.
During a special meeting, the Board approved a plan to dramatically increase the number of Internet domain name endings — called generic top-level domains (gTLDs) — from the current 22, which includes such familiar domains as .com, .org and .net.
“ICANN has opened the Internet’s naming system to unleash the global human imagination. Today’s decision respects the rights of groups to create new Top Level Domains in any language or script. We hope this allows the domain name system to better serve all of mankind,” said Rod Beckstrom, President and Chief Executive Officer of ICANN.
New gTLDs will change the way people find information on the Internet and how businesses plan and structure their online presence. Internet address names will be able to end with almost any word in any language, offering organizations around the world the opportunity to market their brand, products, community or cause in new and innovative ways.
“Today’s decision will usher in a new Internet age,” said Peter Dengate Thrush, Chairman of ICANN’s Board of Directors. “We have provided a platform for the next generation of creativity and inspiration.”
The decision to proceed with the gTLD program follows many years of discussion, debate and deliberation with the Internet community, business groups and governments. The Applicant Guidebook, a rulebook explaining how to apply for a new gTLD, went through seven significant revisions to incorporate more than 1,000 comments from the public. Strong efforts were made to address the concerns of all interested parties, and to ensure that the security, stability and resiliency of the Internet are not compromised.
ICANN will soon begin a global campaign to tell the world about this dramatic change in Internet names and to raise awareness of the opportunities afforded by new gTLDs. Applications for new gTLDs will be accepted from 12 January 2012 to 12 April 2012.

August 15, 2011
IAB Opposes New Web Domain Program From ICANNControversial ICANN Plan Includes Exorbitant Fees for Web Publishers and
Brand Marketers & Opens Doors to ‘Cyber Squatters’
NEW YORK, NY (August 15, 2011) — The Interactive Advertising Bureau (IAB) today called on the Internet Corporation for Assigned Names and Numbers (ICANN) to withdraw its controversial new domain-naming plan, saying that the program to assign hundreds of thousands of new domain names would cause incalculable financial damage to brand owners, including the hundreds of media brands in its membership. These “top-level domain” addresses, which could include domain endings that focus on specific trademarked brand names such as .coke, .jetblue, .cnn, .facebook or .verizon, would come at an extremely high cost to publishers and advertisers, and would also offer “cyber squatters” an opportunity to harm a brand’s integrity and/or profit greatly from their bad-faith domain registrations.

“ICANN’s potentially momentous change seems to have been made in a top-down star chamber. There appears to have been no economic impact research, no full and open stakeholder discussions, and little concern for the delicate balance of the Internet ecosystem,” said Randall Rothenberg, CEO and President, IAB. “This could be disastrous for the media brand owners we represent and the brand owners with which they work. We hope that ICANN will reconsider both this ill-considered decision and the process by which it was reached.”

The IAB move followed strong criticism of the ICANN plan by the Association of National Advertisers (ANA_. The ANA has labeled the plan as economically unsupportable, stating that it is likely to cause irreparable harm and damage to its membership and the Internet business community in general. At the same time, according to the ANA, the program contravenes the legal rights of brand owners and jeopardizes the safety of consumers.

These new domain endings are expected to roll out in late 2012.

ANA Cites Major Flaws in ICANN’s Proposed Top_Level Internet Domain ProgramLetter to ICANN President Calls for Abandoning Potentially Disastrous Program
Public Comments Provided to Department of Commerce Reinforce
ICANN’s Lack of Input from Global Internet Community, Overstepping its Mandate
New York, NY – August 4, 2011 – In a letter to Mr. Rod Beckstrom, President, Internet Corporation for Assigned Names and Numbers (ICANN), the ANA (Association of National Advertisers) today detailed major flaws in the proposed ICANN program that would permit applicants to claim virtually any word, generic or branded, as Internet top-level domains. In the first year alone, the ICANN plan would allow as many as 1,000 new top level domains with the same cap every year thereafter.
Specifically, the ANA cites ICANN’s lack of a bottom-up input process involving the global Internet community, insufficient research and guidance from expert authorities, inadequate oversight by the U.S. Department of Commerce (DOC) and potentially disastrous consequences if the program is implemented in January 2012, as planned. The ANA has outlined similar criticisms in its public comments to the DOC, submitted July 29, 2011.
Acting on behalf of its members – the more than 400 companies, representing in excess of 10,000 brands that collectively spend over $250 billion in marketing, communications and advertising each year – the ANA argues that implementation of the ICANN program is economically unsupportable and is likely to cause irreparable harm and damage to its membership and the Internet business community in general. At the same time, according to the ANA, the program contravenes the legal rights of brand owners and jeopardizes the safety of consumers.
“By introducing confusion into the marketplace and increasing the likelihood of cybersquatting and other malicious conduct, the ICANN top-level domain program diminishes the power of trademarks to serve as strong, accurate and reliable symbols of source and quality in the marketplace,” says Bob Liodice, President and CEO, ANA. “Brand confusion, dilution and other abuses also pose risks of cyber predator harms, consumer privacy violations, identity theft and cyber security breaches. The decision to go forward with the program also violates sound public policy and contravenes ICANN’s Code of Conduct and its undertakings with the United States Department of Commerce.”
The ANA letter explicitly contends that material gains are sorely lacking for commerce, competition and innovation. In contrast, the ICANN program would throw the domain name universe into substantial confusion while generating untold costs to domestic and international businesses and consumers.
“In our research, we have found no consensus for support for the program among businesses, consumers, academics, researchers, agencies or government,” explains Douglas J. Wood, ANA’s General Counsel and a partner with Reed Smith LLP. “The paucity of support suggests an overwhelming rejection of ICANN’s assertions that there would be ‘benefits…’ for business and industry at large.”
“These concerns are especially heightened in an economy that day-by-day continues to pose ever-increasing challenges and unprecedented uncertainties for businesses and consumers worldwide,” warns Liodice. “Another layer of unnecessary costs is the last thing the buying and selling public need in the middle of the worst economic crisis since the Great Depression.”
ICANN’s justification for its proposed program – increasing competition, promoting innovation, addressing the shortage of second-level addresses and helping differentiate products and services – is flawed, according to the ANA, and fails to represent a consensus approach.
The ANA further contends the program will divert scarce corporate resources that could otherwise be deployed for job creation, capital investment and economic expansion; contravene the legal rights of brand owners, such as those which belong to ANA members; exacerbate the already challenging problem of protecting consumers from online confusion and unlawful invasions of their personal privacy; diminish cyber security and increase the likelihood of predatory cyber harm.
For consumers, adoption of the new program poses significant risks. “The Internet can turn into a veritable minefield for criminal activity when it becomes easier for online felons to cloak themselves in the name of a trusted brand. One can only imagine the harm such operators could have if they owned sites with top-level domains attractive to children, to the aged or to otherwise vulnerable citizens,” explains Liodice.
For marketers, there are potentially equally serious risks, according to the ANA. “Brand owners will face a ‘Hobson’s choice.’ They will feel compelled to divert valuable marketing, legal, financial and technical resources to managing top-level domains or risk brand dilution,” says Liodice. “They are essentially being forced to buy their own brands from ICANN at an initial price of $185,000.”
The ANA asserts that ICANN is now moving forward with the program despite the conclusions of its own experts, ignoring studies in its own report entitled “Rationale for Board Decision on Economic Studies Associated with the New gTLD Program.” Wood noted, “This so-called ‘rationale’ falls short of ICANN’s own mandate to conduct economic studies. Rather than calling for further expert analysis, ICANN dismisses the economic evidence in its own studies and opts for a default justification of ‘competition’ in which any top-level domain may be adopted. That’s a circular argument that lacks foundation.”
The ANA concludes that ICANN’s program is an example of public policy gone awry. “On behalf of our members, and with input from our global partners in the marketing community, we have no choice but to vigorously oppose implementation of this program,” says Liodice. “We have asked ICANN to sit down with us and work this out, but abandoning the proposed program is a necessary first step and then if any change in the top-level domain architecture is to be adopted, it should be justified by sound research, compliance with ICANN’s legal and contractual obligations and with a true consensus process.” The ANA has requested a written response from ICANN to its letter by August 22, 2011.

4A’s Opposes Changes in Internet Domain Purchase Program

4A’s President and CEO Nancy Hill today joined other marketing and advertising groups in strongly opposing proposed changes in the sale and assignment of Internet domain names.Hill was reacting to a letter to advertisers from the Internet Corporation for Assigned Names and Numbers (ICANN) which discounted marketers’ concerns about the Corporation’s proposal to substantially change the way Internet domain names can be assigned.The new ICANN rules, if adopted, would allow applicants to claim virtually any word, generic or branded as a domain name, resulting in confusion of brand identity and dilution of brand history and value.

Nancy Hill issued this statement: “We are very disappointed in the position taken by ICANN concerning the
assignment and sale of new domain names. These changes would cost brand owners billions of dollars, severely, if not irreparably, diluting the value of trusted and respected brand names, as well as abrogate the good work 4A’s members have done on behalf of their clients.All marketers share the goal of a stable global marketplace, served by an Internet system that consumers can rely on to accurately reflect the quality and history of a product or service. ICANN’s actions would remove that trust and place consumers at a significant disadvantage in making marketplace choices and decisions.We join with advertisers, manufacturers, media and consumer groups in strongly urging ICANN to reconsider this ill-advised and harmful proposal.”

The New gTLDs and How to Cope with Them by John McKeown
Published: 03/31/2011, can be viewed at  http://www.casselsbrock.com/CBArticle/The_New_gTLDs_and_How_to_Cope_with_Them