Get ready for the next great land rush, because the Internet is about to expand. Top-level domains, now restricted to 22 variations like .com, .edu, .net and .gov will soon be limitless. Companies have already petitioned ICANN (the Internet Corporation for Assigned Names and Numbers) for the right to be the official registry of new top-level domains, which may now take the form of whole words like .health and.books.[i] These new domains are called “generic top-level domains.”[ii]

As trademark owners can attest, the Internet is already a difficult place to police unauthorized uses of intellectual property. Cyber-squatters register domain names that contain the legitimate trademarks of others (or commonly misspelled variants), hoping to trick unsuspecting visitors into viewing their webpages. With the availability of thousands of new domains, cyber-squatters will have thousands of new playgrounds. The coming expansion of domain names to a theoretically limitless number is cause for concern for the trademark owner.[iii]

The trademark rights-protection community is worried that a new generation of cyber-squatters is crouching at the door. However, trademark owners have gained certain protections within the new generic top-level domain regime through negotiations with ICANN. Some of these protections are already in place, and some are still being worked out. As the launch of several top-level domains is only months away, now is a good time to plan for the protection of one’s trademark rights.[iv]

The situation remains fluid, but we know enough now to advise trademark owners about a protection regime called the Trademark Clearinghouse. This is a system which will give owners of registered marks two important safeguards – also known as rights-protection mechanisms (RPMs).

The Trademarks Clearinghouse has been established to protect trademark owners

The Trademarks Clearinghouse is essentially a verified list of registered marks eligible to receive the benefit of rights-protection mechanisms. RPMs were built into agreements between ICANN and the administrators of the new domains, known as registries. There are two mandatory RPMs and some optional RPMs. The availability of optional RPMs varies depending on the owner of the registry.

The two mandatory RPMs across all domains are: access to a sunrise period, in which a trademark owner can purchase a domain name before the general public; and notice of a potentially adverse third party domain name registration.

Sunrise Period allows for early access in which to purchase new domain names

A sunrise period is a mandated 30-day period during which a rights holder in the Clearinghouse will have access to registration of a domain name before the general public. Only by registering a mark in the Trademarks Clearinghouse will trademark owners be notified of the opening of a sunrise period. As a member of the Clearinghouse, the trademark owner may purchase the domain name containing its mark.

By way of example, let’s fast-forward to the eventual opening of the top-level domain for .music. The owner of a trademark registration for the mark BRAND X who is participating in the Trademark Clearinghouse will be able to register the domain name brandx.music or brand-x.music during the .music sunrise period before members of the general public (notably, cyber-squatters).

The registry selected to administer the .music domain may also elect to open up the sunrise period to industry-specific clients in addition to trademark owners. If BRAND X is somehow related to music, or if the owner believes that the .music domain will become otherwise important, it may see value in registering the domain. However, if BRAND X is not related to the music industry and would rather not register its trademark on this top-level domain, then Brand X can elect not to participate in the sunrise period.

During Notice Period trademark owners are told who has registered their trademarks as a domain name

The second rights-protection mechanism is the notice period. Following the sunrise period, a 90-day notice period will start upon the launch of each new generic top level domain.

During this period any third party who attempts to register BRAND X on a new generic top-level domain will see a screen that notifies the third party that BRAND X is subject to a trademark registration and that the third party should proceed only if it is sure that it has a right to use the mark BRAND X.

Further, Brand X (or its agent) will receive an email alerting it to the fact that a third party has registered a domain which matches Brand X’s registered trademark.

While cyber-squatters may very well ignore the notice screen, some commentators believe that the notice screen could be used as evidence of bad faith on the part of the domain name registrant if a UDRP proceeding is instituted.[v]

Unfortunately, ICANN has provided for a mandatory notice provision lasting only 90 days from the date of the launch of the top-level domain due to the costs borne by registries in providing the notice. Left unexplained by ICANN is the sufficiency of a 90-day notice period when cyber-squatters can simply wait until Day 91 to register a new domain without having to view a rights notice.

Some generic top-level domain registries, such as Google, have indicated that they will provide notice to the brand owner and to the potential registrant of the trademark claim for the life of the registry.

Additional mechanisms will be offered to protect trademarks

In addition to these two RPMs, some registries, like Google, say they will provide additional protections to trademark owners who participate in the Trademark Clearinghouse, but the details are yet to be fleshed out. Some registries will allow Trademark Clearinghouse participants to block any entity from owning domains comprised of registered trademarks.

As an example, the largest top-level domain name registry applicant, Donuts Inc., says it will offer members of the Trademark Clearinghouse the ability to purchase a five-year “block” of its trademark across all registries owned by Donuts[vi] (of which there will be more than 200).

A block will operate much like a provision pioneered during the .xxx domain name launch whereby a trademark owner can pay a fee to prevent any person from owning a domain name on the top-level domain that incorporates a registered mark for a fixed period (typically five years). The block will be cheaper to acquire than individually registering the domain on all the top-level domains administered by a single company.

The two mandatory RPMs and any additional RPMs will be available to Trademark Clearinghouse members only. Participation in the Trademark Clearinghouse carries an annual fee of $125 and requires proof of current use of a mark and an existing registration in nearly any country. Charges related to legal work necessary to enroll in the Clearinghouse, enforcement proceedings against third parties, or registering one’s own domain during a sunrise period are not included.

The Clearinghouse will be run by Deloitte and IBM, who have won a bid to administer it. Each mark will be protected along with up to ten “closely related” variants of each mark. For instance, BRAND X will be able to protect brandx, brand-x and brand_x. A participating trademark owner will continue to receive notices of sunrise periods as new domains roll out over the next few years.

A streamlined dispute resolution procedure has been introduced

Finally, those familiar with the UDRP process should take note that a new streamlined dispute-resolution procedure, called the URS (Uniform Rapid Suspension System), has been set up for clear-cut cases of trademark abuse by cyber-squatters.

Unlike in a UDRP proceeding, a trademark owner prevailing in a URS proceeding does not get the domain name transferred to it, but does win a suspension of the domain name for the duration of the domain name registration period, if it can show that the domain name was registered in bad faith.

We recommend involvement in the Trademark Clearinghouse to protect your valuable brands

Many trademark lawyers are taking a wait-and-see approach before recommending participation in the program to clients, perhaps because recourse to a UDRP proceeding or an Anticybersquatting Consumer Protection Act claim will continue to be available to the new top-level domains. Conversely, there will be no notice provisions for domain names in the original 22 top-level domains.

We believe that trademark owners who already monitor their marks against third party domain names, or those who have already fallen victim to the registration of their trademarks (or marks similar thereto) as domain names by third parties, should sign up for the Trademark Clearinghouse and characterize the cost as part of the necessary policing of one’s mark. While the Clearinghouse’s notice provisions are not as robust as hoped, participation in sunrise periods for domain names related to one’s industry will prove worth the expense.

On the other hand, if the public largely refrains from surfing to domains outside of the known ones, like .com and .net, and new generic top-level domains like .books and .music go the way of .mobi, then a trademark registrant can simply opt out of the Trademark Clearinghouse when the next annual fee comes due. Because the initial investment is only in the hundreds of dollars, it is better to participate and retain the ability to register one’s trademark during the sunrise period of industry-specific generic top level domains.

We are available to answer questions you may have about the Trademark Clearinghouse, so feel free to contact us at your convenience.

[i] Some companies have applied to be appointed the official registry for a top-level domain so that they can levy registration charges on companies who wish to register individual domain names on that top-level domain. Other companies have applied so that they can own and administer an entire top-level domain for their own marketing purposes.

[ii] It is important to understand what a generic top level domain is and how the landscape of the internet may change in the coming years. Until now, in addition to the country-specific domain names like .ca (for Canada), there have been 22 top-level domains. The best-known of these is .com, but also among the 22 are .edu, .net, .tv, .biz, .info, .mobi and .xxx. Several of these top level domains are widely used, but many are not.

[iii] Whether or not web traffic will actually funnel to any of these new top-level domains is anyone’s guess. One might expect that people seeking information about healthcare or medicine may prefer to receive that information from websites parked at .health or .drug. If key players inside an industry begin to host information on industry-specific websites, it could spur a trend where search results are tailored to top-level domains related to an industry. (Google is the second-largest applicant for top-level domains and thus has a vested interested in the vibrancy of these new domains.)

[iv] Industry insiders expect the process of launching top-level domains to take off by late summer or early fall.

[v] A UDRP (Uniform Domain Name Dispute Resolution Policy) proceeding is an arbitration between a trademark owner and a domain name registrant and can result in the transfer of the domain name from the registrant to the rights holder if use and registration of the domain name are made in bad faith.

[vi] Donuts, Inc. is a new company funded by private equity funds and venture capitalists. Its goal is to buy up as many generic top-level domains as possible and become the internet’s largest registry. More information is available at www.donuts.co