ICANN and those gTLDs again: another view

There are invariably two sides to any dispute --
and Merpel is happy to take on her adversaries

Merpel has let off her head of steam concerning ICANN, and this has attracted the attention of World Trademark Review's Adam Smith.  Writes Adam:

"The $185,000 application fee is allegedly calculated on a cost-recovery basis, rather than being a money grab by ICANN. Moreover, it is an investment that is small relative to the amount of money a successful gTLD applicant could earn from it. If you win the right to run .blog, for example, how many domain name registrations in that space could you sell at $10 a pop? [A gTLD which is wholly generic or descriptive is always likely to have massively profitable prospects -- but these aren't the ones that brand owners tend to be unhappy about] While brands are not likely to generate revenue from their .brand, phasing out all existing domain names (imagine how many, say, Mars Chocolate owns) and folding every brand under your own .brand could prove cost-effective [This is presumably on the assumption that phased-out names will remain off the market and unavailable for others]. Moreover, the high fee will deter bad actors from applying – something brand owners would support (although the flip side is, of course, the potential cost if seeking to register gTLDs for a multitude of brands!) [Wikipedia lists Nestle as having over 370 brands. Allowing for some duplication, if the company decided to go for gTLDs for just 150 of them, that's not much less than $28 million up-front].

A scenario in which Google or Facebook “snaffle up lots of words including surnames” would not come to pass - under the rules, it would not be possible for this to happen [Can we have legal ruling on this, please?]. Nor do I think those companies would be interested in attempting to do such a thing - Facebook may rather apply to run .facebook, and offer a domain name registration within that space to users and brands, thus www.adamsmith.facebook. Fans of Facebook would probably salivate at this prospect. How about that as a brand experience?

Returning to the fee, ICANN will not make a profit of 70% on every unsuccessful application – it is worth noting that ICANN is a non-profit (the fee breakdown is available here from page 23 onwards). That said, questions do remain over ICANN’s fiscal situation should it receive 10 applications or 1,000. Similarly, controversy remains over the war chest it is compiling to fund any later legal fees, as we have covered in WTR:

…the Internet Corporation for Assigned Names and Numbers (ICANN) plans to amass a hefty war chest to fight lawsuits arising from the expansion. The cash will come from the fees paid by applicants wishing to run a new generic toplevel domain (gTLD) space. ICANN intends to set aside $60,000 from every fee received for “risk costs” – that’s almost one-third of the full $185,000 fee. Based on ICANN’s prediction of 500 new generic TLD applications, this could raise $30 million for the non-profit organisation.

When WTR asked Peter Dengate Thrush, chair of ICANN’s board, for the reasoning behind the risk tax, he answered: “Prudence. If we hadn’t done it, we would be highly criticised when the first lawsuits appeared. What fuels prudence is the uncertainty factor.”  

The fund reveals not only that ICANN is arming itself for legal battles, but that it has put a figure on how much it may need. “All of the costings have gone through rigorous analyses,” Dengate Thrush explained. “We’ve taken financial advice and looked at buying insurance against the cost of litigation.” When asked whether this implied that the board expected litigation, he replied: “No, it’s just prudence – most people have life insurance.” 

But life insurance policyholders know that they are going to die. [Good point!]

Finally, I believe that WIPO will be concerned by the implication that it did not fully understand ICANN’s plans during its consultation process. WIPO has sent a delegation to many, if not all, ICANN meetings and has submitted comments at every stage in the consultation [Sending delegations and submitting comments is not evidence that any organisation has mastered the issues and, after the apparent lack of effective engagement by WIPO with UNCITRAL in the latter's work on security interests in IP as intangibles, brand owners may be forgiven for thinking that WIPO's larger agenda and responsibilities may prevent it from taking up cudgels on their behalf even if it should be disposed to do so] The organisation’s arguments are usually well constructed, even if they do bear all the hallmarks of Geneva’s bureaucracy. That WIPO has been limited to submitting statements and has not been consulted by ICANN to the same extent as governments have must irk WIPO no end, but it has played along nevertheless.

At present, uncertainty surrounds the impact of the new gTLD programme, so it’s important that IP owners, the IP press, industry and the public at large address the facts. As such a well-respected blog, IPKat should provide as informed a picture as possible about the gTLD regime – both its positives and negatives (and there are plenty of each!)".

Thanks, Adam: it's always good to hear from you. This Kat suspects that he and Merpel may be hearing from others too in the near future ...

Artwork: 'Table Tennis Cats' by icequeen5560, hosted on photobucket.

ICANN: a dream at last coming true, or a legal scam?

Merpel gets around a fair bit these days. Being a fictional Kat she can sneak into all sorts of places and eavesdrop on some fascinating events. This is her report on what she did yesterday:

"I attended a meeting at the London offices of a well-known law firm re the Internet Corporation for Assigned Names and Numbers (ICANN). An ICANN Top Dog attended with some colleagues and spoke at length about the many and varied delights of the new generic Top Level Domains (gTLDs), though not everyone in the audience was as delighted as the ICANN folk were. One articulate lady, in particular, may have made herself not a little unpopular for sharing her own opinions to the contrary -- though after the event some folk who were reticent about supporting her views and remained silent throughout did at least have the good grace to come up to her afterwards in order to thank her and assure her of their own outrage.



The point in contention is this. Have you seen how much it costs to play this high stakes gTLD game? You have to pay US$ 185,000 to play -- with no guarantee that you will even be able to get the domain you want. If you are unsuccessful, ICANN refunds 30% of your US$ 185,000. And that's just the start. If you do succeed in getting the domain of your dreams, you will then have to stump up at least US$ 25,000 annually -- with lots of other costs tacked on.

If this were another world, and a more rational one, we might be tempted to described this operation as a scam. Companies that are as cash-rich as Google [which, on revenue of US$ 9bn in the last quarter, brings in US$ 185,000 every three seconds] and Facebook will snaffle up lots of words including surnames and then, assuming that they expect to see a return on their investment, will presumably charge people to use them. This would be sad. Once upon a time some of us believed that the whole reasoning behind the internet was that it was essentially free and open for all -- but the effect of the new gTLD regime is likely to change this -- and not for the better. The ICANN folk agreed, but said that it was inevitable that things would change and that this was a done deal and cannot be stopped".

Merpel is fairly sure she heard someone saying:

"This is about managing risks to your brand and, when brand owners assess the risk, they will realise that they have to be part of this and join in".

So is this what the new gTLD scheme is about: creating risks for brand owners to take, and leaving ICANN to make a profit of 70% on every unsuccessful application? Merpel is not averse to the principle of gTLDs but, the more she thinks about it, the more she feels the system which has been devised for them unfairly benefits ICANN and the speculation of businesses that have no inherent legal or moral claim to the use of the vast spread of new names that so many businesses and individuals have been encouraged to welcome so warmly.



Merpel has been speed-reading through the Hargreaves Review's Digital Opportunity again and doesn't seem to have spotted the words 'ICANN' or 'gTLD' in it. She also wonders whether the organisations that are the custodians of intellectual property interests internationally such as WIPO and WTO may have fully understood the detailed implications of this new and apparently unstoppable development at the time when ICANN went through its consultation process.

New generic TLDs: Association of National Advertisers throws a tantrum

As the IPKat has reported, the new generic Top Level Domains (TLD; the part in a domain name after the last dot) which allow private entities to administrate TLDs of their choosing (subject to rules and regulations) are almost certain to come. And it's not like they have been approaching in stealth mode, either, because the Internet Corporation of Assigned Names and Numbers (ICANN) has been soliciting opinions on the proposal for years.

The US Association of National Advertisers (ANA), an interest group representing, well, advertisers, and therefore brand owners, has in an open letter to ICANN dated 4 August 2011 expressed its grave concerns over the proposed new generic TLDs. Some of these concerns are not unfounded, and certainly familiar to brand owners:

• Misappropriation of Intellectual Property – The experts cite a key concern of misappropriation of intellectual property rights, including the “costs of domain watching, defensive registrations, litigation or other measures to end misappropriation, and costs due to misappropriation that is not blocked (e.g., lost profits due to sales of counterfeit goods or brand dilution).”


• Defensive Registrations – As noted, brand owners may be compelled to file defensive registrations, i.e., “registrations undertaken to protect legitimate trademark or intellectual property rights from misuse, not registrations undertaken as the ‘defense’ of one’s business against increased competition on the merits.” This cost alone could be in the hundreds of thousands of dollars per brand name, creating a multi-million dollar liability for major corporations and a multi-billion dollar cost to the industry.


• Domain Navigation Dilution because Consumers have More Places to Look – The experts note that the “introduction of additional gTLDs may increase the costs of Internet navigation by increasing the number of potential domains over which a user may search. To the extent that such effects arise, they can dilute the value of existing domain names as navigation devices. The costs associated with such dilution include the costs of defensive registrations . . . and the costs due to dilution that cannot be mitigated.”


• Harm to Internet Users from Increased Cybersquatting – One of the most incipient and costly challenges to the adoption of any new TLD is the prospect of cybersquatting and the substantial costs associated with preventing and policing it, which are already well into the billions. With respect to cybersquatting, the experts note, “In addition to harm in the form of increased search costs consumers may suffer more direct harm from increased cybersquatting. This direct harm may result from malware, phishing, and the unknowing purchase of counterfeit goods.” While the experts opine that such a result “may” occur, history proves that cybersquatting will occur just as it has with every TLD that has ever been administered by ICANN.

ANA's letter ends with a thinly veiled threat of litigation ("Should ICANN refuse to reconsider and adopt a program that takes into account the ANA’s concerns expressed in this letter, ICANN and the Program present the ANA and its members no choice but to do whatever is necessary to prevent implementation of the Program and raise the issues in appropriate forums that can consider the wisdom, propriety, and legality of the Program.")

While some of ANA's concerns are justified, it does seem a bit late to voice them now, particularly given the lengthy process that led to ICANN's decision on 20 June of this year to implement the program. During the process, interested parties could express their concerns, and most of the points raised by ANA were raised. Whether ICANN's response to these concerns has been satisfactory is another question. In any case, ICANN has responded in equally strong terms to the strongly worded letter by ANA, calling ANA's assertions "incorrent or problematic" and accusing ANA as mischaracterizing the ICANN process. ICANN asserts that the concerns of trade mark owners have been addressed by

Establishment of a Trademark Clearinghouse as an information repository performing specific information collection and data validation services. A model for such a clearinghouse, as well as a mandatory Sunrise period and mandatory Trademark Claims service, have all been incorporated into the program. The Sunrise period means that rightsholders will have the first opportunity to secure domain names as desired. The Trademark Claims service provides notice to rightsholders where matching names are registered during the initial launch period. The Trademark Clearinghouse is designed to create efficiencies for trademark holders, so that rights information need only be submitted and validated once, and for other parties in the registration process, by creating a centralized source of information.

Implementation of a Uniform Rapid Suspension (URS) system as a cost-effective and timely mechanism for brand owners to protect their trademarks and to promote consumer protection on the Internet. The URS is a complement to the existing Uniform Domain Name Dispute Resolution Policy (UDRP), and will allow for rapid suspension of a registered name in clear-cut cases of infringement. Intellectual property stakeholders, governments, and representatives from multiple other stakeholder groups, spent significant time refining the details of this proposal so that it would be an efficient, low-cost, and meaningful tool for rightsholders.

Establishment of post-delegation dispute mechanisms to attach liability to (i) Registry Operators that operate a TLD in a manner that is inconsistent with the representations and warranties contained within its Registry Agreement, or (ii) Registry Operators that have a bad faith intent to profit from the systemic registration of infringing domain names (or systemic cybersquatting) in the Registry Operator’s TLD. For example, a Trademark Post-Delegation Dispute Resolution Procedure (PDDRP) has been incorporated into the Registry Agreement, and provides another tool for rightsholders.

Requirement for maintenance of a “thick” (more detailed) Whois database in all new gTLD registries, and a requirement that this information is readily available to those who qualify through a centralized source, making it easier to locate wrongdoers than in the current environment. These requirements have been incorporated into the Registry Agreement.

While there may be more hiccups to come, this Kat still thinks the new gTLDs are here to stay, and trade mark owners should better acquaint themselves with the technicalities rather than hope that the (admittedly potentially harmful) new TLDs will not materialize.

New Top Level Domains are here to come, get used to it

Despite the concerns expressed by the United States and the European Union, the Internet Corporation for Assigned Names and Numbers (ICANN) has decided to allow the creation of new generic Top Level Domains such as ".brand" or ".city". The slick video above produced by ICANN gives you some elementary info (if you prefer reading, ICANN's FAQ on the new gTLD may help).

Two important points from a trade mark owners' point of view are the requests of the US and EU to (a) eliminate the requirement proof of' “use” of the trademark for users of Sunrise, URS (Uniform Rapid Suspension System) and PPDRP (Post Delegation Dispute Resolution Protocol); (b) change the burdens of proof in URS and PDDRP from clear and convincing evidence to preponderance of the evidence. The ICANN board has declined to follow these suggestions on the rationale that the requirement of use deters gaming of the system and the higher standard of proof is appropriate in view of the drastic consequences of a positive decision in URS and PDDRP proceedings. Make sure your proof of use documents are up to date and accessible on short notice.

Another area of disagreement is the cross-ownership of registrars (those accredited to register domains in a TLD) and registry providers (those who keep the database of domain names, and generate the zone files which convert domain names to IP addresses, such as Nominet for .uk). Both the EU and the US fear anti-competitive effects if cross-ownership is permitted, but ICANN is undeterred. European Commission Vice President and Digital Agenda Commissioner Neelie Kroes has made it very clear that she is unhappy about ICANNs decision to allow cross-ownership. It is open to speculation what, if anything, the Government Advisory Committee will do about ICANN's ignoring its advice.

Afilias, a registry services provider, has published a brochure and a short film on the strategic aspects of the new TLDs entitled "Envisioning Your .Brand New World: A Field Guide for Brand Builders.". While there is commercial intent behind these resources, they are nonetheless a useful primer on the importance of the new TLDs for brand owners. Namely, you will have a period at the beginning of 2012 (as currently planned, has been postponed often) to submit a request to administer your own TLD registry to ICANN, and it is unclear when there will be another opportunity once this window has closed. That means that brand owners may have to decide whether they want to administer their own gTLD name space - which is quite costly (the application fee is USD 185,000, but it has been estimated that the whole process costs up to USD 1 mio. if you don't have the skills to run a registry in-house) - before they know what their competitors are doing; or to put it more bluntly, before they know whether owning your own TLD is hot or not.

If you want more in-depth information, the official Applicant Guidebook, which has undergone six revisions and gone from 97 to 360 pages, should provide you with all the details (note that it is still a draft and has not been officially put in force).

On a related note, IPKat has previously reported that the WIPO is very unhappy about ICANN's plans to reform the UDRP, and Eric Wilbers, Director of WIPOs Arbitration and Mediation Center, has re-iterated this position in an open letter dated 15 July 2011. The key message is "the UDRP should be left to do its job".

Even if it wished to do so, IPKat could not apply for the .cat TLD - because that is reserved for Catalonia, or rather, "the Catalonian speaking community irrespective of its geographic location" (because of "the reluctance of certain Catalan institutions, companies and people to use .es, .ad, .fr, .it domains"...). Websites accessible under a domain name in the .cat TLD must substantially be in Catalonian, and we believe they don't refer to meowing.

ICANN goes ahead -- and the world will never be the same again

All this talk of domains
can make a Kat go dotty ..

With a somewhat leaden heart, this Kat has been reading the news, courtesy of Guardian Online, that internet naming board ICANN has approved the long-expected vast expansion of domain suffixes to the existing 22 international global top level domains (gTLDs).  According to the article,

"Twenty-six years after .com was first unveiled to the world, officials have swept away tight regulations governing website naming, opening up a whole world of personalised web address suffixes. ...

Peter Dengate Thrush, chairman of Icann's board of directors, said: "Today's decision will usher in a new internet age. We have provided a platform for the next generation of creativity and inspiration [this Kat wonders what Mr Thrush's definitions of creativity and inspiration look like]. Unless there is a good reason to restrain it, innovation should be allowed to run free."

Analysts say they expect 500 to 1,000 domain suffixes, mostly for companies and products looking to stamp their mark on web addresses, but also for cities and generic names such as .bank or .hotel. Websites can now be categorised by subjects such as industry, geography and ethnicity – as well as using Arabic, Chinese and other scripts [this should be fun, says Merpel, who wonders how quickly Western Kats will learn to identify the main ones, for good or ill].  ...it will also now be possible to have website names entirely in Mandarin or Cyrillic or any other script, which will ease the problem of reading and writing addresses for the majority of people who do not use the Roman alphabet.

The growth will also come as the internet shifts to the next-generation IPv6 addressing system for its basic systems, which enables far more devices to be attached to the internet [The IPKat has already managed to attach his fridge and his toaster, but he's struggling to get his vacuum cleaner into the USB port].

ICANN approved the move after six years of negotiations, in which concerns were repeatedly expressed that the enormous expansion of suffixes could lead to extra costs for businesses of registering a site with their trademark as the number of suffixes explodes.During the 1990s there were hundreds of cases of "domain squatting" in which people would register sites that used companies' trademarked names, effectively holding them to ransom. Expanding the number of domains could make that far worse.[Only during the 1990s? And only 'hundreds'?]

But it would also ease the pressure on the ".com" domain, created 26 years ago. In May 2009 a study found that 74% of websites were in the .com domain space. ...

... [O]thers said that the promise of space could be a double-edged sword. "If you're a company with a lot of money, such as Barclays, then you could buy the '.barclays' suffix and build a little island on the internet, on the basis that you can persuade customers that only legitimate Barclays sites will end with that," said Charlie Abrahams, of the brand protection company MarkMonitor. "If your brand has just three letters, it might be worth it. If you're Tommy Hilfiger, it's probably not, because I can't imagine anyone bothering to type all that at the end of a URL." [The IPKat gave up typing URLs years ago; he clicks them when they're hyperlinks and cuts and pastes them into his browser when they're not]

However, the principal beneficiaries are likely to be the internet registrars who sell the rights to site names. ICANN has set a $185,000 fee per suffix, and applicants have to work their way through a 360-page guidebook to prepare their bids ahead of the first suffix auctions, which start on 12 January 2012 and run for 90 days. ICANN says it will auction suffixes if multiple parties have legitimate claims [Apple? Prudential? Polo? Washington? Birmingham? Madonna? Cambridge? EPO? This one can run and run ...]. However, it expects companies will reach deals to avoid a public auction [No they won't, says Merpel, if the hawk-eyed competition folk at the European Commission have anything to do with it and sniff the comfortable scent of collusion between competitors ...]. ...

The ICANN board approved the move by 13 votes to one with two abstentions in a meeting in Singapore. ... The move could also create enormous confusion for consumers and companies. It greatly expands the risks from "phishing" sites because they could use confusing domain names in language scripts that look similar to existing ones to capture peoples' details. And for companies, the challenge will be to decide whether to register their names in all possible domains, or to create their own suffix, or to limit themselves to a small number of domains."

What do readers think? The IPKat is running a little poll for the next week near the top of his side bar. Be sure to let him -- and Merpel -- know!

Should the UDRP be reformed? Don't go there, says WIPO

The Uniform Dispute Resolution Policy (UDRP) of ICANN, which is binding for all registrars and, by virtue of being incorporated into the domain name registration agreement, on anyone registering a domain name in a generic top level domain (notably .com, .net and .org, the others play a small role), provides since 1999 for a dispute resolution process if a trade mark owner feels that a domain name infringes his rights. Assuming IPKat readers will be roughly familiar with the policy, I shall spare you the details (some background here).

ICANN is cautiously posing the question whether the UDRP should be reformed, and has received a resounding "NO, PLEASE DON'T" from WIPO. The main arguments of WIPO, as summarized in a Webinar held on 10 May 2011, are the following:

• The UDRP has been offering an effective solution for trademark owners, domain name registrants, and registration authorities.
• By accommodating evolving norms and practices, the UDRP has proven to be a flexible and fair dispute resolution system.
• With vast DNS growth around the corner and untested new RPMs in development, the time is wrong to revise the UDRP.
• Institutionally stacked, an ICANN revision process would likely end up overburdening and diluting the UDRP.
• Fundamental questions about the business and DNS beneficiaries of cybersquatting must be addressed before targeting the very mechanism intended to address this practice.

Instead of allowing the UDRP to be placed in the dock, ICANN should first fairly address the following issues:

• the relationship between cybersquatting and the activities, revenues and budgets of DNS actors; the incidence of UDRP cybersquatting findings in relation to wider trademark abuse in the DNS overall, with filed UDRP cases merely representing the tip of the iceberg; and
• the degree of proportionality between trademark rights enforcement and domain name registration opportunities in the DNS.

From the user's side, Aimee Gessner, Senior Trademark Counsel at the BMW Group, adds:

• The real problem is not the UDRP: Other practices since the launch of the UDRP in 1999 have contributed largely in encouraging cybersquatting:
• Domain name tasting
• Increasing domain parking sites / pay per click sites
• Drop-catching
• Use of privacy registration services to hide identities of cybersquatters
• Establishment of bogus “registrars” that have no purpose other than to cybersquat

Summary:
• The UDRP is working fairly and efficiently for its intended purpose
• There are many other causes today for the steady increase in cybersquatting which ICANN should rather review
• Brand owners are concerned at this time with what the expansion of the DNS will cause in terms of cybersquatting and other forms of rights infringement system at such a critical time
• Unwise to review and possibly compromise UDRP system at such a critical time

Attorneys acting for complainants point out that the trade mark owners bear the entire cost of the UDRP system and suggest that a "loser pays" system may be fairer. Respondents warn against further streamlining a system that may cease to be considered fair.

The registrars have some technical issues with the UDRP, notably

• The meaning of “Maintaining the Status Quo” in Section 7 is not clear: No explanation of “Legal Lock” mechanisms and when they go into effect or when they should be removed.
• Policy does not provide guidance on what a registrar is to do if a claim is stayed or suspended: Is the legal lock to be removed or remain in place?
• Policy does not address Privacy and Proxy Registrations or require complaining party to amend complaint once infringing party identified.
• No explanation on what a registrar should do when a UDRP decision conflicts with an injunctive order issued by a of local jurisdiction.

It should be possible to implement these rather technical issues without breaking the system, this Kat thinks. As far as the message of WIPO is concerned, it couldn't be clearer: don't go there (they literally state this in an open letter to ICANN).

Brave New gTLDs?

Oh brave new world of new gTLDs - a view perhaps not shared by everyone. The Guardian today reports of a new study which reveals that 65% of the British population (or 65% of the 1000 British consumers asked by the Future Laboratory and Gandi.net who conducted the study) believe that the introduction of new generic top level domains (gTLDs) could turn the internet into rather messy and chaotic place and also raise ownership conflicts.

Image from awwthatscute.com

According to the Guardian, the report gives numerous examples of gTLD's that could offend, such as the gTLD ".god" and ".war" and also predicts that there could be conflicts ahead depending on the respective use of the new gTLDs. ICANN, The Internet Corporation for Assigned Names and Numbers, introduced its plans concerning new gTLD's last October (see here on the ICANN's website).

".ipkat" anyone?

EU copyright licence and a fully private ICANN: a busy couple of days for the InfoSoc Commissioner

InfoSoc Commissioner, Viviane Reding has been busy in the past couple of days.

The New York Times reports that she, together with Meglena Kuneva, the consumer affairs commissioner are putting forward a proposal for a Europe-wide copyright licence. The idea is to facilitate the sale of online content across national borders without the need for distributors to engage with the different copyright laws of up to 27 Member States.

Meanwhile, Commissioner Reding is calling for ICANN to become a fully private and independent company once its agreement with the US Government expires on 30 September 2009. She would like to see this accompanied by a 'G-12 for Internet Governance' which would would include two representatives from each North America, South America, Europe and Africa, three representatives from Asia and Australia, as well as the Chairman of ICANN as a non-voting member.

It's not often that the IPKat finds himself agreeing with the Eurocrats, but on both issues he thinks there is sense in the proposals. He'd like more detail though about the Internet 'G-12'. Will it really be representative? For example, would the membership rotate? How will it take into account the fact that some countries host far more internet activity than others?