"Discrete, Limited Rounds?" ICANN's Economic Analysis of New TLDs

Somewhat lost in the coverage of the recent ICANN meeting in Brussels was the release of "An Economic Framework for the Analysis of the Expansion of Generic Top-Level Domain Names" on June 16th, a copy of which is available here.

The first 10 pages, comprising the Introduction and Overview and Background sections, provide a nice overview of how we got to this point and should be mandatory reading for those how are new to the issue. The Theoretical Framework section outlines the pros and cons for the introduction of new TLDs, as well as the Department of Justice's concerns that prompted the Economic Evaluation itself. The next section consists of a survey of studies conducted by Summit Strategies, Minds + Machines, Edelman and Stahura, which makes me feel better personally to know that someone else has waded through these papers.

The final section, however, is the most useful, in the sense that suggestions are made in connection with analyzing the costs and benefits of the implementation of new TLDs. The authors conclude that analysis of domain name registration volumes, domain name resale prices, and the prevalence of domain name registrants switching to new TLDs should all be given low priority. The authors do posit, however, that the increased costs to trademark owners in connection with protecting their brands through domain name registration, monitoring and enforcement should be monitored and analyzed. The authors are also concerned with the costs to consumers due to consumer confusion and fragmentation of the Internet related to new TLDs, although that is obviously not easily measured or monitored.

Finally, the authors propose "it may be wise to continue ICANN's practice of introducing new gTLDs in discrete, limited rounds. It is impossible to predict the costs and benefits of new gTLDs accurately. By proceeding with multiple rounds, the biggest likely costs--consumer confusion and trademark protection--can be evaluated in the earlier rounds to make more accurate predictions about later rounds." That does sound wise and kudos to Michael L. Katz, Gregory L. Rosston and Theresa Sullivan for contributing to the discussion. Nevertheless, when I remotely asked the panel for "Brand Management in the Age of New gTLDs" at the ICANN meeting in Brussels the likelihood of implementing new TLDs in "discrete, limited rounds," the response was mostly chuckles.

ManagingIP: Why Brand Owners Need New Internet Strategies

On May 26, 2010, Managing Intellectual Property published a piece titled, "Why Brand Owners Need New Internet Strategies," in relation to the recent introduction of IDNs and the planned implementation of new TLDs. While it it possible that private-party litigation or governmental interference could slow down the implementation of new TLDs, trademark owners need to recognize that new TLDs remain on the horizon. Two of the speakers referenced in the piece even recommended that brand owners may benefit from creating a special department targeted at dealing specifically with domain name issues.

CNN Interviews ICANN Senior Director Regarding IDNs

Pursuant to CircleID, ICANN Senior Director, Tina Dam, was interviewed with regard to recent developments concerning internationalized domain names (IDNs). As was mentioned back in February, the first four IDNs approved represent top-level domains in Arabic, Russian and Cyrillic scripts, and therefore, trademark owners should take steps in the near future to determine whether to register domain names in these IDNs, particularly if they hold trademark registrations in Egypt, the Russian Federation, United Arab Emirates or Saudi Arabia.

IDN ccTLDs One Step Closer

As mentioned below, ICANN is currently in the process of approving IDN ccTLD requests and recently announced that four internationalized domain names had been approved: Egypt, the Russian Federation, United Arab Emirates, and Saudi Arabia. The languages associated with the first four IDN ccTLDs to be approved include Arabic and Russian in Arabic and Cyrillic scripts, representing another step closer for IDN ccTLDs.

From the perspective of trademark owners, important considerations include: Do the referenced nations represent significant geographic areas in which the company does business or a natural area of business expansion? Has the brand owner registered and/or used a translation or transliteration of the trademark in either of these scripts?

It was also recently announced that the registry behind the application for the Russian Federation, incorporating the Cyrillic script, intends to begin operation in March of this year.

Important Dates for Trademark Owners in Early 2010: Pending Introduction of New TLDs

As referenced below, this blog is intended to keep trademark owners abreast of developments with regard to the introduction of new top-level domains. With the turn of the calendar to 2010, there is a lot coming around the corner of which brand owners should be aware. It is my intent to increase the frequency of posts as developments occur, but there are a number of impending dates important to this process.

On January 27, 2010, the public comment period closes regarding the draft model for Expressions of Interest for new top-level domains. Important considerations that may effect trademark owners include:
Participation in the Expressions of Interest is mandatory. If a trademark owner chooses not to participate, said trademark owner may not apply in the first round of new TLDs.
A deposit of $55,000 is required to participate. This fee will be credited against the proposed $185,000 application fee to register a new TLD.
The $55,000 deposit is refundable only if ICANN fails to act on the introduction of new TLDs prior to approximately the end of 2011.
The potential applicant, applicant contact information and to-be applied-for TLD will be made public.

On February 4, 2010, at the Special Meeting of the ICANN Board of Directors, the Board will consider the draft and public comments, and may vote to proceed with the draft model.

Here is a list of potential participants and applicants thus far.

With regard to Internationalized Domain Names, ICANN still intends to introduce new country-code top-level domains in non-Latin scripts in early 2010. At this point, there are 16 requests for IDNs in eight languages.

To reiterate, there is a lot coming around the corner for trademark owners with regard to the introduction of new TLDs. Brand owners should be sure to pay attention to the above deadlines and any changes that may occur in the near future. The intent is for this blog to serve as a clearinghouse of information and updates for trademark owners concerned with these issues.

ICANN's IDN ccTLD Fast Track Process Updates

In relation to the discussion of IDNs below, ICANN is posting updates with regard to the IDN ccTLD Fast Track process here. So far 10 requests for IDNs have been submitted in five languages. Check back often to stay apprised of any information related to the introduction of new TLDs.

Suggestions for Protocols

In the previous post, the suggestion was made that trademark owners should treat the introduction of IDNs as a test run for the implementation of new gTLDs, which resulted in a couple of e-mails seeking suggestions as to what such protocols might entail.

New gTLDs are somewhat more complicated, but IDNs are similar to ccTLDs with regard to factors to consider in registration.

Do you have a trademark registration in the relevant country?
Do you conduct significant business in that country?
Is the country a likely prospect for expansion?
What would be your likely response if your trademark was registered as a domain name by a third party?

These are some of the questions trademark owners need to be considering as the introduction of IDNs comes closer to reality. The implementation of new gTLDs may be delayed, but new gTLDs are inevitable. The sooner trademark owners begin asking the above-referenced questions, the less painful the ultimate roll out will be.

Trial Run for Trademark Owners

Last week, the most-recent ICANN meeting concluded in Seoul, South Korea with a meeting of the ICANN Board, in which the Board approved the introduction of non-Latin character domains ("internationalized domain names" or "IDNs"). New IDNs could result in new country-code top-level domains ("ccTLDs") in scripts such as Arabic, Chinese, Cyrillic, Hindi, Japanese and/or Korean as early as mid-2010.

Moreover, during the Seoul meetings, ICANN made clear that the introduction of new generic top-level domains would be delayed beyond the first quarter of 2010, as delineated in ICANN's initial ambitious time line.

Many trademark owners were legitimately concerned with the possibility of ICANN introducing en masse up to 500 new top-level domains concurrently. While the implementation of new top-level domains now appears inevitable, the introduction of IDNs offers trademark owners a unique test case for the development and implementation of processes by which the trademark owner can determine whether to register domain names in new top-level domains.

In anticipation of the introduction of IDNs, trademark owners should now be developing such processes to treat the initial implementation as a trial run for the introduction of new generic top-level domains.