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ICANN postpones limitless domain plan

A plan to create a limitless supply of new internet domains has been postponed so that the concerns of major brand holders can be taken into account. Brand holders have objected to the costs they will incur in defending their names.10 Mar 2009

Every time a new domain is launched, many brand holders feel that they must register their name and many variations or permutations of it at that domain in order to stop other people profiting from it.

Cybersquatters that gain control of names related to major brands can try to sell the name to the brand owner, or use it to pretend to be that company or to attract visitors to a website that displays adverts that make money for the domain name owner.

The body responsible for regulating the internet's addressing system, ICANN (International Corporation for Assigned Names and Numbers), has proposed allowing anyone to create any so-called Top Level Domain, though only if they pay $185,000.

While there are only a few generic TLDs (gTLDs), some companies already spend significant sums maintaining large portfolios of domain names.

It is far cheaper to register a domain name than it is to use legal proceedings to win a name from a cybersquatter. So companies that use just one or two domain names for their websites and email communications may hold many other names as defensive registrations. Typically these will be variants of their brand names, registered solely to prevent anyone else getting them.

Brand owners fear that a proliferation of new gTLDs would send their domain name management costs spiralling out of control.

Responding to brand holders' concerns, the ICANN board voted unanimously last week to put its policy on hold while it consults with the concerned intellectual property owners.

"ICANN staff has determined that the implementation issues involving trademark protection need additional community input and analysis," said the resolution passed by the board. "The board recognizes that resolution of these issues would be beneficial to the introduction of new gTLDs."

The resolution created a task force of intellectual property (IP) owners which would discuss the issue and produce a report on it by the end of May for discussion at ICANN's next board meeting in Sydney in June.

ICANN had consulted with the public and business over its plans, and in its consultation document it noted that many people had objected to the plans because of the cost of registering names at every new domain just to make sure that others did not.

"Many comments noted that an issue of concern was trademark protection and particularly protection from what they saw as frivolous and expensive defensive registrations at the second level, both at the registry start-up time and on an ongoing basis," said its document.

"Are there implementable, practical mechanisms to avoid the need for purely defensive registrations at the second level? ICANN intends to conduct a series of discussions with all relevant parties relating to proposed enhanced protections for trademark holders."

"If additional trademark protection mechanisms are agreed upon and included in the new gTLD implementation, the aim would be to reduce costs to trademark holders, and increase and build more confidence in protection measures," it said.

ICANN held meetings all last week on various issues, and board member Bruce Tonkin said that during those meetings potential solutions to the problem had already begun to emerge.

"People have been proposing various solutions to some of the trademark problems, particularly at the second level," he said at the board meeting. "I think what this motion does is support that momentum in providing some ICANN resources to assist those various people that have got solid proposals, assist those that made submissions in the public comment process to really try to converge their various approaches to either one or maybe two alternative solutions that could be considered by the community."

The problem could be a significant one for trade mark and brand holders. For each new domain a company could have tens or even hundreds of names to register in order to stop others from using them.

Whenever new domains launched in recent years, trade mark holders were given priority rights to register their brands. The cost of each name purchased in this so-called 'sunrise period' tends to be significantly higher than the cost of registration during the subsequent 'land rush' phase, where names are sold on a first come, first served basis.

ICANN has said that it has no way of measuring how many new gTLDs will be created, but its best guess is that 500 domains will be registered at first. If that estimate is accurate it will present brand owners with the cost and administrative burden of registering thousands of domain names.

John Mackenzie, a technology lawyer with Pinsent Masons, the law firm behind OUT-LAW.COM said that brand owners do not want the new gTLDs.

"The people who stand to gain from the new bespoke domains are typosquatters and those in the business of selling domain names – the name registrars and registries. Most companies simply don't need and don't want the new names," said Mackenzie.

"When .eu launched, the European Commission said that the high uptake showed the demand for the new domain. It showed nothing of the sort. Companies bought the names because they felt they had to, to stop their brands being weakened by parasites."

"The current prospect of 500 new domains is frightening. While the delay is good news, what we really want from ICANN is either a u-turn or effective protection for brand holders."