Getting a Handle on the New Generic Top-Level Domains: Strategies for Brand Protection in the Era of New gTLDs

After years of intense discussion and debate, the new generic top-level domain names (known as gTLDs) are here.  And they have been popular:  when .club went live on May 7, 2014, over 32,000 domain names ending in .club sold in the first 24 hours, and nearly 30,000 more were sold over the next three weeks.

Whether these new names will have any staying power remains to be seen, but what is clear is that the new gTLDs can create new challenges for brand owners, and new solutions for cybersquatting problems are being put to the test.  This post will provide an overview and update on the new gTLDs and discuss ways in which brand owners can approach and manage rights enforcement as new domains continue to roll out.

The gTLD Explosion:  A Very Brief Background

Prior to this year, only a handful of gTLDs existed – names like .com, .biz, .mil, .edu and .org.  At the time the application window through the Internet Corporation for Assigned Names and Numbers (ICANN) closed, over 1900 applications for new gTLDs had been filed.  As of this writing, over 1000 TLDs have been approved; just under 60% of those are generics (such as .book and .movie).  Geographic and brand names have also been quite popular.

The sheer volume of gTLDs prompted stakeholders to develop some new trademark protection measures, including the Trademark Clearinghouse (TMCH) and the Uniform Rapid Suspension (URS) system, which provide two additional tools to brand owners for minimizing abuse and taking action against cyber-squatters.

Defensive Strategies Against Abuse

The most talked-about feature for brand protection in the new gTLD era is the TMCH.  Set up by ICANN and operated by Deloitte, the TMCH is the only globally designated database for the new gTLD program.  The cost to enroll is $150 per trademark, and proof of ownership (usually a trademark registration) is required.  Enrolling in the TMCH offers the trademark owner two services:  the trademark claims service and the sunrise service.  One downside of both is that only identical matches will trigger the service.

The trademark claims service gives notice to would-be registrants that the name the registrant intends to register matches a registration recorded with the TMCH.  If the registrant registers the domain name despite the warning, the trademark owner is notified.  The registry’s minimum requirement for notices had been 90 days after a new gTLD launch, but as of April, an ongoing notification feature has been added for those who opt in and make sure to renew.

The sunrise service gives the trademark owner the right to priority registration of an identical registered domain name in the new gTLD at least 30 days before the gTLD is offered to the public.  At that time, proof of use of the mark will be verified.

Some registrars such as Donuts.co (which applied for more gTLDs than any other entity) are offering additional protections to trademark owners, such as blocking services, and additional features and services are rolling out frequently.  In addition, the TMCH is in the process of adding mixed scripts to their registry.  (To keep up on TMCH developments as they happen, we recommend following @TMCHinfo on Twitter.)

For a brand owner with hundreds of trademarks, the cost of not just registering every mark but responding to notices can be quite high.  By communicating with the marketing department about their priorities and working with a trademark lawyer who is experienced in the area, brands can develop a strategy that strikes the right balance between protecting core marks without going so far as to end up spending resources on uses that are of marginal concern from a brand protection standpoint.  New software that finds hits is also rolling out and may prove to be a highly useful tool for catching problematic registrations early.

Taking the Offense Against Cyber-Squatters

Historically, trademark owners facing a domain name cyber-squatter were limited to the options of sending cease-and-desist letters, filing a lawsuit in court under the Lanham Act or other statutes, or bringing an action before an arbitrator (such as the World Intellectual Property Organization or the National Arbitration Forum (NAF)) under the Uniform Domain Name Dispute Resolution Policy (UDRP).  Now, a trademark owner has the option to avail itself of the URS, which works much like the UDRP but is faster and cheaper.  As of this writing, the NAF and the Asian Domain Name Dispute Resolution Centre are approved providers of the URS, although the latter is a very recent newcomer and has not handled nearly as many URS cases as NAF.

The elements to prevail are the same in the URS as under the UDRP – that the domain name registered by the respondent is identical or confusingly similar to a trademark in which the complainant has legal rights, the respondent has no legitimate rights or interests in the domain name, and the domain name has been registered and used in bad faith.  The filing fees are around 15-25% of those for the UDRP, and decisions come out in well under half the time that the UDRP takes.

As much as the speed and cost can be a draw, the URS contains some important pitfalls.  First, the burden of proof is higher than with the UDRP:  the complainant must meet a “clear and convincing” standard.  Therefore, simply maintaining a generic parked page will not be enough to show bad faith where it may be enough under the UDRP.  Second, there is a 500-word limit for the complaint, so a trademark owner must be able to meet the higher showing in far fewer words than the UDRP procedure permits.  In addition, the prevailing complainant does not receive the domain name; instead, the domain is “frozen” for the remainder of the registration period.  And while the URS permits corrections and re-filings as well as appeals, too much use can be deemed “abusive.”

Fewer than 100 cases have been decided under the URS but, perhaps because complainants using the URS have followed the suggestion to use it only in clear-cut cases, nearly all have resulted in a finding for the complainant.  Those few cases that have not resulted in a decision for the complainant have found that bad faith was not sufficiently established, perceived the complainant’s mark as being susceptible to descriptive or generic use in the context complained of, or questioned the complainant’s standing.  (While the TMCH is separate from the dispute resolution systems, that a trademark owner has a name in the TMCH will establish proof of use in a URS or UDRP proceeding and thereby potentially minimize the risk that standing will not be found.)

As with registration in the TMCH, working with counsel can help a brand owner decide whether the URS or the traditional UDRP is a better fit for the specific situation, particularly in the context of the brand owner’s budget, risk tolerance and goals.  Particularly because the TMCH and URS are so new, a savvy brand owner will want to revisit its domain enforcement strategy on a relatively frequent basis.  And in the era of the new gTLDS, a brand owner must remember to make gTLDs a permanent part of considerations that the marketing and legal departments cover when building and protecting a brand.