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IP: The winding road of new gTLDs continues

Stay alert and keep abreast of new developments

When the Internet Corporation for Assigned Names and Numbers (ICANN) held its “big reveal” June 13, it may have appeared to have mapped out the general contours of its proposed Internet of the future—one with potentially unlimited generic top-level domains (gTLDs). In the first round of its New gTLDs Program, it received more than 1,900 applications and almost $360 million in application fees. ICANN also faced mounting pushback and criticism from industry insiders, government stakeholders, interested parties and observers, not to mention a long and still somewhat unclear process ahead of it to evaluate those applications, sift through the comments and objections, resolve the contention issues over which applicants will own the contested domains and, eventually, delegate new domains into the Internet. And now, more than two months after the big reveal, ICANN has “fishtailed” all over the road, predicted significant traffic jams ahead and is, by its own account, already at least six months behind schedule.

While the map remains somewhat unclear, one thing is certain: this is not the time to set your calendar for next May (when ICANN says it might have completed the initial evaluations) and put your company on autopilot. Even if your company decided against applying for a TLD (or a gTLD) some of your competitors or other industry participants may have. Even if you think you and your company are just casual observers or uninvested bystanders, ICANN’s gTLD program may have a significant impact on your business and your bottom line. You can’t wait until the map of the Internet of the future is already drawn, or your company may be left with little room to maneuver. Regardless of whether your company is a stakeholder or an observer, you can and should stay informed on the process and consider whether and how you might want to influence the outcome.

What we know

Beneath the now-familiar statistics from the big reveal are some truly enlightening and crucial themes. Here are two:

Previously, registries have typically contracted to operate one or two gTLDS, but the new program experienced applicants applying for large portfolios of gTLDs ranging from a dozen to more than 300. In fact, 43 percent of applications come from large portfolio players. Four of the top six applicants are companies (new or already established) that intend to secure dozens of gTLDs each.

Two of these, Donuts Inc. and Demand Media LLC, together account for 333 applications, 107 of which they share they share. Demand Media, Inc. is a U.S. content and social media company that operates online brands such as eHow and Cracked, and also owns eNom, the world’s second-largest domain registrar. Donuts Inc., while a start-up company, is owned and operated by a team of experienced internet industry players and raised $100 million in venture capital in advance of its applications for 307 generic top-level domains. In addition, Famous Four Media, Top Level Domain Holdings and Uniregistry are among the largest portfolio applicants and Internet industry giants Amazon and Google, with 101 and 76 top level domain names respectively, rounded out the top six applicants.

Not surprisingly, 40 percent of the applications were from big brands like Volkswagen, State Farm, American Express, Nike and Macy’s, among others. Before the big reveal, industry commentators expected consumer brands merely to secure brand-related terms. For example, Travelers Insurance applied for .redumbrella and Nationwide applied for .onyourside. Many applicants with well established brands also applied for multiple generic TLDs, some within and some outside their existing business areas. In fact, these applicants looked to acquire generic words such as .lol, .talk, .mom, .dad and .cloud, the ownership of which could provide economic value beyond their brand. Clearly these companies see opportunities to profit from control over generic spaces both related and unrelated to their current businesses. Some applications are already drawing negative commentary from competitors and the public, such as that the applications are anti-competitive and give the applicants an unfair business advantage.

Why it matters

The key objectives of ICANN’s program were to expand consumer choice, encourage innovation and increase competition, yet many applications for non-trademarked terms propose controlling, and in some cases restricting, high-value generic terms only for the use of the owner.

One of the most criticized aspects of the new gTLD plan is the option for applicants to run closed registries—registries restricting second-level domains (the names to the left of the dot) —for generic terms, effectively closing off a generic dot space to competitors. In the application, ICANN requires applicants to describe the mission and purpose of the applied-for gTLDs, and some of the most popular domains, such as .app (13 applications), .home (11 applications), .book (9 applications) and .shop (9 applications), appear to have at least one applicant that intends to run a closed registry. While this is potentially an expensive gamble for those applicants, given the program’s key objectives and the number of competing applications for these TLDs, it is one that could have a huge pay-off for those applicants—and huge impact on other companies with an interest in the closing off of these high-value terms.  

What to do

At minimum, all companies should become informed about the applications for both brand and generic terms that might affect their business areas, paying close attention to whether applicants are seeking to turn generic terms relevant to their business into closed registries. Business also need to be vigilant, staying up to date on the application process (whether they’ve applied for gTLDs or not), monitoring the public comments and considering weighing in with comments of their own, given the extended deadline of Sept. 26, or even filing formal objections. Over the next few months, we will provide you with a series of articles that will analyze the key aspects of the gTLD program, provide updates on the process and keep you informed about the issues important to protecting your business or brand as ICANN moves through the evaluation process.

Contributing Author

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Daniel Frohling

Daniel D. Frohling is a partner in the Chicago office of Loeb & Loeb LLP, where he leads the firm’s gTLD Development and...

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Contributing Author

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Jessica Lee

Jessica B. Lee is an associate in Loeb & Loeb’s New York office, where she litigates and counsels clients in the areas of...

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