On June 20th, the Board of Directors of the Internet Corporation for Assigned Names and Numbers (ICANN) approved the New gTLD program for implementation. This program will provide for the registration of new generic top-level domains (gTLDs) to be used in web addresses. Currently, the number of gTLDs - the domain name used as the last part of a web address - sits at 22, including the familiar ones currently in use - - .com, .net, .edu, .gov, and .org extensions. The New gTLD system will be a radical expansion in the number of gTLDs and in their purpose. Up until now, gTLDs have only been loosely associated with the entities using them (.com for commercial entities and .edu for educational institutions, for example). Now, instead of being locked into whatever domain names are currently available, companies will have a unique opportunity to use a custom gTLD to brand themselves on the internet.
It will cost $185,000 to register a new gTLD, with an additional annual fee of $25,000. A company purchasing a gTLD will be responsible for the maintenance of that domain. As such, only companies with significant technological infrastructure in place should apply. The first registration period for new gTLDs begins on January 12, 2012 and ends on April 12, 2012, with applicants being screened closely by ICANN. There are some clear motivations for registering a new gTLD; it can create a unique, distinctive presence online that can guide customers away from illegitimate sites with similar names. If companies act quickly enough, they can secure their new gTLDs against possible competitors. Public companies may also consider utilizing a gTLD which reflects their stock symbol.
There are, however, several potential concerns with the new system. Trademark owners will not be granted gTLDs on their trademarks automatically, nor will other companies necessarily be precluded from registering gTLDs containing a trademark belonging to a third party. Though there will be a trademark protest system built into the new gTLD program, along with a rigorous application and filtering process, the threat of trademark dilution is still very real. There is also a potential for "cybersquatting" - persons buying up domain names and attempting to sell them for inflated prices. It will be interesting to note over time whether the potential marketing and branding advantages of the new gTLDs will outweigh the potential legal issues, which may depend to a considerable extent on the rigorousness of the application screening process.
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For more information on this new development, please contact Neil M. Kaufman, Esq. in our Corporate and Securities Department at 516-328-2300, ext. 288 or your attorney contact at our firm.
