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Will ICANN changes create a tug-of-war for domains?

By: dmc-admin//October 27, 2008//

Will ICANN changes create a tug-of-war for domains?

By: dmc-admin//October 27, 2008//

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ImageA new rule by ICANN, the Internet oversight body, to expand the field of top-level domain names, will make it much harder for companies to protect their trademarks, attorneys say. They expect confusion and increased litigation as corporations seek to prevent cybersquatters and fraudsters from registering domain names that infringe on their trademarks.

“A can of worms might be the best way to describe it,” says Rick McKenna, a partner at Foley & Lardner LLP, Milwaukee. “ICANN is about to dramatically expand the landscape and the realm of possibilities in which there can be misuse or even infringement of well-known brands and trademarks on the Web.”

However, David Cross, a partner at Quarles & Brady LLP, Milwaukee, is taking a wait-and-see approach. “I’ve seen no red flags that I need to give my clients a heads up on yet, partly because the plan is still being formulated. What I’ve seen is pretty sketchy.”

ICANN is the Internet Corporation for Assigned Names and Numbers, a Marina Del Rey, Calif., nonprofit that acts as a sort of system operator for the Internet. Among its tasks is assigning top-level domain names, which initially ended in .com, .gov, and .org but now also include such names as .biz and country-code identifiers like .ca for Canada and .uk for the United Kingdom.

Open Domain Names

In June, ICANN approved a rule allowing any entity to apply for any top-level domain name. For instance, Wells Fargo Bank could apply for a name ending in .wellsfargo, and IBM Corp. could apply for a name ending in .IBM.

“The problem is really one of complexity,” says Thomas Miller, a partner at Michael Best & Friedrich LLP, Milwaukee. “Under the current system, there are problems with enforcing your trademarks in the Internet world. Because the top-level domain names ICANN has allowed are limited, the opportunities for cybersquatters and fraudsters have been limited as well. When you create this new system that’s unregulated, it opens the door to all kinds of cybersquatters and fraudsters.”

Miller offers an example of a problem the new rule could present. “I could register heineken.beer and beer.heineken,” he explains. “The combinations are now unlimited, and for a trademark owner to protect itself, it has to go after every one of the fraudsters and cybersquatters who register those names.”

ICANN will increase the cost of domain-name registrations to about $100,000 and up to deter fraudsters and cybersquatters. But that could break some corporations’ banks. “If brands are protected through trademark registration, they’re in a position to bring infringement litigation,” says Elisabeth Bridge, a partner at Whyte Hirschboeck Dudek in Milwaukee. “But there are so many derivations that can be protected that it gets to be a very expensive task for small- and medium-sized businesses to register every possibility of domain name.”

What’s in a Domain Name?

Even if corporations can afford the new names, they don’t yet know what the fee will cover.

“Because ICANN hasn’t released its regulatory scheme, it’s not clear what that fee will get Heineken,” says Miller. “Does it get you only heineken.beer or all the combination of top-level domains using Heineken’s trademark? In addition, we don’t know what ICANN would do with more common names like Smith Barney, Smith & Nephew, and Smith & Wesson. Very few people have thought that far ahead, especially at ICANN.”

Cross agrees that ICANN’s new plan could create problems, but he’s not convinced it will leave trademark owners unprotected. “ICANN is discussing internal reviews that would give protection to trademark owners,” he explains. “For example, there’s a multi-step application process, and it includes a review of whether there would be a violation of others’ legal rights. That’s unlike the older program, which was a bit like the wild, wild west.”

In fact, ICANN will publish in late October or early November a guidebook with draft rules addressing how the approval and application process will go forward, according to Jason Keenan, ICANN’s media advisor. ICANN will then accept comments on the process for at least a month, possibly longer.

“Since ICANN started, there’s always been a concern about domain name confusion,” says Keenan. “One thing applications will be judged and weighed on is whether they’re confusing and similar. There will be mechanisms around that general issue in the guidebook, but the issue is not yet resolved. It’s one that people may want to comment on.”

What if fraudsters and cybersquatters slip through the ICANN screening process?

“Clients have to think about how much money and effort they’ll spend,” says McKenna.

“For some large brand owners, this will cause fairly significant litigation from companies trying to shut down misuse of their trademark on the Web. If someone wants to create a top-level domain name of .wellsfargo or .wellsbank, almost certainly Wells Fargo would have to take action to protect its rights.”

While ICANN is receiving comments on how to implement its scheme, attorneys are already advising their clients to begin thinking about how the new framework will affect their businesses.

“I’m recommending that my clients maintain their current domain names,” says Miller.

“But they’ll have to think long and hard about how to go forward. Which generic top-level domain should they create for their business? And do they change their whole Web site over to that domain name or just link their current site over to it? This change will create a lot of work for brand and marketing managers to thoughtfully attack the problem.”

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