EABC Comments on gTLD Proposal

["Jan Barnes" <Jan.Barnes@xxxxxxxx>]

EABC position paper on ICANN gTLDs, March 2009

 

The European-American Business Council represents 65 US and European-based
global companies, united in promoting transatlantic investment, innovation
and integration. While the EABC recognizes that increased flexibility in
domain names may bring certain benefits, our members have several serious
concerns with ICANN's proposal to expand the number of  generic Top Level
Domains (gTLDs). Our concerns centre around (1) the immense cost and efforts
that will be required to register gTLDs defensively and to defend existing
intellectual property rights against any new gTLD that infringes or harms
those rights, (2) the risk of severe damage to the intellectual property
rights of trademark and brand owners and the related consumer confusion that
will result, and (3) the vaguely defined application and dispute resolution
processes that place the burden on trademark owners to prevent the
registration of new gTLD extensions that infringe on their marks and
threaten to cause confusion detrimental to consumers and the public. Based
on these concerns, EABC believes that the launch of new gTLDs as currently
proposed by ICANN should be significantly reconsidered or re-evaluated.

 

The EABC believes that the creation of new gTLDs that consist of trademarks
or that may infringe existing trademarks will create significant risk and
expense for trademark owners. Defending against, tracking and policing
domain name infringers is a time consuming and hugely costly endeavor for
trademark owners under the current system.

 

Under the proposed process, in order to protect its rights, a trademark
owner will be required to invest hundreds of thousands of dollars preparing,
applying for, establishing the infrastructure for, administering, and
maintaining a gTLD consisting of that trademark. This expenditure will be
multiplied several times over for owners of multiple marks, not to mention
the additional costs if that trademark owner finds itself engaged in a
bidding war with another claimant, legitimate or not, for that same gTLD.

 

If a trademark owner fails to engage in this process, it faces the risk that
another entity with inferior or no rights will apply for the same gTLD and
use it to divert customers and brand value away from the legitimate rights-
holder. Moreover, an environment of literally hundreds of new gTLDs will
render effective trademark protection virtually impossible and create
extensive confusion and potential loss of confidence in online commerce
among consumers and the public.   Even if a company does not feel compelled
to apply for a new gTLD to protect their brand, they will incur substantial
costs monitoring and policing for infringements that will occur for their
exact brand and tens of thousands of misspellings of their brands across at
least 500 new TLDs.  The existing remedies available to trademark owners to
police and and enforce these rights do not scale to a scheme involving
initially hundreds and then thousands of new TLDs. In addition, the entire
financial burden of objecting to any application made for a new gTLD or
enforcing trademark rights associated with registry misconduct in a new TLD
or registrant abuse will be borne by the existing rights owner under the
proposed guidelines. 

 

The EABC has taken note of the 2nd Version of the Draft Applicant Guidebook
released recently by ICANN, as well as the outcome of the recent meeting in
Mexico City. The EABC realizes that some changes have been made, namely in
relation to the costs and application and dispute resolution process.
However, many of the concerns EABC has outlined have not been adequately
addressed:

 

1.      Some suggestions on trademark and intellectual property protection
have been made by ICANN in the Analysis of Public Comment accompanying the
2nd Version of the Draft Applicant Guidebook. For example, ICANN
acknowledged that trademark protection was a prime issue of concern among
respondents and stated that the following actions will be undertaken:
organize conferences and discussions with trademark holders and Intellectual
Property organizations to propose additional trademark protection; conduct a
study on anticipated online malicious behavior that would accompany the
expanded TLD name space to counter potential infringers and cybersquatters;
examine if there are implementable, practical mechanisms to avoid the need
for purely defensive registrations at the second level; examine if registry
or registrar mechanisms can be put in place to avoid potential confusion
among consumers and the public regarding new gTLDs. However, these promises
of discussion and further study do not fundamentally provide answers or the
robust and comprehensive forms of protection for IP rights owners that will
be needed to police and enforce trademarks to combat fraud and confusion in
the new TLD rollout.  Moreover, ICANN should not, as a procedural matter, be
releasing any new version of the guidebook without first addressing the
trademark, consumer confusion and related abuse issues and finding solutions
that are acceptable to the business community.

Following the recent meeting in Mexico city, the Board of Directors
requested that ICANN's intellectual property constituency convene an
Implementation Recommendation Team (IRT) to develop and propose solutions to
the trademark protection issues in connection with the introduction of new
gTLDs.  The draft report by the team will make recommendations to improve
the aforementioned guidebook and will be considered at ICANN's Sydney
meeting in June. In view of these developments, the EABC would like to see
the following trademark concerns addressed in IRT's final report and ICANN's
revised proposal:

*      Sunrise period-the implementation of a detailed, objective, uniform
and cost-based Sunrise Process for all new gTLDs, whereby trademark holders
can register domain names before the registration process is opened up to
the general public. In this case, trademark owners could be charged only a
reasonable minimum fee to register their protected names.

*      Protected Name Registry-an alternative to a sunrise period could be
the creation of a Protected Name Registry, allowing brand owners to apply to
have their trademark placed on a reserved list. This could be achieved
through expanding the existing Top-Level Reserved Names List in Module 2 to
include trademarks or creating a separate database of trademarked terms,
specifically for the purpose of pre-registering IP rights in order then to
protect these within the proposed new gTLDs.

*      Brand Category Applications-other solutions include a separate
process for applications from trademark owners wishing to register their
trademark as a new gTLD string. ICANN can enable applications that are based
on registered trademarks to be distinguished from open and community-based
applications.  

2.      Although ICANN made minimal changes to the cost scheme it still
remains excessive. The only major change was the proposed reduction of
annual registry fee to $25,000 per year, $6,250 per quarter. The gTLD
application fee remains unchanged at $185,000. These minor changes will do
little to offset the significant burden imposed by the proposed system.
3.      ICANN did make some changes concerning its inadequately defined
application and dispute resolution processes that would place the burden on
trademark owners to prevent registration of new gTLDs that infringe on their
marks.  For instance, ICANN proposed: a public comment process for every
application with comments considered in each application's evaluation; an
objection period commencing upon the application's publication and closing
once ICANN publishes an initial evaluation report; the Arbitration and
Mediation Center of the World Intellectual Property Organization (WIPO) has
agreed in principle to administer disputes brought pursuant to legal rights
objections. However, it is still unclear how the whole process will work and
whether trademark owners will have priority over other registrants and what
form that priority would take. Therefore, it would be useful for ICANN to
include in the revised proposal that WIPO initiates consultation with the IP
community as it develops its processes to take into account of the needs of
the users.  Serious consideration should be given to WIPO's proposal to
allow for a mediation process where a trademark holder determines that an
ICANN accredited registry is abusing its mandate in the new TLD either
through misuse caused by the name itself or through registry misconduct.
Without some direct form of self-help mechanisms, it will be unlikely that
ICANN can effectively police registry or registrar abuse. In the absence of
famous trademarks being added to the reserved name list, successful
objections should have precedential value so trademark owners do not have to
keep objecting. 

Quadrupling the name space will only exacerbate the inadequacy of ICANN's
existing resources to police the domain name space for problems.
Administration of the internet and cyber security are inversely related -
less oversight means more security issues for consumers and businesses.

Based on all the concerns we have expressed in this position paper, the EABC
considers that ICANN should re-evaluate the current plan for new gTLDs, at
least insofar as it involves the award of any new gTLDs that comprise
trademarks.  In particular, ICANN should pay for a truly independent
economic study of the market (instead of commissioning an economic advocacy
paper designed to support its wish to rollout new TLDs).  In view of this
market analysis, it could be determined whether the goal of the scheme is
proportionate to the potential effects of new TLDs on consumers and business
owners.  In addition, such an analysis may show that a gTLD expansion (if
any) should be limited until adequate, low or no cost safeguards are in
place to protect consumers, businesses, and brand owners from brand abuse,
confusion and cyber fraud threats.

 

As a major transatlantic industry association, including companies across
all major industrial sectors, the EABC asks to be included in all
conferences and discussions addressing IP issues which ICANN has promised to
convene. We will continue to make every effort to identify a solution that
would better address the concerns of EABC members and other trademark
owners. Any solution must avoid the unintended and undesirable consequences
that we believe will result from the new gTLD plan, as currently proposed.

 

For more information, contact: 

Alexis Serfaty, Policy Director, Washington, DC: Alexis@xxxxxxxx or 

Jan Barnes, Europe Director, Brussels: jan.barnes@xxxxxxxx