Michelin comment on Closed Generic TLDs

[Dreyfus & associés <contact@xxxxxxxxxx>]

The following comments are submitted on behalf of Michelin.

 

Since 1889, Michelin has constantly innovated to facilitate the mobility of
people and goods. Today, it is setting the benchmark across every tire and
travel-related services market, while leading a global strategy to drive
sustainable, profitable growth. With more than 115,000 employees, Michelin
has produced 184 million tires and sold close to 10 million maps and guides
in 2011. Michelin is #1 in the passenger car light truck and truck tires
market.

 

The Internet is with no doubt one the major channel of sales, from
information to the selection of a tire dealer, and this although the sale of
tires requires mounting in a garage. According to the website Modern Tire
Dealer, online retail sales in the US would reach $200 billion in 2012 and
$279 billion in 2015
(http://www.moderntiredealer.com/blog/b-o-b/story/2012/01/just-how-important
-is-the-internet-to-tire-sales-k-m-tire-knows.aspx).

 

In an increasingly digital world, it is now second nature for most consumers
to start their search for tires from their computer or mobile device.
Running attractive and efficient websites built on easy to remember domain
names are a key to access a good SEO ranking on search engines.

 

Michelin is extremely concerned by the “Closed Generic” TLD Applications, in
particular the TIRES Applications from Bridgestone and Goodyear. 

The “Closed Generic” TLD Applications have the following characteristics:

-       the TLD applied-for is a generic term, a word of common language,
closely linked to a economic sector;

-       the Applicant is a major stakeholder in the same economic sector;

-       the Applicant plan to restrict the registration of domains under the
TLD to itself or to a limited number of partners (subsidiaries, affiliates,
business partners).

 

Why are these “Closed Generic” TLD Applications a source of concern?

 

1. These generic terms refer to a business category

Some of these generic terms are necessary for the exercise of an activity
and should not be reserved for, or monopolized by a single stakeholder in a
business category. Generic words used in a generic way cannot be reserved by
and in favor of a single organization. Words as parts of language are our
common heritage. It is obvious that language, and its specific uses, have to
be protected as public domain that is equally accessible to all. 

The delegation of a generic term matching an economic sector to one single
player could lead to establishing a monopoly by excluding the direct and
indirect competitors.

 

2. The Applicants are looking for a monopoly

Some of the applicants for these generic terms have chosen to reserve the
name spaces for themselves rather than offering registrations to everyone.
These applicants seek to operate them in a completely closed manner and to
capture the exclusive use of these generic terms for their own business. If
allowed to register as closed domains, a single player could control the
entire domain string related to a generic word and prevent others from
registering domain names within such string. Very often, applicants have
chosen to apply for closed control of a generic term representing or closely
linked to their own economic sector.

 

3. A similar application in the brick and mortar world would be denied

Trademark regulations including the Lanham Trademark Act or the EU Directive
2008/95/EC forbid the registration of trademarks which consist exclusively
of signs or indications which have become customary in the current language
or in the bona fide and established practices of the trade. If the
Applicants were to file a TIRES trademark registration, it would be refused
for lack of distinctiveness. Trademark rights are compatible with free
competition rules in as much as registration of a trademark does not confer
an exorbitant right to its holder, preventing its competitors from using a
generic and necessary term in their business. The same regulations should
apply to new gTLDs.

 

4. A typical example of “Closed Generic” TLD Applications

Among the companies that are trying to obtain a monopoly on a generic term
representing or closely linked to their own economic sector, major tire
manufacturer applied for the generic term TIRES:

- application # 1-2123-56973 for TIRES by Bridgestone Americas Tire
Operations, LLC;

- application # 1-1884-1217 for TIRES by The Goodyear Tire & Rubber Company.

Both applicants are major stakeholder of the tire industry. They claim to
hold significant market shares in the business and have organized their
applications on a closed registry model. They don’t plan to allow the
public, tire reseller, tire manufacturer or other stakeholder of the tire
industry to register domains using the extension. As a result, they will
hold an exclusive right to these new generic TLDs. 

 

5. A risk increased by the terms of the Revised Registry Agreement

In connection with the operation of the registry for the TLD, in principle,
the Registry Operator must not register domain names in its own right. As an
exception, closed applications for generic TLDs can be filed in application
of the Registry Operator Code of Conduct as set forth in Article 6
(Specification 9) attached to the ICANN Revised New gTLD Registry Agreement,
which provides: “Registry Operator may request an exemption to this Code of
Conduct, and such exemption may be granted by ICANN in ICANN’s reasonable
discretion, if Registry Operator demonstrates to ICANN’s reasonable
satisfaction that (i) all domain name registrations in the TLD are
registered to, and maintained by, Registry Operator for its own exclusive
use, (ii) Registry Operator does not sell, distribute or transfer control or
use of any registrations in the TLD to any third party that is not an
Affiliate of Registry Operator, and (iii) application of this Code of
Conduct to the TLD is not necessary to protect the public interest”. 

These provisions were originally intended for “dot-brands” applications.
However, at the time, no distinction between commonly used words and brands
was made by ICANN.

Unfortunately, any applicant who wishes to operate a closed generic TLD can
file an exception request to operate the TLD for its own purpose. Such
exemptions may be granted by ICANN at ICANN’s reasonable discretion. In
particular, the Registry Operator must prove that there is no infringement
or at least no risk with regards the public interest. 

Although “public interest” was not defined by ICANN, could an application
seeking exclusive access to a common generic string that relates to a market
sector be consistent with the protection of public interest? 

 

6. Monopoly situations are detrimental to consumers

The main risk of delegating of theses TLDs under the rules requested by the
applicants is the capture of the whole tire online sales channel by one of
these two operators.

This would surely have anticompetitive consequences and limit consumer
choice across the Internet:

-                 competitors will be prevented from using those generic
TLDs to compete with the string owner;

-                 consumers will have access to offers coming from one
single player, which means that they will be captive of one single tire
manufacturer.

Monopoly situations are tackled by legislation or regulations because they
are detrimental to consumers. A monopoly on a TLD would probably be in
breach of antitrust regulations including the Sherman Antitrust Act in the
United-States or the antitrust provisions of articles 101 and 102 of the
Treaty on the Functioning of the European Union.

 

ICANN is a governance system with the responsibility of protecting and
promoting public interest and consumer trust.

We therefore urge ICANN to resolve the ambiguity surrounding these
applications, decide that « Closed Generic » TLD Applications such as TIRES
are potentially detrimental to consumers, do not comply with the limited
scope of the exception mentioned in the Code of Conduct of the Revised
Registry Agreement and should not proceed any further.

 

 

Best regards,

 

Nathalie Dreyfus

Dreyfus & associés

Conseils en Propriété Industrielle - Intellectual Property Attorneys

 

78 avenue Raymond Poincaré - 75116 Paris - France