Why Brand Owners Should Consider Supporting an EOI Process

["McGrady on Domain Names" <paul@xxxxxxxxxxxxxxxxxxxxxxxx>]

 From Upcoming Release 6 of McGrady on Domain Names: A Global Guide to
Disputes, Registration, and Maintenance, Copyright 2009, Matthew Bender &
Company, Inc., a member of the LexisNexis Group.

 

 

PRACTICE NOTE: 

Why Brand Owners Should Consider Supporting an EOI Process

 

Background

          Members of the ICANN community, of which I am one, have proposed
an "Expression of Interest" process that would require participation by all
applicants for all strings to be filed in the first round of new gTLDs.
Those who don't participate in the proposed EOI process cannot be applicants
in the first round.  The suggested EOI process also calls for a significant
EOI filing fee of $55,000, which would serve as a credit toward the $185,000
application fee.  

 

Benefits to ICANN

          There are several benefits to ICANN should the EOI process move
forward.  First, the process could help provide some much needed information
to ICANN regarding the level of interest in the first round, facilitating
appropriate resource allocation.  It would also answer the so-far unanswered
question "is there market demand?"  

 

Benefits to Brand Owners

          While those benefits are all well and good for ICANN, they fail to
answer the question why a brand owner should support the EOI initiative.  In
fact, the side benefits to ICANN may be causing brand owners to stop their
analysis, determining instinctively that anything that could be good for
ICANN or new gTLDs must necessarily be bad for brand owners.  However, the
EOI process would provide several concrete, cost-saving benefits to brand
owners that should not be quickly dismissed.   

 

As it stands now, a brand owner must file a full application to determine
(1) if any of its competitors will have their own branded TLDs; and (2) if
anyone is going to file for a TLD similar to that of the brand owner against
which the owner must be positioned both to file an objection based on prior
rights AND to participate in an auction of last resort if that prior rights
objection (which is untested) is not successful.  To prepare a full
application, the brand owner must (a) pay ICANN the full $185,000
application fee; (b) retain and agree to pay a back end registry provider
$100,000 or more to assist with the technical aspects of the application and
agree to run the registry for at least 1 year; (c) pay lawyers to assist
with the process; (d) ready a marketing campaign to inform consumers of its
new brand presence (assuming the application proceeds to delegation); and
(e) expend resources on internal re-architecture of its website to prepare
to operationalize the new gTLD.  All of this can easily cost in the
$500,000-$1,000,000 price range.  

 

Less Risk, Same Result

            For those brand owners who wish to obtain their own branded gTLD
to ensure that their competition does not early adopt and leave them in the
"low rent" <.com> space, or those who wish to obtain their own gTLD for
defensive purposes so that another with competing rights in another
jurisdiction or in other international classes doesn't get it, it clearly
makes sense to risk $55,000 instead of $500,000 or more.  If no troublesome
applications are filed in the first round, the brand owner may simply drop
the EOI application, forfeit the $55,000 to ICANN, and be vigilant for round
two.  Or, if no competitors file for branded TLDs, the brand owner may
proceed with a full application and use marketing to brand its competitors
as "low tech" and using "yesterday's Internet."  The choice will be up to
the brand owner.

 

Ready Objections or Litigation

            Even brand owners who have no intention to file an application
for a branded gTLD, will benefit from the EOI process.  The process would
provide these brand owners with information on the pool of possible
applications and would provide them more to time to prepare quality WIPO
objections or retain counsel to ready litigation to prevent the introduction
of the troublesome gTLD.  Instead of scrambling together a complaint in a
matter of days, the brand owner will have months to shop for counsel,
develop stronger theories, and otherwise prepare to deal with the problem.

 

Future Benefits to Brand Owners

          Since ICANN intends the new gTLD process to be ongoing with future
rounds at regular intervals, the benefits of an ongoing "Expression of
Interest" process has its appeal.  Like it or not, ICANN and brand owners
are bound together.  In time, it could prove difficult to launch a new
mega-brand without having the corresponding TLD secured.  It is easy to see
a future where "next year's brands" or "next quarter's brands" are cleared
for adoption only following the close of "this year's" or "next quarter's"
EOI window.