New ICANN gTLDs – What’s Next?

November 24, 2014

By Clark W. Lackert, Reed Smith LLP

The ICANN 51 meeting just concluded in Los Angeles displayed many of the critical issues faced by advertisers and brand owners in the new “gTLD” (generic Top Level Domain) ecosystem.  The first round of gTLD applications is complete, and over 430 strings have already been delegated to date.  Delegated strings include strings which are restricted to members of specific communities such as .bank, strings which are geographic such as .nyc, and overlapping strings such as those for .car, .cars, and .auto.  While there are mechanisms in place for safeguarding or securing trademarks in the new gTLDs, there have been complaints about the low acceptance rate of so-called Legal Rights Objections (“LROs”), around 14%, and glitches in the Trademark Clearinghouse (“TMCH”) such as lack of searchability and acceptance of certain generic terms if incorporated with other words. The so-called Uniform Rapid Suspension (“URS”) system has been helpful to some, but others fault its lack of ability to transfer infringing domain names and its applicability to mostly non-resolving domain names.

Although we are just beginning to see the impact of the auction process, some auctions are now being won for $5 million and higher. High fees for registries are raising eyebrows not only on the level of fees (over $23 million collected from registrars and registries to date) but on how these fees will be used by ICANN.  The most recent figures indicate that ICANN’s surplus revenue from the new gTLD program is in the area of $87 million, and that this will be supplemented by over $20 million in auction fees – amounting to a staggering $100 million in profit!  Many advertisers and brand owners may have heard of a Second Round slated to arrive in late 2016 or early 2017, but probably not a Remedial Round. This balloon has been floated at ICANN 51 to determine interest in having an intermediate “corrective” round to address complaints of geographical name owners, community domain name owners who are of the opinion that the point system standards are too high, and so-called underserved countries and communities who do not file many of the new gTLD applications. This Remedial Round, call it “Round 1½”, could seriously affect advertisers and brand owners since they will once again be called up to defend their intellectual property.  Further, it is not clear whether new instances of objection to already designated gTLDs in the Remedial Round (such as rejections by local governments, for example) would result in such gTLDs being retracted or re-evaluated by ICANN.

The final major development in new gTLDs in Los Angeles was the continued rise of the Governmental Advisory Committee (“GAC”).  This GAC, which now will be more aggressive in asserting its governmental power, seems even more interested in policy making and new gTLD acceptance or veto.  There are indications that the GAC is seeking to circumvent existing ICANN policies based upon its representation of government and organizational interests.  For example, a recent attempt by GAC to oversee local name reservations for “red cross” and “red crescent” domain names (e.g., “denverredcross”) outside of ICANN policy was met with strong resistance from ICANN.   ANA is commenting on the new GAC proposal concerning all geographical names but ANA members are also encouraged to comment on this proposal (before December 31, 2014) as well as other ICANN proposals which are in comment periods.

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