The Four Horsemen of the Apocalypse, Class of 2011: TLDs
The fourth and final in a series of columns exploring the Four Horsemen of the Apocalypse, circa 2011: The cloud; data security in the new world of recreational hacking; IPv6; and the new rules for TLDs, a quartet that keeps in-house lawyers awake at night.
In this fourth and final installment in the series covering the Four Horsemen of the Apocalypse, Class of 2011, we conclude with what may be a monumental change involving top-level domains (TLD) on the Internet. A TLD is the string of letters immediately to the right of the final “dot” in an Internet domain—e.g., “com” in .com or “info” in .info. The word or string of letters and/or numbers appearing immediately to the left of the “dot” is known as a second level domain—e.g., “apple” in apple.com.
About a month ago, a new TLD was introduced—.xxx—presumably making it easier to find adult content on the Internet, the kind of thing that is apparently difficult to find today. Right.
The owners of the .xxx TLD promise better security to prevent access by children, because all those purveyors of porn will rush to .xxx. Right. Or maybe they won’t, since pornography and adult content are two entirely different things, much of the former being illegal in most civilized countries, and the latter is just plain fun for lonely people. And I would imagine .xxx wouldn’t want any of the illegal stuff in their space.
The authority that permitted the introduction of this new domain was the Internet Corporation for Assigned Names and Numbers (ICANN), a California-based nonprofit corporation that has a contract with the U.S. Department of Commerce to run the portion of the Internet that assigns numbers and names to operators of Internet domains and websites. ICANN does so by licensing “registries” to operate TLDs. The registries, in turn, license registrars to sell second level domains to Internet users like you and me. Go Daddy, for example, is a registrar. ICANN gets a piece of the action so it can continue operations, revenues everyone agrees ICANN needs.
Today, ICANN manages the Internet with 21 generic top-level domains (gTLDs) 15 of which are used for commercial purposes and, of course, millions of second level domains. For your next bar-bet, challenge someone to name all 15 of the commercial gTLDs. You win. (Answer: .aero, .asia, .biz, .com, .coop, .info, .jobs, .mobi, .museum, .name, .net, .org, .pro, travel, and the newest, .xxx.)
Marketers and brand owners did not take the announcement of an adult domain well. Fearful that their brand names and trademarks would be used, abused, or ransomed by cybersquatters and trademark diluters, industry demanded that ICANN assure that the owners of .xxx adopted adequate protections.
So, .xxx has a multi-step process marketers can use to protect (sort of) their brand names. The window to seek protection opened on September 2, 2011, and will close on October 28, 2011. If your company has yet to avail itself of the opportunity to stay G-rated, at least for the time being, you better get on it. Of course, the protections offered are hardly perfect, and you will need to continually monitor who buys second level domains on .xxx to insure that variations of your company’s brands are not highjacked by purveyors of adult content with ill intent. The process offered is far too complicated to explain in this column, but suffice it to say marketers and brand owners find them inadequate and expensive.
But wait. There’s more.
If ICANN has its way, in January 2012 we’ll witness the beginning of a new digital era. An era of unlimited TLDs using words, including generic words and brand names, in just about any way someone can conjure up. So someone—maybe even you—can own .soda, .cola, .drink, .thirst, or .whateveryoucanthinkof. Each can be yours at the bargain price of $185,000, plus yearly royalties and costs of operations. And someone might even grab ownership of .apple, .cadillac, .delta, or some other brand name that’s a
generic word or is shared by a number of companies.
ICANN is going to auction those. Ka-ching! Of course we all expect that great icons—brands like Coca-Cola, Microsoft, and Google will grab TLDs in their brand names. Or maybe not.
But once you own a TLD, you can sell second level domains to would-be users on such terms and conditions as you see fit, provided you allow for some minimal protection for trademarks and brand names owned by others. But don’t worry; those protections won’t keep you from making lots of money. Maybe.
The problem is that the last 12 gTLDs authorized by ICANN (remember the bet?) were all pretty much useless for users. But it looks like they’ve been a pretty sweet deal for the sellers. Every time someone tries to register a domain name in .com, .org, or .net, the seller makes sure to suggest that the registrant also protect its second level domain in many of the other gTLDs. and they’ll even sell the other gTLDs at a discount. Bulk pricing so you can kill any likelihood that someone else will try to capitalize on your efforts.
But none of this gave ICANN second thoughts on introducing hundreds of new TLDs, oblivious to the fact that marketers didn’t ask for them and consumers don’t need them.
Of course, ICANN does require would-be owners of new TLDs to adopt policies that will protect brand owners’ trademarks from being infringed in the new domains, just like it did with all the other domains it introduced in the past 10 years. Just like it did in with .xxx.
And despite all those “protections” offered in the existing TLDs, cybersquatting and phishing remain sports for many Internet marauders, to the detriment of businesses and consumers alike. And it’s getting worse every day. Companies are spending hundreds of thousands of dollars a year monitoring and policing the Internet for infringers, phishers, imposters, squatters, and more, all wreaking havoc on the companies’ intellectual property and the confidence they’re trying to build with consumers. Multiply that by hundreds more TLDs and it doesn’t take a rocket scientist—or a computer programmer—to see that the costs across the global brand ecosphere will be staggering.
Today, phishing, hacking, and a host of other cybercrimes plague ecommerce. The privacy concerns of marketers, consumers, and regulators dominate headlines. They all agree that these problems must be solved for consumers to have the confidence in Internet security and brand integrity needed to assure the Internet’s continued growth. Brand owners argue that now is not the time for ICANN to further complicate matters by adding hundreds of new domains, where more mischief will reign. They argue that now is the time for the entire Internet community—including ICANN—to address the real, not the imagined, problems and to clean up the current domains before adding more and turning the Web into an ode to Humpty-Dumpty.
Advocates against ICANN also say that ICANN has failed to show any benefits for brands or consumers. While ICANN speculates that hundreds of new TLDs will increase competition and foster innovation, it offers no concrete proof. The only thing that is concrete is that the last round of new TLDs cost brands millions, offered consumers nothing, was an economic failure, created no competition, delivered no innovation, and only made money for domain name sellers and consultants. No one needs more of that multiplied by the hundreds.
So what should corporate counsel do as the New Year and the herd of Horsemen approach?
First, consider joining the increasing community of those opposed to ICANN introducing any new TLDs. Led by the Association of National Advertisers, supported by other leading global trade associations and brand owners, businesses have undertaken the daunting task of stopping ICANN before the nightmare begins. (Full disclosure: I am advising the ANA on its efforts.) For more information on the ANA’s initiative, contact the ANA’s Dan Jaffe by e-mail at email@example.com or by telephone at 202.296.2359.
Second, corporate counsel, whether for or against the ICANN proposal, need to plan for the worst and determine what they will do if hundreds of new TLDs are introduced over the coming years. Will they buy their own domain? If so, how many domains do they want? Will they participate in the pre-introduction protection programs offered by the new TLD owners?
Regardless of my bias, every brand owner needs to decide where it stands and whether it wants—or needs—a new domain for itself and how it will deal with monitoring and policing hundreds of new TLDs and tens of thousands, if not millions, of new second level domain name owners strewn around the world.
So the Four Horsemen of the Apocalypse, Class of 2011, are challenging every marketer. The cloud, recreational hacking, IPv6, and the prospect of hundreds of new TLDs are already stampeding down upon us and are about to make the lives of corporate counsel and the brands they represent more difficult than ever.
Now who was it who said the Internet was a good thing?
Doug Wood – We Expert
Reprinted from Corporate Counsel, http://www.law.com/jsp/cc/index.jsp