ICANN’s Proposal For New Generic Top Level Domain Names: Should All Brand Owners Be Concerned?

Over the past several years, the Internet Corporation for Assigned Names and Numbers (“ICANN”), the entity that oversees the Internet domain name system, has been aggressively pushing for the creation of new generic Top Level Domains (“gTLDs”). Currently, there are twenty-one gTLDs available, including those well-known extensions .com, .net, .org, .biz and .gov. In addition there are over 200 country-code top-level domains, such as .cn for China, .jp for Japan and .asia for the Asian region.

ICANN is now lobbying to potentially dramatically increase the number of gTLDs, which would allow for extensions 3-63 characters long. ICANN’s proposed plan would allow for the creation of gTLDs that may include brand names, such as www.goofy.disney, www.airline.usair, www.creditcards.visa and www.first.bank. The plan also calls for the registration of gTLDs for non-Latin scripts, including Chinese and Arabic.

The debate has heated up over ICANN’s proposal as brand owners voice their concerns over what they believe would become the new “wild wild west” for cyber squatters. Brand owners worry about the potentially exorbitant costs to enforce their trademark rights against those Internet pirates (a/k/a cyber squatters) that make a living reserving domain names that include other parties’ trademarks. They’re also concerned about the need to register “defensive” gTLDs to keep them out of the hands of squatters. The concern over the costs to reserve defensive registrations is clearly understandable given that the proposed cost to register gTLDs is $185,000USD each. Then an annual fee of $25,000 to maintain it! And those are not typos. $185,000 and $25,000 for a domain name!

Proponents of the plan argue that new gTLDs would enhance and improve the Internet by making available more domain name choices for companies, the implementation of new safeguards against Internet crime, such as reducing domain name squatting, phishing, spamming and other abuses, reducing domain name prices on the secondary market and reducing trademark confusion on the Internet, since different companies could use the same brand name with industry specific terms such as www.united.airline, www.united.investmentfunds and www.united.accountants.

Opponents of the new system argue that premature implementation of new gTLDs procedure without adopting proper safeguards causes serious concerns for brand owners, including increased cyber squatting and brand hijacking, increased consumer confusion and frustration, since consumers would not know where to find a company’s web site (i.e., www.unitedairlines.com, www.united.arlines, www.airlines.united?) and the need to spend hundreds of thousands of dollars on useless defensive domain name registrations. Opponents also argue that the new gTLDs system appears to be nothing more that a “money making scheme” that primarily benefits ICANN.

Proponents of the new gTLDs system argue that brand owners are over reacting to ICANN’s proposal and that, with respect to their concern over cyber squatters, there is a proposed Rapid Suspension System in place, which, when triggered, would immediately suspend an obviously infringing domain name thereby protecting the brand owner from continuing trademark infringement. However, what about those cases that are not so obvious?

In my opinion, the concerns raised by brand owners appear to be limited mostly to multi-national, well-known brands that would be most susceptible to domain name squatting issues. Small to medium-sized companies and many non-consumer products companies probably have little to worry about should ICANN’s proposed plan be implemented. All companies should, however, be keeping an eye on the process as it unfolds and, if implemented, be sure to monitor for misuses of their brand names in the new online “wild wild west.”

If you are interested in learning more about this topic, you may read more at the Goldstein Report here http://bit.ly/9wfbIm and by visiting ICANN’s web site here: http://bit.ly/4o73OE.

Why Improper Trademark Selection Can Kill A Brand

Trademarks can be words, letters, shapes, colors, sounds, smells or any symbol or device used to identify the source of products or services. Most importantly, not all trademarks are created equal. Valuable trademarks distinguish competitors, while trademarks that don’t distinguish competitors are not valuable.

Nokia and Motorola are good examples of trademarks that distinguish the source of their associated products. There is no issue of whether consumers would be confused as to the source of Nokia and Motorola products. However, what about the trademarks Whoville Eye Specialists and Eye Specialists of Whoville? Might consumers become confused as to the source of the services offered under those trademarks? What if Whoville Eye Specialists develops a reputation for blinding patients during routine eye laser surgery? Do you think that reputation would affect Eye Specialists of Whoville’s brand? Of course it would. The likely result would be loss of patients, loss of potential patients and loss of revenues.

But why? Because consumers use trademarks to avoid companies with bad reputations and seek out those with good reputations. Under my Whoville example, consumers are likely to mistakenly believe that Eye Specialists of Whoville and Whoville Eye Specialists are either one of the same or somehow associated or affiliated. Either way, both companies’ brands become irrevocably damaged. And that’s unfortunate for Eye Specialists of Whoville who now must either change its name or spend tens of thousands of dollars in a public relations marketing campaign. Do think it might be difficult for Eye Specialists of Whoville to develop brand loyalty with consumers in light of Whoville Eye Specialists’ reputation?

Companies that offer their products at consistent levels of quality and at fair prices can create brand loyalty. The result of creating brand loyalty is repeat business, which is what all companies desire. Why do some companies get repeat business while others do not? McDonald’s® has been very successful at creating brand loyalty, thus repeat business. But how has McDonald’s accomplished that? By offering its products at consistent levels of quality and at fair prices. Consumers know what to expect when they purchase Big Mac® sandwiches in Seattle and Boston. The Big Mac should cost and taste the same in both locations. However, if the cost, and more importantly the taste, of Big Mac sandwiches were different from city to city and location to location, consumers would not be as loyal to the McDonalds brand as they are today.  And that holds true for any product.

Brand loyalty and brand success go hand-in-hand. Strong brand loyalty eventually generates a high level of goodwill for companies and their brands. Goodwill is described as including a company’s reputation in the marketplace. It is inevitably trademarks that will protect the goodwill, reputations and brand images generated by businesses. Do you think companies want trademarks that have little “value” to be “protectors” of their goodwill and reputations? Of course not. So why do many companies ignore the importance of trademark selection? Ignorance, time or money? All three?  What ever the reason, to ignore the importance of selecting “valuable” trademarks can be the difference between product and brand success and failure.