ICANN prepares for trademark fight with GAC

Kevin Murphy, February 22, 2011, 14:18:45 (UTC), Domain Registries

ICANN thinks the benefits of new top-level domains will outweigh the costs, and it preparing for a scrap when it meets its Governmental Advisory Committee in Brussels next week.

In a number of briefing documents published yesterday, ICANN makes it clear that it does not think the new TLD program will create a huge economic burden on trademark holders.

Brussels is possibly the final major hoop ICANN has to jump through before its board of directors will be able to sign off the Applicant Guidebook and start accepting new TLD applications.

There are a number of areas where the GAC and ICANN disagree. Next week’s meeting is intended to identify those differences, and to try to find ways to resolve them.

The GAC’s biggest problem with the new TLD program, as its members made clear in Cartagena and subsequently, is that it’s not convinced new TLDs won’t cost brand holders a bundle.

What will be the damage caused by cybersquatting? How much money will big business be forced to spend on defensive registrations?

Nobody knows for sure, and none of the independent third-party economic reports commissioned by ICANN ventures anywhere near a comprehensive empirical study.

So the GAC wants another economic study done, to quantify the costs and benefits of new TLDs, and to figure out how voluminous defensive registrations is likely to be.

ICANN disagrees, saying essentially that more studies are pointless, and that demand for defensive registrations in new TLDs are likely to be low.

The Board position is that defensive registrations will increase but not in numbers projected by some trademark holders

Estimates from the Coalition Against Domain Name Abuse, CADNA, last year put the cost to brands of the new TLD program at $746 million. But ICANN isn’t buying that:

The Board also believes that economic studies do not provide evidence that new TLDs will result in demand for defensive registrations. Existing independent studies, that the Board is seeking to validate, indicate that defensive registrations occur only in the very largest, well-established registries only.

the Board is seeking (and will publish) independent corroboration that:

• trademark holders generally do not register their trademarks in all the current generic TLDs.

• Therefore, it is not expected that trademark owners, in general, register their trademarks in new gTLDs, and

• due to the expected costs to run a registry and the expected low number of defensive domain name registrations, there is no economic incentive for an applicant to obtain a TLD for the sole purpose of making money from defensive trademark registrations.

ICANN does not identify these “independent studies”, but the data points cited in the document (pdf) point to a February 2009 article published on CircleID by Paul Stahura, and a comment made on that article by Richard Tindal that cites third-party data.

The Stahura report is arguably the most comprehensive carried out on defensive registrations in existing open gTLDs, concluding that the current cost to trademark holders is very low indeed, and that the bulk of typosquatting and trademark enforcement goes on in .com.

The research suggested that each new TLD would create costs in the tens of thousands of dollars per year, across the whole universe of trademark interests. It used baseline registrar fees in its calculations, unlike the CADNA report, which used sunrise fees about a hundred times greater.

But the Stahura study is “independent” only in the respect that it was not commissioned by ICANN or carried out with its blessing or participation.

At the time it was published, Stahura was president of eNom owner Demand Media, which is expected to be a new TLD applicant. Tindal, apparently also cited in ICANN’s latest report, was senior vice president, registry, for Demand Media.

Independently validating the report’s conclusions will be important, if only to avoid accusations that ICANN is making its decisions based on the views of those who would benefit from new TLDs.

Another of ICANN’s newly published briefing documents (pdf) also address the specific trademark protection mechanisms called for in the Applicant Guidebook.

The GAC has not yet published, or provided ICANN with, its specific recommendations relating to these mechanisms (I understand that will come in the next day or two) but they are expected to call for a tightening of the rules governing the Trademark Clearinghouse and Uniform Rapid Suspension policy.

Unlike several parts of yesterday’s briefing papers, ICANN’s language when discussing these two mechanisms does not suggest to me that it is preparing to substantially compromise.

With trademarks just one of many issues under discussion, Brussels is shaping up to becoming very interesting indeed.

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