Grow Market Lead
Legal
perspective
q&A WITH
ATTORNEY
KEITH KLEIN
By Kerry Pipes
Dot-Complicated
New domain names bring opportunities, concerns
I
n January ICANN began accepting applications for new top-level
domain (TLD) names. We asked
franchise attorney Keith Klein what
this means for franchisors. Klein is a
partner at Bryan Cave LLP and is certified by the California Board of Legal
Specialization as a specialist in franchise
and distribution law.
New TLDs are now on sale. What
should franchisors know? Currently,
Internet domains consist of 22 generic
top-level domains (gTLDs), such as .com,
.org, .net, etc.; and more than 250 country
code top-level domains (ccTLDs), such
as .uk, .mx, .jp, etc. Starting this January,
ICANN, the nonprofit that governs Internet domain names, began accepting
applications for new gTLDs. ICANN
expects to receive hundreds of applications for domains in four categories:
1) generic word TLDs (.shop, .radio,
.franchise); 2) corporate or brand TLDs
(.franchiseupdate, .bryancave) owned by
trademark owners; 3) community TLDs
(.historicpreservation) where domains are
limited to members of a community; and
4) geographic TLDs (.omaha, .london)
owned by cities and geographic regions.
The new TLDs will also allow the use of
certain non-Latin characters.
Can a franchisor buy the .brand TLD
for their system? Yes, which means they
will own and control their new gTLD.
Franchisors not already in the domain
name business will be entering into a new
business line: domain registrar. Obtaining a gTLD is not inexpensive. Beyond
the $185,000 evaluation fee and ongoing registry operating costs, applicants
must demonstrate the financial depth to
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Franchiseupdate Iss u e I, 2 0 1 2
keep the registry fully operational for at
least 3 years.
What are the benefits of owning a
gTLD? There are many. The owner will
be the domain registrar with the power
to regulate both who can obtain secondlevel domain registrations and the cost of
the registrations. Thus, franchisors who
obtain a gTLD for their trademark can
limit second-level domain registrants to
authorized franchisees, employees, and
others they want to allow into the brand
community. Using a .brand gTLD may
Using a .brand
gTLD may be the
next opportunity to
connect, socialize,
and create a social
community.
be the next opportunity to connect, socialize, and create a social community
with a brand’s customers and followers.
Ownership of a brand gTLD may also be
a way to ensure security with customers
and contract counterparties. The franchisor could advise all customers and counterparties that they will receive electronic
communications only from the .brand
gTLD and should communicate with
persons associated with the brand only
through the .brand gTLD or through an
email address using the .brand gTLD. It
also may simplify trademark enforcement
as brand owners will be able to quickly
identify unauthorized uses of the brand
(e.g., anyone not using a domain under
the new .brand gTLD).
Q: What about deadlines? The registration application process has the fol-
lowing milestones in 2012: 1) January
12, application window opens; 2) March
29, last day to register for access to the
TLD Application System; and 3) April
13, application window closes. Before
an applicant can complete and submit
their application they must complete a
registration, which consists of several
steps. ICANN advises applicants not to
wait until the deadlines to register and
submit applications; and that the application evaluation process can take from
9 to 20 months (or longer) to complete.
How does a brand owner that does
not buy their gTLD protect their
brand? After the application process is
complete, ICANN will publish portions
of all applications, and there will be a public comment period and formal objection
process that ICANN advises will last for
about 7 months. Formal objections may
be filed on any of four specific grounds,
including legal infringement and confusion with an existing or applied-for gTLD.
All franchisors are advised to monitor the
application process, whether or not they
apply for a new gTLD. A legal rights objection may be made based on registered
and unregistered trademarks.
Following the launch of the new gTLDs,
franchisors and other rights owners must
continue to monitor and enforce their
rights in the domain names registered
under the new gTLDs. ICANN currently
proposes to have a “trademark clearinghouse” to assist in the prelaunch sunrise
period for the new gTLDs. Trademark
owners will want to avail themselves of
the clearinghouse so they may take advantage of the proposed Uniform Rapid
Suspension System to challenge domain
names identical or confusingly similar to
their trademark.
What’s next? Brand owners with the
financial wherewithal and who see a business reason will have to go through the
application process. Initially, all trademark
owners will need to watch the proposed
new gTLDs, and then expand their domain name registration procedures to
include 1) registrations under the new
gTLDs and 2) their policing of domain
registrations under the new gTLDs they
do not obtain. n