Confident ICANN Publishes Third Draft Applicant Guidebook but timetable slips

Support for RPM grows as ICANN seeks “Expressions of Interest” from applicants

ICANN’s programme to launch hundreds of new gTLDs has taken two steps forward and one step back. Whilst the Third Draft Applicant Guidebook it published on 4 October 2009 updated the process that applicants must follow in order to win a new generic Top Level Domain registry, ICANN new CEO Rod Beckstrom announced at the 36th ICANN Open Meeting held in Seoul from 26 - 30 October 2009 that the timetable of a launch in the first half of 2010 has been abandoned.

“We've just published the third version of the draft applicant guidebook for new gTLDs,” he told over 500 delegates from 80 countries. “Immediately…our promises become relevant, because we have committed that prior to implementing, we will adequately address competition, consumer protection, security, stability and resiliency, malicious abuse processes, sovereignty concerns, and rights protection. These are the issues that have emerged as the result of discussions….We’ll be finished when we’re finished”.

A subsequent announcement by Kurt Pritz, ICANN’s Senior VP with responsibility for the new gTLD programme, that there will now be a Fourth Draft Applicant Guidebook, to be released at a date to be determined, led many members of the ICANN Community to conclude that the application process will not open until the second half of 2010 at the very earliest, and possibly 2011. Following a storm of protests at these delays, an alliance of the organisations planning to apply succeeded in lobbying the Board to consider the value of calling for “Expressions of Interest” from interested applicants as a way of keeping the momentum going.

According to a Board resolution available at http://www.icann.org/en/minutes/resolutions-30oct09-en.htm#5, “Such a call for "expressions of interest" could give ICANN and potential applicants important information about the level of interest in the program and likely strings to be applied for, which could assist the resolution of the remaining issues and assist ICANN in planning for the coming new gTLD round”. This process was used successfully in planning for the introduction of IDN ccTLDs. The Board resolution further notes that, “receiving "expressions of interest" (possibly with some financial deposit) will likely contribute to a better understanding of: 1) the economic demand for new gTLDs; 2) the number of gTLDs that are likely to be applied for; and, 3) relevant industry data.”

The ICANN Board has instructed staff to report on the viability of this initiative by the December 2009 Board Meeting. The hope of those who supported this idea (which included a number of brand owners) is that applicants who file an “Expression of Interest” in a character string, accompanied by a deposit of $50,000, can push ahead with their planning, maintaining the confidence of investors, staking a priority in a registry before general application opens. There are possible benefits to trade mark owners in this approach too: it means that objections can be prepared or negotiations commenced with aspiring registry operators whose character strings would infringe.

Despite these delays, ICANN CEO Rod Beckstrom remains confident that the new gTLD process is unstoppable. Introducing DAG3 Beckstrom says, “We believe that with this third draft, the Applicant Guidebook now contains a number of areas which have matured in development over the past year to a point where the process of continuous iteration and community feedback is essentially complete”.

This confidence is a reflection of ICANN’s achievement in replacing its Joint Project Agreement with the Department of Commerce of the US Government with an “Affirmation of Commitments” at the end of September 2009. This “Affirmation” confirms ICANN’s status as an independent, multi-stakeholder, not-for-profit company that will retain its Headquarters in California. It frees ICANN from 11 years of direct US Government oversight. From now on, ICANN will fulfil its role co-ordinating the Domain Name System for the benefit of the global Internet community, reporting every three years to an international panel of experts that will be co-ordinated by the Chair of ICANN’s Government Advisory Committee. (See www.icann.org/en/announcements/announcement-30sep09-en.htm)

Many within the family of ICANN such as the registrars and registry operators that seek new opportunities to sell domains have welcomed both the Affirmation of Commitments and DAG3. They support the position ICANN takes on its Home Page that new gTLDs will “bring innovative services and greater choice to Internet users through increased competition and engender broad participation through the introduction of IDNs and community-based TLDs into the Domain Name System”.

IP specialists have less reason to be enthusiastic. They are sceptical about the demand for new gTLDs and concerned that there may not be adequate safeguards for intellectual property rights. Addressing a US House of Representatives Subcommittee on Courts & Competition Policy on 23 September 2009, Richard Heath, President of INTA said, “A key argument ICANN offers for expanding the domain name space is the need to spur competition. But ICANN cannot assume, without empirical support, that simply adding unlimited gTLDs to a complex economic model like the domain name system will necessarily increase competition in a manner that best serves and improves the public’s welfare”.

Beyond this issue of the value of new gTLDs are questions about the place of rights protection mechanisms in the process. Rod Beckstrom set out ICANN’s intentions in a public letter to two senior Republicans on the House of Representatives Subcommittee on 29 September 2009: "ICANN’s new gTLD policy includes a provision requiring that new gTLDs ‘must not infringe the existing legal rights of others that are recognized or enforceable under generally accepted and internationally recognized principles of law.’ Accordingly, ICANN will, to the extent possible, protect trademark holders from an abusive domain registration and from the need for defensive registrations in new gTLDs, but no final decision has been made yet on the exact mechanisms that will be employed. The New gTLD Program is being designed with a goal of reducing or eliminating the need for businesses to register domains defensively. One of the key features of protection measures being discussed is a ‘rapid suspension’ system for freezing and suspending clearly infringing registrations in a timely and economical basis, consistent with procedures to ensure fairness… A reduction in the perceived need to register names defensively will also have the effect of reducing the perceived power of new gTLD registries to charge organizations artificially inflated prices for registrations in order to avoid becoming the target of opportunistic cybersquatters."

A URS (Uniform Rapid Suspension) Scheme was one of the measures proposed by the Implementation Recommendation Team formed by the ICANN Board in late April 2009 to propose measures to protect the rights of others in the new gTLD process. However, despite Beckstrom’s apparent endorsement of the principle of rapid suspension, the idea does not feature in DAG3 itself. Instead ICANN has asked its policy-making forum called the GNSO (General Names Supporting Organisation) to consider whether a version of the URS it has published in a separate paper (see http://www.icann.org/en/topics/new-gtlds/draft-proposed-procedure-urs-04oct09-en.pdf) is “an effective and appropriate option”. The problem for trade mark specialists is that the ICANN staff have watered down the URS. In the introduction to this paper, they state, “They adoption of the URS is recommended as a best practice for new gTLD registry operators. This means that it is believed to add value to a TLD and to the namespace generally; however, it is not a contractual requirement”.

This caused a great deal of concern for the IP specialists who attended the Seoul Meeting. According to Eun-Joo Min of WIPO who spoke at a meeting on RPM, over 70% of UDRP cases are uncontested: “Complainants invest considerable time and much money in preparing and filing cases only to find that the majority of respondents fade away without even filing a response”. The URS was designed to tackle “slam-dunk” cases of cybersquatting cheaply and effectively: as proposed by the IRT, it features a form complaint, examination by a neutral panelist and the freezing of a domain within 14 days for less than $300 provided the domain points to website or there is a pattern of abuse. A URS that is Best Practice is an RPM that is ineffective.

Similarly, the ICANN staff took the IRT proposal for an IP Clearinghouse and turned it into a Trademark Clearinghouse (see www.icann.org/en/topics/new-gtlds/draft-proposed-procedure-tm-clearinghouse-04oct09-en.pdf) for the consideration of the GNSO. The Trademark Clearinghouse, explains ICANN, “is envisioned as a data repository enabling specific information collection and data validation functions for trademark information. Under the proposed model, trademark rights holders would voluntarily submit data regarding their trademarks to the clearinghouse. The Clearinghouse would validate all submitted data initially and on a regular basis thereafter to ensure accuracy. The clearinghouse would also support any new gTLD registry during its initial launch phases by facilitating services such as: 1) a “Trademark Watch” service to provide notice to trademark holders of any new second‐level registrations matching their trademarks, and notice to potential registrants that trademark registrations exist matching their intended second‐level domain name, and 2) a “Sunrise Period” registration procedure allowing trademark holders that have registered with the Trademark Clearinghouse an exclusive period of time, prior to general registration of domain names in the TLD, to register domain names matching their trademarks”.

So far so good: the Trademark Clearinghouse is very similar to the IP Clearinghouse proposed by the IRT except that ICANN proposes splitting the functions of the Clearinghouse between two entities: one entity would validate marks for registration into the database; the other would
maintain the database supporting Sunrise and IP Claim services to the registries. A further change is to limit the Trademark Clearinghouse to registered and unregistered marks. Other forms of right which certain registry operators might have wished to include in their RPM are excluded (remember how .eu allowed company names and works of artistic or literary merit to be applied for in its phased Sunrise provided they were protected by national law?).

ICANN staff co-ordinated a debate at the Seoul meeting on these measures featuring representatives of the Stakeholder Groups that make up the GNSO – namely the Contracted Parties (registries and registrars); Commercial Users (intellectual property and business interests); and Non Commercial interests. If the GNSO cannot come to a consensus position supporting or improving these RPM then, according to a letter from Beckstrom to the GNSO published on 14 October 2009, “The Board expects that the staff recommendations (for the URS and the IP Clearinghouse) will be adopted in the implementation of new gTLDs”.

To the amazement of many, including the ICANN staff, the debate was characterised by agreement: the URS should be mandatory insisted the registry representative to be echoed in turn by the Intellectual Property Constituency, WIPO and the Non-Commercial representative. Splitting the Clearinghouse is OK they said, though a bit more thought is needed on the types of rights to be included. Over the next six weeks, these disparate groups will be working on new drafts of the URS and the Clearinghouse through a group called the STI (Special Trademark Interests). The GNSO has until 14 December 2009 to report back to the Board: “This timeframe reflects the Board’s desire to close on this issue and launch the new gTLD process” (letter to the GNSO from ICANN Board of 12 October 2009). If there is no consensus, then “The Board expects that the staff recommendations (for the URS and the IP Clearinghouse) will be adopted in the implementation of new gTLDs”.

But what of the other measures recommended by the IRT (whose 18 members included Com Laude’s MD Nick Wood )? There is no mention in DAG3of the Globally Protected Marks List which was requested by an overwhelming majority of the IP specialists who commented on DAG1 and DAG2 and was designed to block a small number of “supernova” trade marks from registration at the Top Level and the Second Level. Eventually, after question after question was asked of ICANN staff in Seoul, Doug Brent, ICANN COO admitted that “the Board has killed the GPML” noting that “We could not see consensus in the trade mark community let alone the ICANN community”.

The Post Delegation Dispute Resolution Mechanism designed to limit the possibility of systemic abuse by “bad actor” registry operators survives in an Annex to DAG3 but with significant changes from the IRT’s original proposal: ICANN has distanced itself from the process to the point where complaints would go straight to a neutral panellist, which would have at its disposal draconian remedies even to the point of closing a registry. Proposals for complainants who bring a case without merit to lose up to $25,000 have also been removed. Needless to say this somewhat unbalanced alternative model of DRM is unlikely to be supported by registry operators. What about ICANN simply enforcing its contracts, they cry?

IRT Recommendations that all registry operators should employ Thick Whois, that the String Confusion review should consider aural and commercial impression (meaning) have made the cut together with a requirement on all applicants to describe the pre-launch rights protection mechanisms they will adopt for assessment during the Initial Evaluation of applications.

What other issues have to be resolved before the new gTLD process opens? Flexing its muscles for the first time since empowered under the “Affirmation of Commitments”, the Government Advisory Committee (GAC) released a communiqué from Seoul on 29 October 2009, which sets out a checklist of issues which it expects ICANN to address before the application process opens:
“Following discussions in Seoul however, both between GAC members and with other stakeholders, the GAC feels that many of its concerns remain outstanding, related in particular to the potential cumulative effects of changes resulting from the introduction and implementation of DNSSEC, IDNs, new gTLDs and IPv6;…the importance of further economic studies to improve the community's understanding of all the costs, benefits and market impacts;…the need for more effective protection of intellectual property rights… the structural separation between registries and registrars, price caps and the potential impacts on competition in the DNS market… the need to explore track differentiation between categories… the need to respect national public interests and sovereign rights regarding strings with geographical meaning… the need to assist developing countries which would otherwise be constrained by their limited access to financial and technical resources”.

The debate about rights protection in the new gTLD process is entering a critical phase. ICANN’s strategy of sending the URS and the Clearinghouse to the GNSO for consideration is perhaps the last time they will consult on RPM. Although the GNSO is not expected to report until 14 December 2009 and there will be no public comment process on their conclusions, the IP community can comment on DAG3 until 22 November 2009. Every contribution from an IP practitioner helps: even a simple statement in support of a mandatory URS will help to legitimise ICANN’s attempts to introduce adequate IP protections. Go to www.icann.org/en/topics/new-gtlds/comments-3-en.htm to submit your comments.

20 facts about the new gTLD Application Process

The first page of DAG3 tells us that the document is designed to give “Applicants an overview of the process for applying for a new gTLD”. There is a great deal that is new in DAG3, as remarked on by Kurt Pritz, ICANN Senior VP with responsibility at the ICANN Seoul Meeting in October 2009: “I think if we posted a red-line of all the changes since the first version of the Draft Applicant Guidebook, the whole thing would be red and not very instructive. DAG3 features over 50 substantive changes”. Here is our summary of the process and the key changes:

1. Applicants must submit answers to 50 questions through an on-line application system. These questions are designed “to provide general information, demonstrate financial capability and demonstrate technical and operational capability”.

2. The questions relating to finance and security will be treated as confidential but otherwise all applications will be posted on line at one time “as soon as practicable after the close of the application period”.

3. Third party objections to an application can be submitted from the moment applications are published to one of the DRS providers engaged by ICANN. These objections can be from a rights owner against someone applying for a trade marked term (a “Legal Rights Objection”) or by one applicant against another. Multiple objections may be consolidated.

4. Each application will face an Initial Evaluation. Independent evaluators will assess “if the applicant has the technical, operational and financial capability to run a registry”. Initial Evaluation could take five months. Notices of Initial Evaluation will be posted in batches

5. If an applicant fails Initial Evaluation, it can apply for Extended Evaluation. Extended Evaluation could take five months and involves one more round of questioning.

6. Applications for the same string that pass Initial and Extended Evaluation (if appropriate) will be called “Contention Sets”.

7. Applicants that pass Initial and Extended Evaluation (if appropriate) embark upon a “Transition to Delegation” process that features execution of the registry agreement and pre-delegation technical tests. If successful, the applied for string is entered into the World Root Zone.

8. Most applications are expected to pass in the shortest possible time (meaning they avoid Extended Evaluation, Dispute resolution or String Contention). A straightforward application could have a life cycle of eight months; A complex application that faces Extended Evaluation, Dispute Resolution and String Contention could take 19 months.

9. There will be a mechanism for third parties not involved in an application “to bring relevant information & issues to the attention of those charged with handling new gTLD applications”.

10. ICANN will be appointing an “Independent Objector” (IO). The IO “acts solely in
the best interests of the public who use the global Internet." In light of this public interest goal, the IO is limited to filing objections on the grounds of Morality and Public Order and Community. The IO does not act on behalf of any group or individual.

11. All applications will be designated as “Standard” unless the application is “for the benefit of a clearly delineated community” in which case it will be called a Community-based Application. Community-based applicants must: 1) Demonstrate an ongoing relationship with a clearly delineated community: 2) Have applied for a gTLD string strongly and specifically related to the community named in the application; 3) Have proposed dedicated registration and use policies for registrants in its proposed gTLD, commensurate with the community-based purpose it has named; and 4) Have its application endorsed in writing by one or more established institutions representing the community it has named.

12. A Standard Application can be used “for any purpose”. It may or may not employ eligibility or use restrictions. It is expected that most “Dot Brand” applications will be Standard Applications. Dot Brand registries do not have to open to the general public.

13. “ICANN’s goal is to launch subsequent gTLD application rounds as quickly as possible...the goal is for the next application round to begin within one year of the close of the application submission period for this round”.

14. An applicant may be denied under two grounds: 1) A conviction in relation to breach of fiduciary duty in the past 10 years; 2) If any senior person involved in the bid or any shareholder owning more than 15% of the applicant “is the subject of a pattern of decisions indicating liability for, or repeated practice of bad faith in regard to domain name registrations”.

15. All applicants must provide supporting documents showing:
· Proof of legal establishment
· Proof of good standing
· Financial statements
· Some applicants may need to supply documents demonstrating:
· Community endorsement
· Government support or non-objection
· Third party funding commitments

16. String Contention between applicants seeking an identical term can be resolved by: 1) A settlement between the parties; 2) A Community Priority (Comparative) Evaluation provided one of the applicants is Community-based; 3) an auction. ICANN proposes using “ascending-clock auctions” as “the measure of last resort” to resolve contention with proceeds going to “good causes that support ICANN’s core Mission and Values”.

17. ICANN does not guarantee that any new gTLD string will work: “Past experience indicates that network operators may not immediately fully support new top-level domains, even when these domains have been delegated in the DNS root zone, since third-party software modification may be required”.

18. Applicants for IDN strings must supply a U-label (ASCII) and an A-label (Unicode form of an IDN label) and “a short description of what the string would mean or represent in English”. Currently the application process is for a character string in either ASCII or IDN. ICANN is considering what to do with “variant strings”: variant strings feature two or more characters that are confusingly similar in appearance such as when “ae” becomes “æ”. Should they be automatically blocked – even if the meaning of the two words is very different?

19. The application fee remains at $185,000 “to ensure the program is fully funded”. However, refunds of between $37,000 (20% of the application fee) and $130,000 (70% of the fee) will be available depending on when an application is withdrawn. If successful, applicants will also have to pay $6,250 per quarter and 0.20c per domain.

20. The fees of the Dispute Resolution Service Providers will range from the $10,000 that WIPO intends to charge for a Legal Services Objection to as much as $122,000 for either a Morality & Public Order Objection or a Community Objection that involves an in-person in Paris before three panellists. Objections can be filed from the moment applications are posted and close at the end of Initial Evaluation.

According to ICANN Vice President Doug Brent, “DAG3 represents months of outstanding effort by many in the ICANN community - working to resolve the few, challenging remaining issues”. In addition to resolving IP questions, a list of these issues could include ensuring IDN gTLDs can function properly in the Root Zone, resolving issues around the security of the Root Zone if new gTLDs are introduced at the same time as DNSSEC and IPv6 and appointing the army of consultants and specialists ICANN needs to implement the programme including evaluators, technical consultants, the auction provider and the IP Clearinghouse operator.

ICANN also needs time to establish its proposed “Seal of Approval” programme for registries that will gain a “verified” status by meeting a set of requirements additional to those that are in place for all applicants relating especially to advanced security measures.

Protecting your marks through the Legal Rights Objection Process

How do you challenge a third party seeking to create a new gTLD registry that matches your trade mark? This will become a critical question for rights owners who are faced with the prospect of “permanent string preclusion” – being locked out of using their mark for a gTLD registry because a third party has got there first. You might argue that it does not matter if you have a powerful presence under .com but it will surely become a matter of concern if the process gains broad consumer acceptance, with new gTLDS getting a high priority in search engine rankings and all of your competitors running their own registries and giving domains to customers and suppliers.

ICANN has recruited WIPO to manage the Legal Rights Objection process. WIPO will be using a panel of experts, yet to be appointed. The role of the experts is to determine “whether the potential use of any applied-for gTLD takes unfair advantage of the distinctive character or the reputation of the objector’s registered or unregistered trademark or service mark, or unjustifiably impairs the distinctive character or the reputation of the objector’s mark, or otherwise creates an impermissible likelihood of confusion between the applied-for gTLD and the objector’s mark”.

A Legal Rights Objection could take as long as 112 days according to a flow chart that appears after page 3-19 of DAG3 at www.icann.org/en/topics/new-gtlds/draft-rfp-clean-04oct09-en.pdf. Multiple objections can be consolidated at the discretion of WIPO.

DAG3 sets out a list of seven non-exclusive factors that panellists will consider:
1. Whether the applied-for gTLD is identical or similar, including in appearance, phonetic sound or meaning, to the objector’s existing mark.
2. Whether the objector’s acquisition and use of rights in the mark has been bona fide.
3. Whether and to what extent there is recognition in the relevant sector of the public of the sign corresponding to the gTLD, as the mark of the objector, of the applicant or of a third party.
4. Applicant’s intent in applying for the gTLD, including whether the applicant, at the time of application for the gTLD, had knowledge of the objector’s mark, or could not have reasonably been unaware of that mark, and including whether the applicant has engaged in a pattern of conduct whereby it applied for or operates TLDs or registrations in TLDs which are identical or confusingly similar to the marks of others.
5. Whether and to what extent the applicant has used, or has made demonstrable preparations to use, the sign corresponding to the gTLD in connection with a bona fide offering of goods or services or a bona fide provision of information in a way that does not interfere with the legitimate exercise by the objector of its mark rights.
6. Whether the applicant has marks or other intellectual property rights in the sign corresponding to the gTLD, and, if so, whether any acquisition of such a right in the sign, and use of the sign, has been bona fide, and whether the purported or likely use of the gTLD by the applicant is consistent with such acquisition or use.
7. Whether and to what extent the applicant has been commonly known by the sign corresponding to the gTLD, and if so, whether any purported or likely use of the gTLD by the applicant is consistent therewith and bona fide.
8. Whether the applicant’s intended use of the gTLD would create a likelihood of confusion with the objector’s mark as to the source, sponsorship, affiliation, or endorsement of the gTLD.

The cost of a mounting a Legal Rights Objection starts at $10,000 divided between WIPO ($2,000 for essential administration) and $8,000 to the panellist. However, if a three person panel is appointed the cost can increase to $20,000.

Erik Wilbers, Director of the WIPO Arbitration & Mediation Center says, “The WIPO Center would not itself decide the outcome of the objection between the parties...The WIPO Center’s specific role in administering the proceedings would be analogous to its role as a UDRP service provider and would include conducting an administrative review of objections and responses to verify compliance with the formal requirements of the applicable rules, notifying the objection to the new gTLD applicant, co-ordinating case-related communications, appointing the panel and otherwise ensuring that the proceedings run smoothly and expeditiously.”

For further information see http://icann.org/en/topics/new-gtlds/draft-wipo-rules-new-gtld-dispute-resolution-04oct09-en.pdf.

For further information on the services Com Laude offers to assist trade mark owners navigate through the new gTLD process contact This e-mail address is being protected from spam bots, you need JavaScript enabled to view it