Expert Q&A on Brand Protection in the Expanded gtld Program

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1 Expert Q&A on Brand Protection in the Expanded gtld Program Practical Law Intellectual Property & Technology An expert Q&A with Lisa W. Rosaya of Baker & McKenzie LLP on the expanded generic top level domain (gtld) program and defensive steps trademark owners should consider to protect their brands, with the first new registries expected to launch in Fall This is just one example of the many online resources Practical Law Company offers. To access this resource and others, visit practicallaw.com. In late June 2013, the Board of the Internet Corporation for Assigned Names and Numbers (ICANN), the global organization that administers domain names, approved the New gtld Registry Agreement for its expanded generic top level domain (gtld) program and the 2013 Registrar Accreditation Agreement. Currently, there are 1825 active applications for new gtlds. On July 15, 2013, the contracting process began, with ICANN and three new registry operators executing Registry Agreements for the following new gtlds (all of which are Internationalized Domain Names (IDNs)): 游 戏, Chinese for "game." "web." Arabic for "network" or,ةكبش сайт, Russian for "website." онлайн, Russian for "online." With contracting in process, the first new gtld is projected to launch by the Fall of Practical Law asked Lisa W. Rosaya of Baker & McKenzie LLP to discuss certain aspects of the new gtld program, including the key risks it presents for brand owners, measures the program provides to address those risks and other steps companies should consider taking to protect their brands in this new era of expansion of the gtld space. Lisa is a partner based in New York. Her areas of focus are global trademark portfolio and brand management matters, including trademark selection, trademark prosecution, trademark opposition and cancellation proceedings, copyright and trademark licensing, enforcement and infringement matters, labeling and advertising issues and domain name disputes. For more information on the new gtld program, see Article, Generic Top-level Domain (gtld) Expansion ( us.practicallaw.com/ ). What key concerns does the new gtld program raise for brand owners? For brand owners, the launch of each new gtld presents a new realm of challenges and level of scrutiny, including increased costs to monitor, register and enforce brands across these new domains. Since the gtld expansion process began in 2008, many constituencies in the ICANN community and others have voiced concerns that: Brand owners will need to incur substantial additional expenses to protect their trademarks in the new gtlds, including the costs of: monitoring and enforcing their trademarks; and registering swaths of new defensive domain names in new gtlds, particularly those that are relevant to the brand owner's business sector or consumer base. The large number of new gtlds, and accompanying secondlevel domains in these new gtlds, will inevitably lead to an increase in nefarious online activities such as phishing, copyright infringement, piracy, online counterfeiting, distributing malware and other illegal activities. What is the Trademark Clearinghouse (TMCH) and what are its key requirements and functions? The TMCH is a global repository for trademark data that was developed to facilitate rights protection mechanisms for trademark owners in the new gtld program. Specifically, registering a mark in the TMCH: Learn more about Practical Law Company practicallaw.com

2 Expert Q&A on Brand Protection in the Expanded gtld Program Gives the trademark owner access to the new gtld program's sunrise and claims services (see Key Benefits). Provides evidence of registration and use (if elected) for the new dispute resolution procedure for new gtlds (see Uniform Rapid Suspension System). A mark may be registered in the TMCH if it is any of the following: Nationally or regionally registered. Court-validated. Protected by law or treaty. Unregistered trademarks are ineligible for registration in the TMCH. This includes any mark that either: Is the subject of a pending federal application or state application or registration. Has been successfully opposed, invalidated or cancelled. When submitting its application to the TMCH, the brand owner must provide certain details for the TMCH to verify the validity of the trademark. Certain non-alphanumeric characters (for example, & are impermissible in domain name strings. If a trademark that otherwise qualifies for registration in the TMCH contains any of these characters, the TMCH matching rules require that they be replaced with (or translated into) permissible characters in the TMCH-registered mark. For example: "&" becomes "and." "@" becomes "at." The trademark owner can include up to 10 of these variations in its TMCH registration for a particular mark. In addition, for each mark registered in the TMCH the mark owner may register up to 50 variations that were the subject of any successful litigation or UDRP proceeding. The fees for registering a mark in the TMCH vary based on: The registration period. A trademark can be registered for one, three or five years. The number of trademarks registered with the TMCH. Depending on the number of registered marks, the fees per mark (excluding any agent fees) range from: $90 to 145 for a one-year period. $285 to $435 for a three-year period. $475 to $725 for a five-year period. To continue to receive the benefits of a TMCH registration, the trademark owner must renew it at the appropriate time. What are the key benefits and limitations of the TMCH for policing and protecting brands and what are the alternatives? Key Benefits Once the TMCH verifies the data provided by the mark owner and the registration is granted, the verified data in the TMCH will be used to support both claims and sunrise services, which all new gtld registries must provide. The sunrise service gives owners of trademarks registered in the TMCH a period of time to register these trademarks as secondlevel domain names in a new gtld before registration in the gtld is open to the general public (sunrise period). All new gtld registries must offer a sunrise period of at least 30 days. To take advantage of the sunrise service, the trademark owner must also submit to the TMCH a declaration and proof of use of the mark. The claims service provides for certain warning notices when a party files an application to register in a new gtld a second-level domain name that is identical to a mark registered in the TMCH. This service requires new gtld registries, for a minimum period of 90 days following the sunrise period, to: Send a warning to any party seeking to register a domain name that is an exact match to a trademark registered in the TMCH. If the applicant disregards the warning and proceeds to register the domain name, notify the trademark owner, who can then take appropriate action. The TMCH data can also be used in the Uniform Rapid Suspension system (see Uniform Rapid Suspension System). Key Limitations The TMCH's main limitation is that the sunrise and claims services are only available for marks that are identical to those registered in the TMCH. For example, if a company owns and registers the trademark BERATE in the TMCH, the registration would not either: Cause the TMCH to generate a warning letter if a third party applies to register BERAIT as a second-level domain name in a new gtld. Entitle the company to register the variant BERAIT during a sunrise period. Brand owners therefore should consider using a new gtld watch service either in addition to or as an alternative to registering its marks in the TMCH. Potential benefits from using a watch service include that: Where a company already uses trademark or domain name watch services, expanded coverage to include new gtlds may not involve a significant cost. 2

3 These services identify strings that are not identical, but may be confusingly similar to one's trademarks, including misspellings and alternative spellings of the trademarks. What other rights-protection mechanisms (RPMs) are available for brand owners in the new gtlds? Until now, the Uniform Domain Name Dispute Resolution Policy (UDRP) and court actions have long been the only RPMs available to brand owners in the gtld space. Both remain available for new gtlds; however, for new gtlds, brand owners now also have: The TMCH, which serves as more of a prophylactic measure (see Question, What is the Trademark Clearinghouse (TMCH) and what are its key requirements and functions?). The new Uniform Rapid Suspension (URS) system. Uniform Rapid Suspension System The URS is meant to provide a quick and low cost method to resolve clear cases of abusive registrations by cybersquatters and the like. The URS will operate in parallel to other RPMs, so if a party brings a URS action and loses, it can still avail itself of the UDRP or court proceedings. Any trademark owner may file a URS complaint if it believes its mark is being used in bad faith as part of a domain name in a new gtld. The complaint must show that: The domain name in dispute is identical or confusingly similar to a word mark: for which the complainant owns a valid national or regional registration and that is in current use; that has been validated through a court proceeding; or that is specifically protected by a statute or treaty in effect at the time the URS complaint is filed. If the mark is registered in the TMCH, the trademark owner can use that registration to satisfy the ownership and use requirement. Otherwise, the trademark owner must provide other evidence to support these elements. The domain name registrant has no legitimate right or interest to the domain name. The domain name was registered and is being used in bad faith. These elements largely track the elements in a UDRP proceeding, except that the UDRP does not have a use requirement. The following table sets out other key differences between the URS and the UDRP: URS UDRP Standard of proof The trademark owner must show by clear and convincing evidence that no genuine issue of material fact exists with respect to any element The trademark owner must prove each element by a preponderance of the evidence. Remedies The disputed domain name may only be suspended. Remedies include cancellation or transfer of the disputed domain name. Cost ICANN has approved two providers for URS proceedings: The National Arbitration Forum (NAF) and Asian Domain Name Dispute Resolution Centre (ADNDRC). NAF's fees to file a URS complaint are $375 to $500 depending upon the number of domain names at issue. The respondent in the proceeding must also pay fees ranging from $400 to $500. Fees are refundable to the prevailing party. UDRP fees are $1500 or more and there is no opportunity to recover any fees. Availability Only available against domain names in new gtlds Available for all gtlds including, for example,.com and.net. 3

4 Expert Q&A on Brand Protection in the Expanded gtld Program What other rights-protection mechanisms (RPMs) are available for brand owners in the new gtlds? To protect their brands in the new gtlds brand owners should: Carefully study and monitor the applications for gtlds in which they would want to register their trademarks as second-level domains. Assess whether to register any of their trademarks in the TMCH, weighing the costs against the benefits. Consider engaging a domain name watch service and create and implement workflow processes to ensure that any infringing strings are identified, investigated and prioritized for appropriate action. Issues to consider when evaluating registry in the TMCH include whether: Registering domain names containing the company's mark during a gtlds' sunrise period has strategic value. This is an important consideration where a mark is not unique to the company on a global basis (for example, other parties use an identical mark in other countries). For those marks, the company may want to try to beat the other parties to the punch in certain gtlds by registering during the sunrise period. The mark lends itself to generating claims notices for identical matches only. For example, a mark such as MART may be more likely to generate claims notices than MORE, where confusingly similar phonetic variations such as MOOR and MOORE would fall by the wayside in the claims process. Recognizing that the potential costs of a defensive registration program will increase exponentially in a world with more than 1800 gtlds, brand owners should still assess which gtlds and which of their trademarks merit the cost of defensive registrations. Brand owners should also monitor which new gtld registries offer "blocking registrations," where a trademark owner can apply to block another's registration of second-level domain names that contain the trademark owner's registered trademarks. These types of registrations, which will not resolve to any active website, typically have a much lower fee than straight registrations. Therefore, where available, this blocking option may be a more cost-effective alternative for protecting a mark. obligations. The RAA is the contract that governs the relationship between ICANN and its accredited registrars. All new gtld registry operators, and therefore all new domain names in the new gtld space, will be governed by these agreements. The new gtld Registry Agreement and the 2013 RAA include key provisions addressing rights protections that were not part of previous agreements, including: Whois Data Verification and Validation. Registrars must verify either the address or the phone number of each new domain name registrant. Addressing Abusive Practices. New gtld registry operators and registrars must contractually prohibit registrants from abusive activity such as "distributing malware, abusively operating botnets, phishing, piracy, trademark or copyright infringement, fraudulent or deceptive practices, counterfeiting or otherwise engaging in activity contrary to applicable law." Registrars also must provide a point-of-contact for and investigate complaints of any abusive activity. Better Compliance Tools. These will include broader suspension and termination remedies for ICANN vis a vis new gtld registries and registrars and, with respect to registrars, clarification of ICANN's audit rights and access to information to assist with ongoing investigations and a requirement that registrars annual certify compliance with the terms of the RAA. Security Threat Checks. Registry operators must conduct assessments to determine whether any domain names in their gtlds are being used for activities constituting security threats, for example, distributing malware, phishing or pharming. Reseller Oversight. Registrars have specific responsibilities for ensuring its resellers' compliance. Although certain provisions of the new RAA do address proxy and privacy services, no formal accreditation process was adopted by ICANN; however, this may come to fruition in the future. Counsel should monitor the new gtld program for future developments as the new gtlds proceed to delegation. What material provisions are included in the New gtld Registry Agreement and the 2013 Registrar Accreditation Agreement (RAA) which were not in prior Registry Agreements or RAAs? By way of background, the Registry Agreement is the contract between registry operators (successful new gtld applicants) and ICANN setting out the new gtld registry operators' rights and 4

5 LISA W. ROSAYA Baker & McKenzie LLP For the links to the documents referenced in this note, please visit our online version at T E Lisa.Rosaya@bakermckenzie.com W Professional qualifications. District of Columbia, US New Jersey, US New York, US Areas of practice. Ms. Rosaya routinely counsels clients on global trademark portfolio and brand management matters, including trademark selection, trademark prosecution, trademark opposition and cancellation proceedings, copyright and trademark licensing, enforcement and infringement matters, domain name issues and disputes and labeling and advertising issues. She also assists clients in addressing IP issues in the context of corporate and financing transactions, including due diligence and perfection of security interests domestically and internationally. Ms. Rosaya s wide client base includes companies in the consumer and personal care, food and beverage, telecommunications, media and entertainment, luxury goods, financial services, computer hardware and software industries, among others. For more information, search for the following resources on our website. Topics Internet ( Trademarks/Trade Marks ( Practice Note Internet Brand Protection ( Toolkit Brand Protection Toolkit ( Article Generic Top-level Domain (gtld) Expansion ( Legal Update: archive ICANN publishes guidebook for new gtld applicants and launches related initiatives ( Practical Law Company provides practical legal know-how for law firms, law departments and law schools. Our online resources help lawyers practice efficiently, get up to speed quickly and spend more time on the work that matters most. This resource is just one example of the many resources Practical Law Company offers. Discover for yourself what the world s leading law firms and law departments use to enhance their practices. To request a complimentary trial of Practical Law Company s online services, visit practicallaw.com or call Use of Practical Law websites and services is subject to the Terms of Use ( 6690) and Privacy Policy (