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New top-level domain names: offer online opportunities for franchisors: if you miss this opportunity, there may not be another one anytime soon.

What if McDonalds' Internet presence could go beyond "mcdonalds. com"? What if the company could control the entire universe of Internet addresses that ended with the suffix ".mcdonalds"? What if the United Parcel Service owned the universe of Internet addresses that ended with ".ups"? These franchisors could limit the use of their particular domain suffix to franchisees, to customers, to suppliers, or any other group that they choose, and could control the entire registry process for the category of users that they select. The possibilities for expanding a franchisor's Web presence with this kind of tool could be considerable, but it carries challenges for franchisors as well. Franchisor trademark owners must be well informed to make responsible decisions to promote and protect their brands online.

More Control Over Your Domain Name

Top-level domains are the letters located to the right of the dot in a Web address. For example, ".com," ".net" and ".org" are some of the most common top-level domains. Currently there is a finite number of top-level domains, and anyone applying for a new Web address must apply to have an address with one of the existing top-level domains. The existing top-level domains fall into several categories. Some, generally referred to as sponsored top-level domains, are operated for a defined group of stakeholders according to a specific charter. For example, ".aero" is sponsored by the Societe Internationale de Telecommunications Aeronautique S.C. and is intended for use solely by the aviation industry. Others, like ".uk" are referred to as country-code top-level domains and often are used to represent country-specific Web material. Domain names that are not sponsored or country code top-level domain names are considered generic top-level domains and are generally available for any use.

Over the years, there have been various efforts to expand the number of top-level domains available. Recently, the Internet Corporation for Assigned Names and Numbers, the organization responsible for administration of the generic top-level domains, decided to accept applications for additional generic top-level domains. The idea is that private companies or organizations could invest in their own generic top-level domain either for a specific community, or for more general public use. The new opportunities presented to franchisors by the expansion of top-level domains could be quite significant for a number of reasons: the expansion provides franchisors and other brand owners with the opportunity to create a more positive online user experience; by obtaining a top-level domain, a franchisor has complete control over its Internet presence, including security and registry services; with the appropriate marketing, obtaining a top-level domain can reduce the need for defensive registrations; and unlike ".corn," there is no scarcity of names at the second level (i.e. www.anythingyouwant. Your Domain will always be available).


In addition, there are good reasons to make the investment now rather than waiting to see how the process develops. Applications for new generic top-level domains will be considered in rounds, and subsequent rounds are likely to be delayed if there are a significant number of first-round applicants. If you miss this opportunity, there may not be another one anytime soon. If someone else registers your proposed string, there may not be another opportunity at all. Second, with limited numbers of reputable back-end registry services providers, finding the external technical expertise necessary to run a top-level domain may be more difficult for later applicants.

Application Process Under Construction

The application process for new generic top-level domains is still being developed. In October 2008, ICANN released its first Draft Applicant Guidebook for public review and comment. A revised version was released in February. As proposed, the process will work as follows. Applicants must complete an application and pay a $185,000 application fee. Applicants for new generic top-level domains will have the option of designating their proposed generic top-level domain as "community-based." A community-based generic top-level domain is one that is operated for the benefit of a defined community consisting of a restricted population (i.e. ".bank" or ".chicago"). Presumably branded generic top-level domains would fall in this category. All non-community-based generic top-level domains are considered "open." An open generic top-level domain can be used for any purpose consistent with the registry agreement and requirements of the application and evaluation criteria. Under the guidebook, if there is a community-based applicant and an open applicant for the same generic top-level domain name or "string," the community-based generic top-level domain will be given priority.

Once an applicant applies for a particular generic top-level domain string, both the string and the applicant will undergo an initial evaluation. The proposed string will be evaluated to determine whether it is so visually similar to other existing or applied-for strings that confusion is probable, whether the proposed string conflicts with any names reserved by ICANN, whether the proposed string could negatively effect domain name system security or stability, and whether, if the proposed string is a geographical name, the requisite governmental support or lack of objection has been obtained. The applicant will also be evaluated to confirm that it has the requisite technical and operational capability, financial capability, and registry services to operate the generic top-level domain according to the proposed terms without compromising domain name system security or stability.

If You Choose Not to Apply, Do Not Forget to Object

During the evaluation stage, franchisors may have an opportunity to object to registrations that they believe may adversely impact their interests. The objection procedures are important because the proposed process assumes that anyone who passes the initial evaluation will be approved if no objections are filed. There are multiple grounds on which an objection may be filed. According to ICANN, a franchisor that has applied for a generic top-level domain will be able to make a String Confusion Objection if an applied-for generic top-level domain string is confusingly similar to the franchisor's existing or applied-for generic top-level domain string. Even if a franchisor does not itself apply for a generic top-level domain, franchisors that claim rights in registered or unregistered marks will be able to make a "Legal Rights Objection" if the delegation of an applied-for generic top-level domain string would infringe upon the franchisor's existing legal rights. If an objection is made to a proposed string during the objection period, no top-level domain will be delegated until all of the objections are resolved. If an objection is successful, the string cannot proceed to registration. However, if the applicant passes the initial evaluation and defeats all objections, the application for the proposed string will be approved.

Elements to Consider in Your Cost-Benefit Analyses

As a franchisor evaluates whether to make the investment in its own generic top-level domain, there are several things to consider. On one hand, the costs of obtaining a new generic top-level domain may be considerable. The application fee will be at least $185,000 and each successful applicant currently must pay a mandatory renewal fee of $25,000 for the first three years of registration. There will also be costs associated with providing the required registry services, as well as potential legal costs associated with the application process and subsequent registry services. On the other hand, the introduction of unlimited numbers of generic top-level domains has the potential to completely change the Internet as we know it. If a business spends the marketing money necessary to utilize its generic top-level domain as a strategic business and marketing tool, it could pay dividends while other companies are scrambling to catch up.

Things to Watch For

Even if a franchisor chooses not to make an immediate investment, it is important that the franchisor remains involved in and aware of the generic top-level domain delegation process. As written, the evaluation procedures outlined by the guidebook create a potentially heavy burden on trademark owners.

In particular, there currently are no procedures for automatic comparison of a proposed string with an existing trademark unless the mark is the subject of an existing generic top-level domain or new generic top-level domain application. Thus, even trademark owners who decide not to pursue a branded generic top-level domain will bear the costs of monitoring and objecting to applications by unrelated entities for a generic top-level domain that might encompass their mark. To make matters more complicated, words that are un-trademarkable by virtue of being too descriptive will not automatically be unregisterable. If no objections are filed, there is nothing preventing Papa John's from obtaining the top-level domain ".pizza" nor is there anything preventing Ace Hardware from obtaining ".tools." As a result there may be two duties imposed on franchisor trademark owners by the new generic top-level domains: a duty of creativity to determine which descriptive marks may eventually affect their rights, and a duty to monitor the generic top-level domain application process for competitors' efforts to apply for a new top-level domain based on such a mark.

In addition, "cyber-squatting," the practice of buying a domain name in the hope that the brand owner will pay for the domain at an inflated price, may still be an issue. While the sheer cost of applying for a new generic top-level domain may prevent cyber-squatting at the top level, the guidebook does little to prevent cyber-squatting at the second level of newly established generic top-level domains. The current guidebook requires applicants to identify the rights protection mechanisms that they plan to use to protect users from post-delegation infringement. However, without specific requirements or minimum standards for such rights protection mechanisms, it is unclear whether the mechanisms will be sufficient. As a result, franchisors must be aware of the potential need for defensive registrations in a greatly expanded domain space.

Given the burden on franchisors to make the appropriate objections at the appropriate times, it is important that franchisors work with counsel to develop a system for monitoring and handling potential threats to their interests. At a minimum, franchisors should have a plan for participation in various right-protection mechanisms, defensive registrations and objection filing. For instance, franchisors who are aware of other companies with similar or identical marks may be able to avoid objection proceedings by being proactive about resolving potential conflicts.

The new Internet space created by unrestricted generic top-level domains may be both an amazing new tool and a source of frustration. If generic top-level domains change the culture of the Internet, and users begin to expect brands or online communities to have specific suffixes, the choice to enter the market at the beginning of the process may pay off in a big way. This will of course depend on whether consumers can shift away from the dot corn paradigm. Will Internet users keep track of the new generic top-level domains? Or will they still type ".com" when trying to find a specific company or brand? If the influx of new suffixes makes it less reliable to simply type in a brand name plus dot com to get the company one seeks, will users simply become more reliant on search engines to find the Web site they are looking for? And if consumers are using search engines, does the suffix of the Web address really matter? Regardless of the answers to these questions, the more aware franchisors are of the process, the better equipped they are to protect their future interests and those of their franchisees.

Generic Top-Level Domains Currently Available






















Caroline Chicoine is of counsel at Fredrikson & Byron, P.A. practicing in the area of intellectual property. She is currently vice chair of the International Trademark Association's Internet committee. She can be reached at cchicoine@

Keri McWilliams is an associate in the law firm of Fredrikson & Byron, P.A. and a member of the firm's Franchise and Intellectual Property group. Her practice focuses on franchise litigation, franchise regulatory compliance and trademark disputes. She can be reached at kmcwilliams@
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Comment:New top-level domain names: offer online opportunities for franchisors: if you miss this opportunity, there may not be another one anytime soon.
Author:Chicoine, Caroline; McWilliams, Keri
Publication:Franchising World
Geographic Code:1USA
Date:Sep 1, 2009
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