Jun 15

What’s Next for New gTLDs

Domain authority ICANN’s new gTLD “Reveal Day” took place Wednesday June 13th, with the release of their list of new TLD applications received. A total of 1,930 applications were submitted for 1,409 new gTLDs (with 230 of them “in contention” with 2 or more applications for each). Many are wondering “what’s next?” – now that these applications have been revealed, what’s going to happen?

One thing that is not likely to happen at this point is for the new TLD program to be halted, which wasn’t a given after ICANN initially approved their new process and opened it up for comment. Despite the outrage of some groups about the potential hazards of the program such as trademark concerns, security and potential abuse of new TLDs for piracy, no major government objection has happened.

So since new gTLDs are inevitable now, what takes place between this reveal and their launches?

1. Objections and Disputes

Much of the focus on new gTLDs besides speculation on what will materialize after they launch will be on objections and disputes. ICANN has opened a 7-month window for the filing of any objections/disputes. These objections will undoubtedly be for many different direct and indirect reasons, but officially there are 4 different categories of disputes/objections:

  1. String confusion: This is an objection based on the TLD being confusingly similar to an existing TLD or to another applied-for TLD. These objections can be filed by an existing TLD operator or a gTLD applicant in the same application round. It’s worth noting that ICANN will also be evaluating TLDs based on similar criteria, so even without any objections, some may not be passed by ICANN on this basis.
  2. Legal rights: This is an objection against a gTLD that “violates the legal rights of the objector” and can be filed by a “rightsholder”. While ICANN uses ambiguous language to describe this objection, they do hint that this is primarily for trademark infringement.
  3. Limited public interest: ICANN describes this objection basis as “the applied-for gTLD string goes against generally accepted legal norms of morality and public order that are recognized under principles of international law”. Anyone can file an objection but they are initially reviewed to weed out baseless or abusive objections. If you are wondering why an extension like .xxx was recently approved despite this type of objection, that’s because .xxx came before the current new gTLD program was established.
  4. Community: This category of objection would be filed if there is “substantial opposition to the gTLD application from a significant portion of the community that the gTLD string is targeting”. ICANN accepts these objections only from an “established institution associated with a clearly defined community”. This may come up if a significant association for a particular region, industry or community were to be against the gTLD targeting it and/or the applicant vying for it.

If you are looking to object to a new TLD, be prepared to pay the price; the fees involved in filing an objection are rather steep and don’t guarantee you’ll succeed. Here are how the fees break down:

  • String confusion objection fees (via International Centre for Dispute Resolution): $2750 USD non-refundable Filing Fee per party to file the objection, $1250 USD non-refundable Case Service Fee per party if it reaches a hearing, a $6000 USD per objector/applicant if the case is heard on documents only or $3000 USD per day per per party if any type of hearing is conducted (not including any travel expenses of the arbitrator which are billed separately).
  • Legal rights objection fees (via WIPO): DRSP fee (filing fee) of $2000 USD for single-member panel or $3000 USD for three-member panel and an additional Panel Fee of $8000 USD for a single-member panel or $20000 USD for a three-member panel, with a 40% bulk discount if multiple objectors file against a single TLD or 20% bulk discount if an objector files against multiple TLDs.
  • Limited public interest and community objection fees (via ICC): Non-refundable 5000 EUR fee to file the objection and 5000 EUR fee for the applicant to respond, then if it reaches a hearing, up to 12000 EUR administrative fees for a single-member panel or up to 17000 EUR for a three-member panel plus 450 EUR/hr for total time the panel spends on the case which does not include VAT that may apply to those fees as well.

Conclusion of objections and disputes

Given an objector will expect to pay $10,000 USD or more to formally object to a TLD with no guarantee they will win and thousands of dollars spent even if their case is thrown out, there likely won’t be too many objections filed.

That said, some of the groups that were against the new TLD program altogether may look closely at the list of applications and file against TLDs they expect to be troublesome. Some associations might file objections against TLDs where they feel the necessity for defensive trademark registrations will be too big to ignore and would be unfair to businesses they represent.

However, there’s another way to voice an opinion…

2. gTLD Application Comment/Feedback

Upon releasing the application list, ICANN also opened the applications up for public comment and feedback via their New gTLD Application Comments Forum for a 60-day period.

Unlike the formal dispute resolution process, this comment forum is free for anyone to informally voice their opinion or objection to a particular application. How much weight ICANN will actually put on these comments is a mystery, but given they will have a lengthy review process of their own besides the formal objection process, they may find compelling arguments against a TLD in these comments that they may not have known otherwise.

Since it is a public forum, you can sign up for free and view the comments on any TLD application. There are currently only 13 comments, 11 of which are on the .church TLD application by Life Covenant Church, Inc.

Conclusion of gTLD application comment/feedback

At the very least, this could be a very entertaining place to follow in the coming 60 days. Unfortunately, with it being free, it will likely be abused with fake accounts either for or against a particular TLD/application. There’s a good chance that given the potential for abuse, ICANN may put very little if any weight on these comments, but we could see some compelling opinions surface here.

So what about the extensions that have been applied for by one or more company/party?

3a. Contention

One of the misconceptions about “contention” for new TLDs is that they have to be exactly the same. ICANN has not only allowed for objection based on “similar string” but their contention procedures also come into play when two or more TLDs that are similar go all the way through the approval process.

Also, if an objection is found in favor of the objector, the TLD automatically goes into the contention procedures. Winning an objection based on “similar string” does NOT guarantee a TLD is not approved, and losing an objection leads to ICANN determining the similar strings are NOT in contention. That said, it’s unknown whether ICANN might for instance bring two strings into contention procedures if a comment on their application forum suggested that two strings were confusingly similar.

While ICANN encourages parties vying for similar or identical extensions to resolve it themselves, resolution for identical TLDs will ALWAYS result in one company getting control of the TLD, i.e. there is no option for multiple registries for a TLD.

For community-based TLD applications in contention, the applicants can elect to go through a Community Priority Evaluation process to determine a clear winner of the TLD, taking into account community establishment, similarity of TLD to community, registration policies and community endorsement.

3b. Auction

For other TLD applications in contention and for community-based TLD applications where there’s not a clear winner through Community Priority Evaluation, if there is no resolution between the applicants, the TLD goes into an auction for the applicants to bid on. The only TLDs that are exempt from this process are geographical TLDs which simply would be suspended until the contention is resolved between the parties.

The auction is a potentially 5-round process of elimination through bidding. It would take another article of this size to explain the auction process (8 pages are dedicated to it in the Application Guidebook) but one thing to note is that before the auction starts, applicants are required to place a deposit which equates to 10% of their bidding limit in order to participate. ICANN indicates they will specify a deposit amount that will remove that bidding limit but don’t specify even remotely how much that would be. Some of the 751 applications in contention may get weeded out simply by that deposit process.

Winning an auction does not automatically mean winning the TLD even if payment is made. The final step of the process for a TLD to be approved and launched is the contract process. As explained in the guidebook, this includes “execution of a registry agreement with ICANN and preparing for delegation of the new gTLD into the root zone.” Applicants have 90 days to complete this part, and if an applicant won an auction and did not complete this within 90 days, ICANN would award the TLD to the next bidder pending the same process.

There is some consolation for the losers in the contention and auction process however – they may be able to receive a partial refund of the $185,000 TLD application fees they’ve put forth.

Conclusion of contention and auctions

For some of the most hotly contested TLDs, resolution may take quite some time. We may see abuse of the objection system to try and win a TLD or abuse of the comment system to try and compel ICANN to deny an application. We may also see larger companies buy out smaller companies to directly resolve disputes.

The one thing that would be anybody’s guess is how high the auctions for some of these TLDs will go to – possibly millions of dollars for the better generic TLDs.

There is one last thing to consider with these applications…

Batching

ICANN has indicated they are only reviewing and approving new TLDs in rounds of up to 500. Given there are 1930 applications, that means some applicants may wind up waiting well past early 2013 to find out whether their application is approved. ICANN has the target date for posting the batching order of the applications as July 11, 2012.

Overall conclusion

Despite all the press over the “Reveal Day”, the process is still an arduous several months from this point on. We won’t find out which TLDs will be going live until early 2013. At that point, the real expense will begin for the approved TLDs as they ramp up their marketing efforts to get registrants of their domains (or for .brand TLDs, begin to market their new unique web presence).

There’s still a long road ahead and as I’ve expressed before, still likely many years before new TLDs drastically alter the registered domain space as we know it, assuming it ever will.

Disclaimer: The content provided herein is for informational purposes only. We suggest if these issues impact you and/or your organization, that you seek professional legal advice regarding an appropriate course of action for your circumstances.

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