New Top-Level Domain Names to be Allowed

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March 3, 2009

The Internet Corporation for Assigned Names and Numbers (“ICANN”), the governing body responsible for issuing rules and regulations for Internet domain names, plans to sell an unlimited number of new top-level domain names beginning in late 2009. Top-level domain names are those letters to the right of the last “dot” in a website address, such as .com, .org, or .edu.

Currently ICANN allows the use of only twenty-one generic top-level domain names as part of a Web site address. However, starting in late 2009, Web site registrants may begin to purchase the right to use individual domain names that use top-level domain names that incorporate brand names (.nike), business categories (.lawfirm), geographic locations (.newyork), and a nearly endless variety of other words, names, and letters. In addition, for the first time top-level domain names may include non-English characters and words. The new domain name holders will also be able to sell subdomain names falling under their top-level domain name, such as ruderware.lawfirm. The cost for obtaining one of these new top-level domain names is estimated to be $185,000.

Before being awarded one of these new top-level domain names, registrants must present ICANN with proof of their rights to the name, as well as a business case for their use of the name. ICANN is instituting such a process in an effort to prevent someone other than the owner of trademarks, particularly famous marks, from registering a top-level domain name incorporating the trademark. However, in cases where several trademark owners all have rights to the same trademark (for example, where their marks are used in connection with sufficiently different goods or services), this process may not fully protect a trademark owner’s interest in their trademark.

This enormous expansion in potential top-level domain names will likely increase the time and expense involved in monitoring trademarks, as well as costs associated with trademark holders buying up top-level domain names and subdomains in an effort to protect their existing trademarks and protect their clients, customers, and consumers from confusion and misrepresentation by third parties. Companies that do not monitor their trademarks under the new top-level domain name system risk weakening the value of such trademarks if another party should register a top-level domain name incorporating their trademark, and risk losing the right to the use of a top-level domain name consisting of the trademark altogether if another party purchases it first. Therefore, under this new system of top-level domain names, it will be increasingly important for trademark holders to monitor their trademarks.

If you have questions regarding the above, please contact Derek Prestin, the author of this article, or any of the attorneys in the Business Transactions Practice Group of Ruder Ware.

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