Want to own a branded top-level Domain? Staking out brand space on the Internet

For the first time in history, brand owners may own a top level domain that consists of their brand. The Internet Corporation for Assigned Names and Numbers (ICANN) decided earlier this year to permit applications by brand owners that could allow them to act as domain name registrars for their own .brand domains. Instead of www.Disney.com, think www.Hotels.Disney. The ICANN application period opens January 12, 2012 and will close April 12, 2012.

So what are the potential benefits of owning a .brand domain besides adding visibility to a brand? Perhaps most important to sellers of consumers goods, hosting domains associated with a .brand TLD extension adds credibility to products sold through hosted web sites. If for example, consumers learn that .Nike hosted web sites sell authentic Nike brand goods, consumers may look there for authentic goods, while .com (for example) commercial web sites selling product would become less trustworthy. For the same reasons, owning a .brand TLD may reduce cybersquatting, counterfeit sales on the Internet, and confusingly similar trademark use online. All of these benefits turn in part on the way in which consumers respond to the introduction of .brand domains, something many companies are trying to predict.

As a practical matter, a brand owner who is awarded a .brand domain name can control the sales and use of its second level domains (left of the dot), including to authorized retailers or other “partners” and as importantly, terminate those registrants who do not comply with company policies. Owning a .brand domain name may eliminate the need to register and maintain multiple domain names, particularly by multi-national companies.

The decision to apply for a .brand TLD should not be taken lightly. In addition to the application fee of $185,000 USD, there are additional ongoing maintenance and administration fees that are significant. The application process itself has been compared to an “SEC filing” with the bulk of ICANN’s inquiries directed to financial solvency of the applicant entity. Should an applicant succeed in its application for a brand TLD, it must enter into a ten-year contract with ICANN. Any dispute between the brand owner and ICANN must be resolved through mediation by an ICANN selected vendor. In the event ICANN determines that the brand owner’s registrar status should be withdrawn (for example, due to insolvency or a change in ownership), ICANN becomes the owner of the .brand domain.

The decision to apply for a brand TLD is one that requires advanced planning and should involve representatives from legal, marketing, and include top management (given the significant costs). The application process is not something that may be left until the week before the application deadline and there should be a well-developed plan for how the domain would be used and how it would be administered.

Should a company choose not to apply to ICANN for a .brand TLD, it should monitor its trademarks by registering them with a sunrise service or trademark clearinghouse in order to receive notice of third-party attempts to obtain TLDs that are identical or similar to their marks.