Valideus

Background

Summary of the New gTLD Opportunity

Spring 2010

The domain name system (DNS) is divided into 24 generic Top Level Domains (gTLDs) including .com, .net and .org and circa 250 country code Top Level Domains (ccTLDs) such as .au for Australia, .be for Belgium, .cn for China. Whilst all ccTLDs are sovereign property, ICANN, the Internet Corporation for Assigned Names & Numbers, oversees gTLDs and manages the technical co-ordination of the DNS. From its creation in 1999, ICANN’s mission has been to introduce competition into the management of the DNS. Therefore it is planning a liberalisation of gTLDs. Within the next 12 months any organisation can apply to run a gTLD registry. Until now most corporations have positioned themselves under the .com gTLD. In the future, ICANN predicts that all major corporations will own a Dot Brand registry.

Market development: when you allocate a domain in your registry you capture whatever information you like on your registrants. You can give away domains in exchange for loyalty, distribute priority offers, build mailing lists, run your own social network, build new revenues.

Search Engine Prioritisation: Searching for widgets? What could be a closer match than Dot Widgets in the world root of the internet? A 100% match before any optimisation. Cost reduction: in time, having a Private Brand gTLD should mean that applicants can lapse thousands of non-commerce critical/defensive domain registrations and reduce brand monitoring.

Who will apply?

What are the risks of not applying?

Cities: Barcelona, Berlin, London, New York, Paris, Rome, Sydney, Tokyo have all announced bids.

Keyword speculators: internet investors are lining up to bid for generic terms including .eco, .green, .family, .movie, .music, .radio, .shop, .sport or .web in the hope of getting rich. Some market leaders may also seek to dominate their industry sector (and search engine listings) this way. Global brand owners: Canon is the first intellectual property owner to announce a bid. (See www.canon.com/news/2010/ mar16e.html).

Regional & Cultural Communities: From Bavarians to Scots, including some in IDN registries (holding domains in scripts others than ASCII) such as ‫( . يبرع‬Dot Arab).

Permanent string preclusion: if your key term is registered by a 3rd party, you are locked out forever. There’s no second chance. You can’t buy an active gTLD registry in the same way as you buy a registration.

Natural born applicants: companies whose success is built upon the rise of the internet. If Facebook, Twitter and YouTube apply, how long before young people regard .com as “yesterday’s domain”?

Commercial disadvantage: if you do not apply in the First Round but your competitors do, you can’t catch up until the Second Round opens which might not be until 2012. As application and evaluation takes at least 14 months, this could mean you can’t get your brand into a browser until 2014. However, there’s little risk of an infringer applying for a key mark of yours at the Top Level. First they would need an identical registered trade mark to overcome you and second they would be deterred by the high costs. In addition you can challenge any such application through the Legal Rights Objection process, administered by WIPO and costing from $10,000 or you could go to the courts.

IP owners who compete on a day to day basis with 3rd parties for a key term registered in another country or another class of goods or services. Innovators seeking new models of distribution, for loyalty and reward programmes.

V

What are the costs of applying?

The official ICANN Application Fee is US $185,000. Successful applicants must also pay $6,250 per quarter plus $0.20c per domain per year on each term registered after a threshold of 50,000 domains. An Irrevocable Letter of Credit for the equivalent of the cost of maintaining the registry for three years must be supplied. If you withdraw your application after submission you can get a refund of up to 70%.

Corporations plagued by internet infringement who want to signpost authentic information & goods.

What is the timing?

What are the benefits of applying?

Stability: 3rd party registries may be vulnerable to attack from hackers, technical failure and can rarely turn away a court order. Your own registry can be based wherever you want it with rigorous procedures and management by a team that is accountable exclusively to you.

Security: You decide who is allowed to register under your gTLD and who you want to exclude. Competitors and infringers can be barred. Your licensees and affiliates can be controlled. Your own brand gTLD will be trusted by consumers and clients because of its purity.

The ICANN new gTLD process is two years overdue. There will be no major developments until the next ICANN Open Meeting in Brussels from 20 - 25 June 2010 when ICANN is expected to publish the 4th Draft Applicant Guidebook - the document that includes the rules of application, the registry operator’s contract, the application questions, the mandatory technical requirements, rules of objection and measures to protect Intellectual Property etc. The full and final Applicant Guidebook is expected in September 2010 which means that the 45 day Application Period is likely to open in either November 2010 or February 2011. To allow time to prepare an application and to earmark the ICANN fees of US $185,000 and the cost of expert advisory services, this gives you a maximum of six months to decide whether to apply or not.

If you are thinking of applying in the first round, what should you consider?

G

Your resourcing: this is an expensive, complex, time consuming process with the potential to impact on many aspects of your brand. Have you the bandwidth to co-ordinate an application? G The availability of Back End registry service providers and the importance of finding a partner who will prioritise your application over, for example, their own applications. G The complexity of the application process: there are 50 questions to be answered, a Business Plan to be prepared, very detailed technical submissions – and a minimum of 14 marks out of a possible 16 to be achieved if you are to pass the scrutiny of the evaluators. G Whether others in your organisation who are exposed to the marketing ICANN has planned will ask you to submit a last minute application once they have been exposed to ICANN’s PR. G Taking advice on the strength of the character string you wish to apply for. G IP protection - can you protect the name of your registry? G ICANN contracts under Californian State Law. Does this suit you? Could there be Anti-Trust issues if you apply for a generic term? G Whether you will incorporate a new vehicle to hold your registry and where it should be based? G Your business model: will you sell or give domains to your clients, customers, licensees, distributors, fans, the public? What might you charge? How do you recoup your costs? G How you will cope with Contention (a clash with another applicant for the same character string) or Objections filed by an external party challenging your application. G Your strategy if you find yourself in an auction for your selected term with another applicant who has passed evaluation. G An overview of the policies of your registry from the allocation of names to Rights Protection, whether you will operate second level domains and how much data you will feature in your whois. How can you reflect these policies in your registry’s Terms & Conditions? G Exactly what does running your own new gTLD registry involve? If you want to, when can you move your email or website under your new gTLD? What are the implications of such change?

How can we help you?

The importance of domain name watching will increase after the process launches but how can you cope with the advent of IDN gTLDs?

We have developed a modular service suite featuring: G Consultancy to evaluate the opportunity and to ensure there is an understanding in your organisation of the implications of running a gTLD registry. G The management of the application process featuring the drafting of answers designed to exceed the needs of the evaluators, the submission of your application through ICANN’s on-line system and payment of your official application fee. G With our selected technical partners, the day-to-day management of your registry, connected to the world root of the internet, 24/7. We have a GateWay registrar solution so it should not cost Private Brand Registry applicants to add names into their own registry. G Licensing ICANN compliant registry management software should you want to run your registry within your own infrastructure. G ICANN compliance after launch. Our charges typically feature: G $20,000 for the Evaluation Workshop and consultancy, 50% discountable if you decide to proceed plus travel and accommodation if applicable. G From $76,000 for managing the formalities of the application. We charge a one-time signing on fee of $36,000 then a modest monthly fee as we work with you on the application. G For Day to Day Registry Management of a Private Brand Registry (not selling domains on open market but supplying them to staff, licensees etc) from c. $30,000 per month G For Day to Day Registry Management of an Open Brand Registry (that offers domains on the open market) from .c $40,000 pcm + a fee per domain name depending on volume (e.g. $1.50 per domain per year reducing in line with volume) G ICANN compliance: $2,000 per month which includes representation for you in ICANN’s Registry Constituency. G Licensing of our software by discussion (Note the above prices are subject to change in line with ICANN’s requirements) In order to ensure that we can deliver service of the highest level that reduces the risk of an application failing, we are limiting the number of new gTLD applicants we can work with and we are prioritising Private Brand Registry operators. To learn more about our services, contact Nick Wood, Managing Director, Valideus Ltd. Email: Nick.wood@comlaude.com
© Valideus Ltd April 2010

Will your domain strategy change after the launch of the new gTLD process?
G

G

G

When the DNS expands from 24 gTLDs to perhaps 250 or 500 gTLDs how can you secure your trade marks? Will you have to register in every new extension? What will the costs be? To assist rights owners to secure marks in Sunrise schemes, ICANN is planning to create a Clearinghouse to hold current validated trade marks that can be pushed to registries where you may want to register your terms. Placing your mark in the Clearinghouse will prevent you from having to pay for the same information to be validated time and time again across all the registries but you’ll still have to cover the cost of the registrations and renewals. Will the URS (Uniform Rapid Suspension scheme) be an effective tool against abusive registrations? Proposed as a fast, inexpensive version of the UDRP, it features a pro-forma complaint, the locking of the domain within 24 hours and its suspension for the life of the registration plus a year, all for $300.

Valideus Ltd. 116 Long Acre, London WC2E 9SU, United Kingdom T: +44.2078360070 F: +44.8700118187 www.valideus.com

Valideus

New TLD Application & Management Services

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