Minds + Machines

IBM’s submission to ICANN’s comment forum on the fourth version of the Draft Applicant Guidebook — the set of rules for getting a new top-level domain, implies very heavily that they will be applying for .IBM. Furthermore (no surprise) it looks as if they will use it for internal purposes, and not to sell any .IBM names to the public.

First, IBM is pleased that there will be no requirement for a sunrise period, which wouldn’t make any sense if the top-level domain were used for internal company purposes, and not sold to the public:

Second, IBM notes that as yet there is no requirement that .brand top-level domains must use registrars — again, something that makes little sense if you’re just registering names internally. (This issue is currently being hashed out by the Vertical Integration Working Group, which is in a deadlock.)

Taken together, these comments are strong evidence that IBM is, at a minimum, giving serious consideration to applying for .IBM. Canon has already announced their intention to apply for .CANON. It appears that IBM and others are set to join them soon.

One of the pluses of being a veteran of ICANN meetings is the ability to pare down the schedule to what is relevant for our business plans. Minds + Machines will be focused on new gTLDs in Brussels. Following are my circled-with-a-big-red-pen session suggestions for those interested in new gTLDs.

Saturday, June 19

• 15:00 – 17:00 – The Government Advisory Committee (GAC) will discuss developments in the New gTLD process, including the latest Draft Applicant Guidebook (DAG 4), TLD categories, and geographic names. Many of the changes in DAG 4 are the direct outcome of GAC recommendations. If you want a preview of how the rest of the week will play out, don’t miss this meeting.

Sunday, June 20

The Generic Names Supporting Organization (GNSO) has two working sessions on New gTLDs.

• 09:00 – 10:15. Start the day observing the Vertical Integration PDP Working Group meeting with the GNSO Council. At the ICANN meeting in Nairobi, the Board pushed the community to resolve the debate on cross-ownership of registries and registrars by instituting a zero percent cross-ownership rule. This resolution disrupted some high-profile business plans. However, the Board will consider an alternate policy from the GNSO if one is created prior to the launch of the new gTLD program. Nearly 100 community members have participated in the Working Group to formulate a new policy.
• From 14:00 – 17:00 is the GNSO’s New gTLD Working Session. The GNSO will also be briefed on DAG 4 by Kurt Pritz, ICANN’s Senior Vice President.

Monday, June 21

Though some very important work is done during the three previous days, the meeting officially opens on Monday, June 21. If you are interested in the technical side of TLDs, drop in on the ccTLD Tech Day, where registry operators discuss implementing the latest standards and share experiences.

• 15:30 -17:30. Kurt Pritz will take the stage to brief the entire community on the status of the New gTLD program, the highlights of DAG 4 and — not to be missed — an accounting of the remaining open issues.

Tuesday, June 22

• 10:00 – 11:00. The new gTLD highlight on the schedule for Tuesday, a.k.a. “Constituency Day,” is the GAC’s discussion of Morality and Public order, a remaining overarching issue. Attend if you want a glimpse of how this issue could play out.

Wednesday, June 23

• 12:30 – 14:00. Update on Vertical Integration.
• 16:00 – 17:30. A panel discussion on “Reducing Barriers to New gTLD Creation in Developing Regions.” Board Resolution 20 in at the last ICANN meeting in Nairobi requested that the community “develop a sustainable approach to providing support to applicants requiring assistance in applying for and operating new gTLDs.” Working Group members will announce several proposals for consideration. Some of the proposals will be controversial as there is a requirement to recover the costs of new gTLD applications and on-going services to new gTLDs. Applicants, registry service providers, and incumbents will all benefit from attending this session.
• 16:00 – 17:30. Next door, at the same time, panelists will discuss “What brand protection and management measures entities need to consider before, during, and after the launch of the new gTLD program.”

Thursday, June 24.

• 13:30 – 18:00. You can sleep in Thursday morning, because the important public forum is scheduled for the afternoon. This is the time to speak your mind and ask questions directly to the Board before they lock down and decide how to vote on the issues Friday.

The schedule does change leading up to and throughout the meeting, so be sure to double-check the full schedule every morning to confirm dates and times.

Minds + Machines will have multiple representatives at the ICANN Brussels meeting, and we’d be glad to meet with you about our registry services, or just point you in the right direction. You’ll recognize us by our Minds + Machines lapel pins.

Until today’s announcement by Canon, no large brand had broken the “thin brand line” by revealing their plan to apply for their own new top-level domain. Now with Canon’s announcement, other major companies have been challenged to either announce their TLD plans or else state that they plan to forgo the chance to brand themselves at the top level of the domain name space.

Until now, in public, large brands have marched in lock step in opposition to new top-level domains, ostensibly because of the high cost of defending and enforcing their marks in multiple new namespaces. The worst-kept secret in the industry, however, is that brands have been making private plans, and brand-service registrars have been prepping their clients for new gTLDs in anticipation of healthy fees for application submission services.

Canon, at least, has decided that the marketing benefits of their own top-level domain outweigh the costs. In the U.S., legal departments, which are good at identifying risk — though not necessarily expert at quantifying it –, exercise a much stronger presence in the corporate boardroom than they do in European and Asian companies.

Could it be that the highly defensive stance of U.S. intellectual property interests, hardened by the file-sharing wars, is not shared by the rest of the world’s brands?

In Japan, Canon has decided to cast its lot with the money-makers instead of the money-hoarders. I predict we will see more brands opt for engagement with the Internet by visibly branding themselves with their own new gTLD, but that the the last ones to do so will come from the United States.

A PDF version of this survey and analysis, with full data tables, is available as a downloadable PDF here.

Summary: A survey of the domain registration behavior of Fortune 100 companies reveals that they have not registered many of their trademarks in recently created generic top-level domains (gTLDs). A sample of 1043 brands were registered in less than 30% of the eight new open gTLDs created after 2001. If historical registration data is a guide, brands are unlikely to undertake many defensive domain name registrations in the proposed new gTLDs, and furthermore are unlikely to be the victims of cybersquatting.

Overall, the claims of brand owners that they will be forced to spend significant amounts of money performing defensive registrations in the proposed new gTLDs are not supported by the historical data, which shows that they largely do not undertake defensive registrations in new gTLDs, nor is there any extensive cybersquatting in new gTLDs.

Will new gTLDs force brand owners to register names defensively?

In a previous study, we found that the cost of enforcement of trademark rights in new gTLDs is likely to be small – on the order of $.10 per registered trademark, per year. The current study looks at the likely cost of defensive registrations to trademark holders.

A vocal group of brand owners has repeatedly claimed that the cost of defensive registrations would be “astronomical” and a “major burden on U.S. businesses.”

The following correspondence to ICANN provides a flavor of these claims:

• “…astronomical registration fees required to protect trademarks across new gTLDs.” (Overstock.com)
• “The new gTLD program raises substantial concern about costs to businesses, such as a need to file many defensive registrations, making this program like a nuisance tax which many companies cannot afford.” (Time-Warner)
• “[EOIs] would seem to be a premature invitation for mischief that will end up costing trademark owners big bucks one way or another.” (Cowan, Liebowitz, and Latman)
• “A more likely scenario would be for a business just to register site Web addresses [sic] pairing their brand name with any new extensions, such as fios.telephone or gillette.razor. But even that defense could cost marketers up to $1.5 billion, estimates the not-for-profit Coalition Against Domain Name Abuse.”
• “The scale on which owners of famous marks such as Microsoft will have to secure defensive registrations and pursue cybersquatters is staggering.” (Microsoft)
• “Brand owners are also registrants and have thousands of domains of which we use less than one hundred – all the rest are for protection. We spend a fortune to protect our brand.” (Unidentified brand owner)

Brand owners use words like “astronomical,” “staggering,” “a fortune,” and “billions.” But is it really true that new gTLDs will force trademark owners into registering new domain names that they don’t really want?

A recent study by Paul Stahura definitively concluded that the answer was a definite “no”, by examining which trademarks (in general) were registered across com, org, net, mobi, biz, info and us. Stahura concludes:

The vast majority of trademark holders are not registering their trademark in all the current generic TLDs, let alone all the TLDs.

Bhavin Turakhia of Directi agreed, and provided an explanation:

Trademark holders have no reason to register a domain name in a new TLD if the domain name is not going to get any traffic. Speculators have no reason to register a domain name in a new TLD if the domain name is not going to get any traffic, since they will be unable to generate revenue from it or sell it to the trademark holder.

Finally, Dennis Carlton, an ICANN-appointed economist, noted:

… claims that the introduction of new gTLDs will necessitate widespread defensive registrations appear to be exaggerated and are inconsistent with the oft-noted observation that there have been a limited number of registrations on gTLDs introduced in recent years.

These two sets of voices are completely at odds. On the one hand, the adamant insistence by brand holders that defensive registrations in new gTLDs are necessary and costly. On the other, equally insistent dissenting voices saying that brands neither register defensively in new gTLDs, nor do they need to. We attempted to look systematically at the data to try to determine who is correct, or if the truth is somewhere in the middle.

I. Methodology

In attempt to shed more light on the question, we took a look at the new gTLDs launched since 2000, and analyzed registration patterns of major brands across all open gTLDs.

We took Fortune Magazine’s list of the top 100 companies in the United States. Then we found the major brands for each of these companies. Some companies had just a few brands, some had many. In the case where the brand was hyphenated, we also examined the non-hyphenated version of the brand (e.g., Wal-Mart and Walmart). Overall, we looked at 1043 brands and unhyphenated brand variants. On average, this works out to about 10 brands per company.

Then, with the help of DomainTools, we examined the whois records for each brand and brand variant across 13 different gTLDs, listed below. We looked at whether the brand name was available for registration, or if it had been registered, reserved, or was otherwise unavailable for registration. (We did not examine who the owner was, because our study is looking not at the frequency of cybersquatting or fair use registrations, but rather the interest in the domain name by anyone at all, whether by the brand owner or other registrant.)

Specifically, we looked at the following gTLDs, because anyone (either the brand owner or a cybersquatter) can register a name in them with minimal effort or cost:

• .com, .net, and .org. These pre-ICANN gTLDs are open for registration by anyone on a first-come, first-served basis.
• .info – Launched in 2001. Open to anyone.
• .biz – Launched in 2001. Technically only for businesses, but in practice available to anyone.
• .name – Launched in 2002, originally intended for personal names, but now open to general registrations.
• .pro – Assigned in 2002, launched in 2006. Initially designed for certified professionals, now easily registered by anyone through a number of ICANN-accredited registrars.
• .mobi – Launched in 2005 by mTLD, targeting the mobile internet. The restriction that .mobi sites follow mTLD-sponsored standards for mobile-device viewing was never enforced. Open for general registration.
• .travel – a TLD launched in 2006 targeting the travel industry, originally quite restrictive, but now essentially open. In the past 18-24 months, the criteria of qualification has widened and is easily obtained.
• .cat – Launched in 2006. The only requirement for a .cat is that there is some content somewhere in the Catalan language, a requirement that is trivial to comply with.
• .tel – Launched in 2008. Open to all registrants.
• .asia – Launched in 2006. Registrant must be based in Asia. Most F100 companies are eligible because they have Asian operations, but even if not, proxy services are easily available.
• .jobs – Launched in 2005. Specifically targeted at companies and brand holders.

We then tabulated the results, available as Appendix 1 of this study (download the PDF version of this study for the tabulated results).

II. Results and Analysis

Confirming the insights of Stahura, Turakhia and Carlton, we found that brands are not consistently registered across open gTLDs, and that most brands owners have not registered their names in most of the newer gTLDs.

Some specific results include:

1. Brand owners register their names religiously in .com.

Defensive registrations are a real phenomenon in .com. 100% of the 1043 brands and brand variations are registered in .com. Our earlier study on UDRP filings suggests that this is where the vast majority of cybersquatting also takes place.

2. Outside of .com, even in large and established gTLDs, registration patterns are haphazard. Brand owners do not register defensively here with any regularity.

After .com, the drop-off in registrations is steep. Of the larger, older open gTLDs, we found these percentages:

• .net – 878 of 1043 (84%)
• .org – 790 of 1043 (76%)
• .info – 723 of 1043 (69%)
• .biz – 676 of 1043 (65%)

3. In smaller open gTLDs only 29% of trademarks are registered. Brand owners largely ignore new gTLDs.

For all the rest the combined coverage was a mere 29%, or less than 1/3 of the combined coverage in .com, .net, and .org. In only one of the newer open gTLDs was coverage above 50%. The results in rank order:

• .mobi – 592 of 1043 (57%)
• .asia – 461 of 1043 (44%)
• .tel – 477 of 1043 (46%)
• .name – 341 of 1043 (33%)
• .pro – 182 of 1043 (17%)
• .jobs – 180 of 1043 (17%)
• .travel – 108 of 1043 (10%)
• .cat – 59 of 1043 (6%)

4. Brand names are more likely to be registered in heavily marketed TLDs.

Among the newer gTLDs, .mobi, .tel, and .asia, which have been the most heavily marketed of recent gTLDs, had by far the most registrations, beating out even the long-established .name.

5. The cost of defensive registrations to brands results in part from the 300% markup over street price that they pay for their domain names.

Brand owners, for reasons best known to themselves, pay a significant premium over retail to register domain names through brand management companies, and this is a large component of their costs, which would be much lower if they paid street prices. Overstock.com, for instance, estimates “a conservative annual registration fee of $30 per domain name.” However, as of this writing, the retail price for a .info domain name is $.89,.biz $5.99, .net $5.99, while a .com domain name is $7.29 per year.

IV. Examples of brand registration patterns.

For the purposes of illustration, we examined the largest brands of some of the more vehement opponents to new gTLDs. We found that they do not practice blanket defensive registrations.

Verizon has vocally opposed any expansion of the new gTLD space and is a clear opponent of new top-level domains. One the key brands of Verizon is “FIOS.” Fios.com, fios.net and fios.org are all registered to Verizon. But Verizon has not registered fios.name. For under $15.00 per year, anyone can, today, register that name:

Microsoft is also a leading opponent of new TLDs and EOIs. It has, however, not registered “win32,” one of its key brands, in .tel:

Disney does not protect its theme-park brand. Disneyparks.com is registered, but disneyparks.biz is available for $8.99, as is disneyparks.asia:

Philip Morris has pre-registered its key cigarette brands across all gTLDs. But many of its non-cigarette brands are readily available, such as “triscuit”:

There are many such examples, as our study shows.

Large brands, and their brand protection agencies such as Mark Monitor, heavily concentrate defensive registrations in .com, and are far less interested in other TLDs, and when it comes to the newest TLDs, they have shown very little interest at all.

V. Conclusion

If past behavior is predictive of future actions, we will see a minimal amount of defensive registration activity in new gTLDs by brand owners, and new gTLDs will be largely ignored by cybersquatters.

Summary – A quantitative analysis of UDRP data for all open gTLDs concludes that the introduction of new gTLDs will result in approximately 316 new cases of cybersquatting, and that the resultant cost to trademark holders, overall, will be $870,000 per year – less than less than $.10 for each trademark registered worldwide, or about $.44 per trademark registered in the United States. The data show that cybersquatting correlates to registration volume across all open gTLDs, not to the number of gTLDs, but is more prevalent in .com.

A downloadable PDF of this study is available here.

A Quantitative Analysis of Trademark Infringement and Cost to Trademark Holders in New gTLDs

Will New gTLDs Increase Cybersquatting?

A vocal group of brand and trademark owners has lobbied ICANN, the US Department of Commerce, and the ICANN’s Government Advisory Committee (GAC) claiming that new gTLDs would unleash a tide of lawlessness that would cost brand holders a fortune to combat.

Owners of trademarks and brands have claimed that a new round of gTLDs would leave them facing an onslaught of cybersquatting and typosquatting, and that their policing and enforcement costs would be substantial. Here is a recent representative statement of that view:

It is possible that the new gTLD program could lead to hundreds, if not thousands of new gTLDs. This is likely to cause brand abuse, such as cyber squatting, to grow exponentially. As a result, the legal costs for brand owners associated with monitoring, registering, and enforcing domain names are likely to raise substantially. [Source: Leo Longauer, Head of Group Intellectual Property for UBS AG]

This campaign has been so effective that even intelligent observers like David Maher, Senior VP for Policy at Public Interest Registry, accept it at face value:

… there is a connection between the creation of large numbers of new gTLDs and the public interest in preventing a vast increase in cybersquatting and the spread of fraudulent practices. [Source: CircleID]

But is it really true that new gTLDs will bring a “vast increase in cybersquatting”? A wealth of relevant data allows an empirical test of this claim. Both the World Intellectual Property Organization (WIPO) and the National Arbitration Forum (NAF) keep excellent records of claims of trademark infringement brought through ICANN’s Universal Dispute Resolution Policy (UDRP).

The two main costs of domain names for trademark holders are:

1. the cost of pre-emptively registering brands in new gTLDs
2. the cost of monitoring and enforcing trademarks in new gTLDs

This study looks at enforcement, the second category. To understand the cost of enforcement, we studied the 10-year UDRP data on existing “open” gTLDs. We used the data from WIPO and the NAF, which together comprise the overwhelming majority of UDRP cases files. The sample is statistically relevant, comprising 8 new TLDs since 2001, with over 8 million domain names under management. (The study does not include Czech ADR, ADNDRC, or cases from former providers CPR or eResolution Cases. Inclusion of these cases, which deal almost exclusively with .com, .net, and .org domain names, would show an even greater incidence of infringement in legacy gTLDs compared to new gTLDs.)

This study is the first of several in which we will quantitatively examine the likely effects of new gTLDs on trademark holders.

Infringements Per Million (IPM)

A study of the UDRP case data for the last 10 years for both existing (pre-ICANN) open gTLDs (.com, .net, and .org) and for newer ICANN-created open gTLDs shows that the number of infringements within any open gTLD is quite predictable, depending primarily on the number of registrations within that TLD. (For the purposes of this study, we looked at those top-level domains introduced since 2001 that are either “open” — no restrictions on registrants — or whose restrictions are so easily circumvented, or so loosely enforced, that they are effectively “open.” Because trademark owners have not complained as loudly about restricted TLDs, we did not include them in our study. Not examined, therefore, were truly restricted gTLDs: .int, .gov, .mil, .edu, .museum, .coop, and .aero.)

To help understand the relationship, we introduce a new metric: IPM (infringements per million). The data show that among current gTLDs, IPM varies between about 15 and 40, with .com having by far the highest IPM at 41.71 infringements per million registrations.

Domain name growth across all TLDs has for the past ten years grown at a fairly steady 10 – 15% annually (Source: VeriSign Domain Name Brief). Past introductions of new gTLDs have not changed that overall growth. The new round of gTLDs, which foresees an increase of approximately 300 gTLDs (see page 6 of the 2009 ICANN Root Scaling Study, for instance), may, because of intensive marketing, increase this growth rate, but not by orders of magnitude. Based on historical data, the average IPM for the new open gTLDs listed in Table 3 below is 22.47, and 24.15 for .com, .net, and .org. Table 3 lists the IPM for each TLD.

The Data

Legacy open TLDs — .com, .net, and .org — account for the vast majority (94%) of all WIPO and NAF UDRP cases. This percentage has not changed significantly over the 10 years of data, as Table 1 below shows. (The anomalies here, in 2002 and 2007, are due to .info price promotions, where names were offered for free or near-free, which did increase infringements. Price of new TLD registrations – but not the existence of new TLDs – does increase speculative activities of all kinds.)

Table 2, below, shows UDRP claims filed in new open gTLDs.

Finding 1: Infringement correlates closely to registration volume, but .com has the highest rate.

The vast majority of infringement occurs in pre-ICANN legacy TLDs, not in the newer TLDs. To understand what is likely to happen with the new round of gTLDs, we need to better understand these numbers.

The key metric this regard is “Infringements per Million,” or IPM. Table shows 3 the IPM across open gTLDs for 2009.

Cases are calculated not by case number, but by number of domain names. The .cat and .pro TLDs are omitted from this table because for these purposes they are statistically insignificant.

We see that the number of UDRP cases is correlated with the number of registrations in the underlying TLD zone, varying from a low of 11.94 IPM (.biz) to a high of 41.71 (.com). To the extent that there is variation, the outlier is .com, with a higher IPM. Only 4% of all cases (178 out of 3817) occur in non-CNO (com, net, org) gTLDs. Only 1.5% (59 out of 3817) occurred in non-CNOIB (com, net, org, info, biz) gTLDs.

Intuitively, this makes sense: because most large brands and high volume websites operate in .com, one would expect a somewhat larger impact of typo-squatting and other infringement, even relative to the installed base. The next level of TLDs: .info, .biz, .net and .org, which cater to smaller websites, and are less viable as typo-squatting targets, have less than half the IPM ratio.

The newer group of TLDs — .mobi, .asia, .tel — fall within these broad parameters, with .mobi and .asia having a slightly higher IPM, perhaps because they were marketed to the domainer community. Nevertheless it is clear that across all TLDs the results broadly correlate to registration volume.

Finding 2: New TLDs will generate an estimated 316 new UDRP cases per year. Infringements will depend on total domain registrations, not the number of new TLDs.

Our first finding shows that the average IPM for open gTLDs created since 2000 is 22.47. What will the rate be going forward, what will be the total number of infringements, and what will be the corresponding enforcement cost to trademark holders?

Using the average 22.47 IPM for TLDs created since 2000, the new round of gTLDs would create 316 new infringements. This is calculated based on a rosy registration scenario for new TLDs; very likely, they will be less successful, and infringements will be fewer.

Last year, growth across all TLDs was 12%: this includes ccTLDs, which grew at 17% (Source: VeriSign Domain Name Brief). This is very much in line with historical growth of domain names, and we predict that the same growth trend will continue. For gTLDs, this will mean a growth from a combined total of 113 million today to 127 million in February 2011, or an additional 13.6 million names. If these additional names are distributed according to current market share, .com would go from 83.97 million names to 94 million names, .net from 12.63 million to 14.14 million, and so on.

In the past, the introduction of new TLDs has not significantly affected the growth of existing TLDs, and this dynamic is unlikely to change, at least in the short term.

Now, let us turn to the introduction of new TLDs. Suppose that with major marketing efforts the new gTLDs manage to double the growth rate of the overall market from 12% to 24%, and to capture 10% of the market in one year. (Again, this result is extremely optimistic for new TLDs.) The results would look like those presented in Table 4:

Finding 3: The expected total annual enforcement costs for new gTLDs will be less than $870,000 per year, or less $.10 per trademark worldwide.

If all 316 new infringements were filed as UDRPs, at an average cost of $5000, the cost of enforcement to trademark holders would be $1.58M. There are 1.97 million active and pending trademarks in the U.S. Patent and Trademark Office, so on a per-trademark basis (for the U.S. only – clearly there are many more trademarks globally), the cost of new gTLDs would be $.80 per U.S. trademark, and if the 2.4 million registered trademarks in China and the 825,000 European Community trademarks are included, the cost of new gTLDs is $.30 per trademark.

But we can expect trademark holders to make use of the new Uniform Rapid Suspension (URS) process, which will have a cost of $500, not $5,000. What percentage of UDRP claims would be adjudicated through the URS process? We suspect that a majority of the cases that would have gone to the UDRP will now go through a URS proceeding. The number is hard to predict, but a reasonable estimate is that 50% of the claims that are now filed as UDRPs would be filed as URS proceedings. If so, the average cost of enforcing a trademark in the domain name arena will go from $5000 to $2750, or $869,000 – that’s $.17 per trademark registered in the U.S., Europe, and China. If all the world’s trademarks were included, the cost of new gTLDs would be under $.10 per trademark worldwide.

Conclusion

Trademark and brand owners will be faced with only minor enforcement costs from the introduction of new gTLDs. While the overall cost of UDRPs today is high ($19.5 million per year) – the culprit is .com – not the 10 new gTLDs that have been introduced over the last 10 years. (Cost of defensive registrations is not considered in this paper but will be covered in a later study.)

We estimate the total enforcement cost resulting from new gTLDs to be $869,000, or under $.10 per trademark registered worldwide.

Contrast this cost to the benefits of new gTLDs. The benefits of new gTLDs have been well rehearsed, but are worth repeating here.

• Ordinary web users (as well as brands) will not be forced to spend over $10,000,000 annually to purchase .com domains in the secondary market at inflated prices.
• Major cities such as .nyc, .paris, .berlin and .london want new TLDs. They see millions in revenue, increased tourism, increased efficiency in providing Internet services to their residents.
• Thousands of jobs will be created, because each new registry will need to employ 5 – 10 people at a minimum. (As a point of comparison, Afilias, which manages .info and provides registry services for .org, has over 200 employees.)
• Linguistic communities such as .gal (Galicia), .eus (Basque), and .bzh (Brittany) see huge cultural benefits.
• Vertical TLDs with strong user bases such as .eco expect to use proceeds from registrations to help solve problems such as global warming.

The data show that new gTLDs are less likely to be involved in UDRP claims than .com. An expansion of new gTLDs is not likely to significantly increase UDRP costs for trademark holders. If ICANN introduces the Uniform Rapid Suspension (URS) provisions currently under consideration, trademark enforcement costs for new gTLDs will sink even further.

The following is a quantitative analysis of the ICANN public comment for the New gTLD Program – Draft Expressions of Interest/Pre-Registrations Model. The full text of comments can be found on ICANN’s site.

We have also prepared a PDF version of our analysis, which includes a full list of all comments and a brief description of each comment.

I. Overall Findings

The ICANN public comment for the New gTLD Program – Draft Expressions of Interest/Pre-Registrations Model closed on February 7, 2010. A total of 274 separate comments were received (several commenters made multiple comments). 183 comments (67 percent) supported EOIs, and a majority of those favored the Draft Model. 76 comments (28 percent) were opposed to EOIs. 15 comments (5 percent) were neither for nor against the Draft Model.

II. EOI Supporters

EOI supporters break down into two major categories (number of comments in parentheses). A full list of commenters, with a brief description of their comments, can be found in the attached PDF.

• Companies and Groups in Favor of EOIs (86)
• Individuals (97)

Commenters in favor of EOIs can be further divided into the following categories:

1. Prospective Applicants for new gTLDs
2. Individuals connected to prospective applicants
3. The ICANN At-Large Advisory Committee
4. The ICANN ISP Constituency
5. The ICANN GNSO
6. Independent small and medium-sized businesses
7. Independent individuals
8. Independent not-for-profit membership organizations
9. Independent not-for-profit charities
10. Existing gTLD registries
11. Existing ccTLD registries
12. ICANN-accredited gTLD registrars
13. Law firms

III. Arguments Made for EOIs

Comments of the respondents in favor of EOIs were for the most part in full agreement with the staff proposal. Some, however, had additional thoughts or reservations:

• Timetable – the delay in the introduction of gTLDs hurts legitimate applicants who relied on ICANN’s announced timetables.
• Begin the process – The gTLD process needs to get started, EOIs are a welcome first step.
• Predictability – EOIs are welcome because they will help set a predictable timetable for the introduction of new gTLDs.
• Participation – Prospective applicants are an important for making policy for new gTLDs, they have should have some official representation at ICANN.
• Anti-Trademark – trademark interests have been given too much already, should not be allowed to derail the process.
• Anti-Monopoly – vested interests have too much power; ICANN should introduce competition.
• Security – new gTLDs are an opportunity to make the Internet more secure.
• Contention – EOIs will allow contending parties to make arrangements between themselves to prevent auctions.
• “Slot” Trading – ICANN should take care about EOI “slots” becoming a speculative marketplace.
• Mandatory – Several supporters of EOIs believed they should not be mandatory.
• Confidentiality – Several supporters were concerned that too much information was being collected in the EOI; others thought not enough was being asked.
• Price – the proposed filing fee for EOIs was seen by some as appropriately high, others as too expensive.

IV. Minds + Machines Comment Form

Minds + Machines put together an online form that outlined the rather complicated arguments for and against EOIs as a way to encourage comments from those for whom the prospect of writing out an extended argument might be daunting. We further encouraged commenters both for and against EOIs to use the comment form. Most commenters using this form, but by no means all, sent in comments favorable to EOIs.

V. EOI Opponents

The large majority of commenters opposing the Draft Model represented the concerns of trademark holders: trademark associations or groups (23); trademark attorneys (21); or the legal departments of companies (15) account for more than 80 percent of those in opposition of the Draft Model. A full list of the comments, along with a brief description of each, can be found in the attached PDF.

• Trademark Groups Opposed to EOIs (23)
• Individual Companies Opposed to EOIs (15)
• Individuals Opposed to EOIs (17)
• INTA members (21)

The commenters against EOIs can be further divided into the following categories:

1. Large brand owners
2. Registrars providing domain name services to brand owners
3. Trademark and intellectual property associations
4. ICANN’s Intellectual Property Constituency
5. Large charitable not-for-profits
6. Members of the International Trademark Association (see Section VI below for further explanation).
7. Sports organizations
8. Independent individuals
9. Eric Brunner-Williams

VI. Arguments made against EOIs

The following are the primary concerns found in the comments opposed to EOIs:

• Resolution of overarching issues – The “overarching issues” need to be resolved before any EOIs.
• DAG – The Final DAG needs to be published before an EOI.
• Speculation – EOIs will promote speculative behavior including “slot” trading.
• Time – The process is moving too quickly for proper response and consideration.
• Price – $55,000 is too much for nonprofits, developing countries and for others who cannot afford it.
• No gTLDs – Any new gTLDs are a bad idea.

VII. INTA Submissions

On January 12, INTA, the International Trademark Association (INTA) sent out an anti-EOI message to its membership (full text below), exhorting them to comment, suggesting that merely registering their opinion would be sufficient as a comment. Therefore we have included them as a separate category.

Dear INTA Members,

The following notice is to bring to your attention two Internet domain name
system developments that warrant your consideration and potential action.

1. ICANN is Soliciting Input: Should it Proceed with Pre-Registrations for
New gTLDs?

The Internet Corporation for Assigned Names and Numbers (ICANN) is seeking
community views, including input from trademark owners and their
representatives, on whether it should begin accepting “pre-registrations” for
new generic Top Level Domains (gTLDs). Please click here for the ICANN
announcement.

INTA’s Internet Committee will submit comments opposing pre-registration, but
it is important that ICANN also hear from trademark owners directly.

This letter was followed by comments from INTA members that were brief and did not include a reason for opposing EOIs. A typical example follows:

To: draft-eoi-model@xxxxxxxxx
Subject: Pre-registrations for new gTLDs
From: “Lisbet Andersen” lan@xxxxxxxxxxxxx
Date: Tue, 12 Jan 2010 10:48:57 +0100

As an INTA member I have been encouraged to give my opinion on the pre-registration issue. This is to inform you that I do not support ICANN accepting pre-registrations for new gTLDs.

Kind regards
Lisbet Andersen

VIII. Conclusion

The majority of the comments in favor of the Draft Model supported all of the proposed points in the Draft Model, with some concerns about price and whether EOIs should be mandatory. Strongly, they urged ICANN to move forward expeditiously and to provide a clear and predictable timeline.

The comments against the Draft Model were for the most part opposed to EOIs and new gTLDs in general. The comments from the 21 INTA members were very short comments opposing EOIs. Some of the arguments by large brand holders were longer and did not comment on the staff proposal so much as offer their concerns about EOIs and new gTLDs. The primary concern among companies providing an explanation for their opposition was the resolution of the “overarching issues.” Security was the second greatest concern.

Comments or Corrections

We may well have made an inadvertent error in our analysis. Please send corrections or comments by leaving a comment here or by sending an email to minds@mindsandmachines.com.

This month I had the distinct privilege of participating in a fantastic session at DePaul University in Chicago, where Paul McGrady (many in the intellectual property world know him as the author on the Lexis-Nexis guide “McGrady on Domains”) hosted and moderated a very well attended session on New TLDs.

The session was well attended, and had applicants, in-house counsel for large well known brands, students, registrars, brand management companies, very sharp attorneys, and many very impressive representatives from the intellectual property profession.

The panel consisted of J. Scott Evans from Yahoo!, Marc Trachtenberg from Winston & Strawn LLP, David Wheeler from Greenberg Traurig, LLP, and myself.

I have posted the presentations and some more information on the session HERE.

It was a distinct honor to sit amongst this group of peers, and there were great questions from the audience.

-Jothan

TechCrunch reports that its brand has been taken as a Twitter name, and that there is a landrush going on to get these names, which are already trading for money. The problem is so bad that a name brokerage, Tweexchange, has sprung up to get to facilitate sales. Twitter has posted a policy outlawing the sale of names, but a quick review of this policy reveals that it’s as as toothless as a newborn baby, and is clearly more observed in the breach than otherwise.

Trademark owners might want to take note of a worrying trend — valuable names that fall outside the DNS, outside any of the recommendations made by ICANN’s IRT (Implementation Recommendation Team), outside the UDRP (Uniform Dispute Resolution Policy), and outside of any recourse except for the creaky, expensive, and slow-moving protections of national trademark laws. Twitter’s policy offers none of the protections of ICANN’s current system, let alone the expanded protections foreseen by the IRT recommendations.

Twitter should be looking hard at a new .TWITTER top-level domain, so that it doesn’t have to come up with its own dispute policy. Whatever that policy ends up being, it is sure to engender numerous lawsuits and the headaches and expense that come with them.

Trademark owners, for their part, would be far better off encouraging Twitter to apply for the top-level domain .TWITTER, so that naming disputes could handled by the umbrella policies that are already built into ICANN, instead of the reactive, seat-of-the-pants policies that will emerge from private companies.

By opposing new top-level domains, and thereby encouraging the palpable demand for new names to leak out of the DNS system and into private namespaces, trademark owners are inviting a world of woe upon themselves. Instead of one uniform policy, they are about to find themselves reacting to multiple policies in multiple namespaces governed by recalcitrant companies whose commercial imperatives are completely opposed to what trademark holders see as their legal responsibilities.

Next up — Facebook. After that, who knows? There will be more.

Our partnership with EPAG Domainservices, a leading German registrar, is bearing fruit. Our non-exclusive arrangement with EPAG, where we supply registry software and ICANN expertise, while EPAG supplies local-language sales and support, is a great model, especially with a company of the EPAG’s high caliber.

Together, we participated in the 4-city roadshow across Germany designed to acquaint German businesses with the new TLDs. The interest in new TLDs was strong and persistent, and I now believe that a substantial number of German brand holders will be applying for a new top-level domain — either their own brand, and/or a generic word that describes their industry.

Here’s today’s press release in full:

EPAG and Minds + Machines See Strong Interest in .BRAND TLDs

EPAG Domainservices GmbH and Minds + Machines LLC saw a surge of interest in .BRAND top-level domains (TLDs) from German companies during a recently-concluded four-city exposition. Strong attendance and vigorous engagement by companies demonstrated vivid interest from businesses in applying for their brands as top-level domains.

The exposition, “.BRAND – BUT HOW?” was organized by eco e.V. and Markenverband e.V. to supply information to businesses about new TLDs. EPAG and Minds + Machines were major sponsors and welcomed 250 major brandholders to events in Cologne, Frankfurt, Munich and Berlin.

Businesses showed strong interest in using new TLDs to benefit their brands.

Executives in marketing, trademark and IT told EPAG that many companies are preparing to apply for new TLDs, and understand the substantial value of this global digital asset.

Alexander Schwertner, Managing Director of EPAG, noted the enthusiastic response to the joint service offering of Minds + Machines and EPAG: “This roadshow has proven the market demand for new TLDs from businesses in Germany, underlining the need for ICANN to finalize the application procedure as soon as possible.” “We are delighted with our partnership with EPAG in Germany, and gratified that our registry technology and application preparation services are getting substantial traction in the German market,” said Antony Van Couvering, CEO of Minds + Machines.

In upcoming weeks, EPAG and Minds + Machines will run workshops throughout Germany for companies considering TLDs — including information on how to prepare their ICANN application.

Minds + Machines works internationally with companies, cities, not-for-profits and entrepreneurs to secure and operate new top-level domains (TLDs). Minds + Machines provides the comprehensive application preparation services necessary to acquire a new TLD, as well as a robust, scalable registry hardware and software platform used by over 20 TLDs worldwide today. Minds + Machines is known for its customer-friendly approach that is specifically designed to make the process of acquiring and operating new TLDs more accessible, more reliable and less expensive.

EPAG has been an ICANN-accredited domain registrar since 2000 and specializes in managing domains for resellers, large companies and SMEs. EPAG’s team of experts offers a wide variety of services ranging from fully automated domain registration to personal support in the registration of country code domains.

I recently wrote a paper to which I gave the super-fun title Community Scoring in ICANN’s Draft Applicant Guidebook: How to Make Sure that New Top-Level Domains Are Meaningful and Useful.

I also submitted it as a comment to ICANN’s IRT (Implementation Recommendation Team).

Warning! This is very long. Worth studying every word, of course…

Summary: The new top-level domains (TLDs) from ICANN have the potential to usher in a much more useable Web, but ICANN needs to define a “community” TLD better so that existing communities of interest can create and manage their own TLDs. As it stands, these communities will be shut out and many new TLDs will become meaningless replications of .COM. We recommend tweaking the scoring in ICANN’s Draft Applicant Guidebook to make it easier to qualify as a community.
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