Will You Be Confused When The New Generic Top Level Domains (gTLDs) Launch?

With the impending release of the new generic top level domain (gTLD)program there has been a lot of discussion and disagreement about how gTLDs, especially “closed gTLDS” should be handled. The new gTLDs are “dot-anything” domain extensions that go beyond .com, .net, .org, .info., .ca., and the other domain endings that we’re used to.

As part of a planned expansion, the new gTLD program, ICANN accepted applications in the first half of 2012 from organizations willing to pay a hefty price tag to run a domain extension. This includes companies such as IBM, Google, Amazon, Audi and YouTube.

In all, 1,930 applications for new domain extensions have been filed for various types of extensions, ranging from the truly generic (.love, .shop, .app), to the brand-specific (.goog, .bmw, .aol) and the geo-specific (.nyc, .boston, .paris).

Companies given the right to manage these new gTLDs don’t necessarily have to open them to the public. Domains that are truly generic have been termed “closed generics” like .art and . music. This issue is important because of its effects on consumer perception, information, and market share. For example if a hotel chain is granted .hotel and it is recognized as the space to go to find hotel information there is a lot of room for monopoly creation and excluding of the competition. The victorious hotel chain could include information for hotels that are not direct, price-point, competitors but market the domain as an authority on hotels or the domain to use when planning your next hotel stay. This ability to craft a misleading message has the potential to cause consumer confusion as most consumers will be unaware of who owns the domain and create unfair advantages that will skew competition. This leaves the consumer with incomplete information which runs counter to purpose of trademark and other intellectual property protections afforded innovators and disrupts the delicate balance of competition that is necessary to preserve fair pricing.

Intellectual property maven,  Professor J. Thomas McCarthy,  has filed a statement opposing closed generic gTLDs as being inconsistent with trademark law and its goals.  According to McCarthy

“Trademark law in every country in the world forbids individuals to gain exclusive property rights in generic names of products. One of the primary rationales for this rule is to prevent a single person or company from gaining an unfair competitive advantage in the marketplace. Private ownership of generic language is not consistent with free enterprise and fair competition in an open economy. If ICANN were to approve closed, generic gTLDs, these important goals would be undermined…

Transparency and consumer choice are goals of the trademark system of every country in the world. In our view, these values are threatened by closed, generic gTLDs. Indeed, should these types of new gTLDs be approved, consumers may mistakenly believe they are using a gTLD that allows for competition, when in reality the gTLD is closed and the apparently competitive products are being offered by a single entity. This would allow the owner of the generic gTLD to gain exclusive recognition as the provider of a generic service, something that is prohibited by Trademark law.”

Domain names are a niche of trademark protections and should abide by similar rules because they are designed for a similar purpose. Consumer confusion and brand value are an important part of investing in domains and seeking to purchase these gTLDs. With that in mind, ICANN should be seeking to protect the consumer first and then to protect and promote brands. If the consumer is place first there should be some additional rules and regulation for these truly generic domain extensions.  They should be clearly defined and then regulated to a degree. Either companies keep them exclusively for their use so consumers know the term is closed or if they make it available for competitors they cannot exclude any competitors or legitimately interested parties.

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Image from Cnet

In response to these recent concerns, Google claims that if they are awarded the right to manage the domain registrations for .search, .app, .blog, and .cloud, there is a “good chance” that it won’t just use them for its own services  and will open them up for non-Google properties, too.  Google accounts for about 100 of the over 1,900 applications ICANN received. Some of these are brand specific but Google, like others, also applied for the right to manage some very generic top-level domains. This was an excellent business move on the part of Google but should really cause ICANN to consider how these domains can best serve the entire internet community and preserve competition on the Internet.

In a letter sent to ICANN recently, Google Chief Information Officer Ben Fried said the organization should allow closed generic string applications to proceed (PDF). The company believes that an “unfettered process is paramount in opening up the domain name space and increasing innovation in a market that has always been, effectively, stagnant.”

Google also clearly stated that it would expand the use of certain gTLDs beyond its own products:

After careful analysis, Google has identified four of our current single registrant application that we will revise: .app, .blog, .cloud and .search. These terms have been identified by governments (via Early Warning) and others within the community as being potentially valuable and useful to industry as a whole. We also believe that for each of these terms we can create a strong set of user experiences and expectations without restricting the string to use with Google products.

The completely “unfettered process” requested by Google leaves too much unknown. Most things to get the desired result require at least a modicum of regulation. I do not suggest that ICANN begin to dictate how all gTLDs should be run but I do think guidelines and prevention of consumer confusion are important considerations when relinquishing control of very generic domain extensions to private companies.

ICANN CEO Fadi Cherhade announced the release of new gTLDS starting April 23.  These closed gTLDs will not be apart of that roll out but will follow shortly thereafter. The important question is how are these very generic extensions going to be handled?  Will there be additional regulation to prevent consumer confusion, preserve healthy market competition, and prevent monopolies? I wouldn’t doubt that these are considerations for ICANN and that they have ideas in the works to combat these issues. Hopefully, the initial launch will help to solidify any lingering questions.

TechFreedom believes that this type of regulation should be left to antitrust regulators, however, the law is always behind and this regulation would be reactionary rather than proactive. Antitrust regulators can fine tune and regulate on a micro level but implementation should begin with macro regulation or guidelines.

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