INTA study reveals cost of new gTLDs to brand owners as ICANN community wrestles with RPM review

At this week’s ICANN meeting in South Africa, the impact and effectiveness of new gTLD rights protection mechanisms (RPMS) has taken centre stage, with one participant voicing concerns that some trademark owners are over-reaching in sunrise applications. The flipside, of course, is that many see the need to implement proactive defensive registrations across a range of strings. Now, a new study from INTA reveals that member registrations in new TLDs have been “overwhelmingly made for defensive purposes”.

Yesterday in Johannesburg the working group leading the Policy Development Process (PDP) to Review all Rights Protection Mechanisms (RPMs) in gTLDs hosted a session to explore the direction of the review. The three hour session focused on the questions that should be asked to obtain meaningful data on new gTLD sunrise registration and trademark claims. During the discussion on the former, one suggestion made by Rubens Kuhl, product marketing manager at NIC.br, was that trademark owners themselves sometimes over-reach in terms of registrations and technically ‘abuse’ the sunrise: “One of the perceived abuses are trademark owners that have marks that apply to a sector, let’s say ‘airport’ for electronic devices. Sometimes they then try to register those marks in other contexts like geoTLDs where nobody would expect an airport to be an electronic device but instead an actual airport with airplane you could fly to. So we should probably direct trademark owners to exercise care in the use of their trademarks, to not try to register [in TLDS] where the trademark doesn’t have a meaning in that specific context.”

This viewpoint was countered by Gregory Shatan, president of ICANN’s Intellectual Property Constituency, who stated: “I think that whether in sunrise or anywhere else, unless it’s in the rules of the registry, each registrant should have the ability to make their own choices about why they’re registering in a particular TLD. Sadly, there are a lot of defensive registrations being made by trademark owners and that may well be the reason. I think we all wished there was no need for such things but that’s just not where we are.”

As Shatan argues, even in TLDs seemingly unrelated to their specific trademarks, brand owners may feel compelled to engage in defensive registrations in a bid to ring-fence use of their marks. To date there hasn’t been data evidencing the amount being spent on such defensive moves, but a recent survey conducted amongst INTA corporate members is set to change that. The survey asked members to capture all costs across 2015 and 2016 that relate to new gTLD-related expenditure. Collating that data from across the company is a significant ask but 33 companies rose to the challenge.

On the issue of cost, the survey reveals that, on average, respondents spent $150,000 per year on defensive actions, with internet monitoring and diversion actions the largest line item. Costs specific to new TLDs comprise about 1/7 of the total. This is likely now higher – the report noting that these costs were for the early years of the new TLD program, arguing “it is reasonable to expect the proportion specific to new TLDs to rise in future”.

The survey results have been published on the ICANN community wiki and amongst the other key findings were the following:

• Almost three-quarters of respondents had received Trademark Clearinghouse notices across the two year period, with more than one-third receiving 100+ notices. Where these notices result in costs, investigations are the biggest expense, followed by warning/cease and desist letters. However, the latter are most frequently actioned.
• Three-quarters of members had taken action against domain name owners using new TLDs by sending cease and desist letters, while 27% had used UDRP proceedings. Use of the URS, civil actions and lawsuits were infrequently adopted.
• Three-quarters have spent more than $1,000 on cease and desist letters in the past 24 months.
• Two-thirds feel UDRPs and required Sunrise periods have helped mitigate risks to a major or moderate extent.
• Only 36% feel that Trademark Claims (36%), and 27% that the URS, helps mitigate risk.

One contentious aspect of the new gTLDS programme has been premium pricing, and 67% of respondents reported that they had been affected by the practice to some degree. However, 15% refuse to pay premium pricing as a matter of course, while 6% pay only for their key marks.

Reflecting on rights protection mechanisms, then, one respondent concluded: “We support the idea of having RPMs; however, given the volume of new gTLD real-estate created, we do not believe that the balance has been struck correctly between the high cost and limited effectiveness of the measures.”

The question of effectiveness is at the heart of the work being undertaken by the RPM review working group, but there is clearly some way to go before the full picture is apparent. In the meantime, studies such as INTA’s impact analysis go some way to quantifying the real world consequence of the new gTLD expansion on brands and budgets.