In this digital age , "Internet Marketing" is of growing importance for businesses. Brand owners have to look for opportunities to build up and expand their online presence and at the same time, take proactive steps to monitor and stop cyber-squatting activities and protect their brands and goodwill online.

This article highlights the latest domain name developments which brand owners should note from a brand protection perspective. Your particular attention is drawn to the 28 October 2011 deadline if you wish to obtain protection before the internet's "red light district" goes live.

1. ICANN Board Approves Dramatic Expansion of Generic Top-Level Domain Names: Moving Beyond ".com"

At its June 20, 2011, board meeting in Singapore, the directors of the Internet Corporation for Assigned Names and Numbers (ICANN) voted to approve the Applicant Guidebook. This decision sets in motion a rapid and unprecedented expansion of the number of generic Top-Level Domains (gTLDs).

Prior to approval of the new program, gTLDs, which are the letter strings following the “dot” in an Internet address (e.g., the “com” in .com), were limited to 21 specific sequences, such as .com, .biz, and .mobi. While registrants were free to register almost any sequence prior to the gTLD, known as a second-level domain, registrants had few options when choosing a gTLD. With ICANN’s approval of the new program, the Top-Level Domain Name space has been opened to allow the registration of nearly any combination of letters, including brands or other terms, such as .bank, .lawyer or .chicago.

According to ICANN, the expansion will allow for a greater degree of innovation and choice. While the full impact of this expansion is uncertain, it is clear that regardless of their intent to participate in the new program, brand owners will need to re-evaluate the way they currently monitor and enforce their brands on the Internet. 

In addition to detailing the necessary procedures for registering a new gTLD, the Applicant Guidebook contains several trademark “Right Protection Mechanisms” that were developed in consultation with trademark owners and their representatives. These protections include a sunrise period, a formal process for objecting to new gTLD applications and a trademark clearinghouse meant to notify brand owners of infringing domain name applications. In order to receive the full benefits of these protections, however, brand owners must take specific steps to have their marks validated and entered prior to the launch of new gTLDs.

The Applicant Guidebook also limits the number of new gTLD applications that ICANN will delegate into the Internet in any given year and sets a limited application window that will open on 12 January 2012 and close on 12 April 2012. While ICANN anticipates that additional application rounds will follow this limited application period, there is no guarantee that this will occur. As a result, brand owners interested in participating in the new gTLD program need to prepare in advance to ensure that they are not excluded from the application process altogether. 

2.  Protection of Your Brands From the Internet's New Red Light District - .xxx generic Top Level Domain - URGENT: Action Required Before 28 October 2011

The new .xxx generic top level domain name was approved by the Internet Corporation for Assigned Names and Numbers ("ICANN") earlier this year and has been launched on 7 September 2011. Members of the adult entertainment community may be excited to have opportunities to acquire premium domains which they cannot obtain under the existing gTLD extensions and build up their red light district in the internet; whilst brand owners of other businesses who wish to protect their brands from being registered and used as part of the new .xxx domain names can apply to the Registrar, ICM Registry LLC (the "Registry Operator"), to block any future bad faith applications upon payment of a one-time service fee.

During the Sunrise Period from 7 September 2011 to 28 October 2011, the online adult entertainment community and related product or service providers are allowed to apply for registration of .xxx domain names which correspond to their respective registered trademarks (which must be registered prior to 1 September 2011) or existing domain names (which must be registered on or before 1 February 2011).

Cybersquatters of a branded .xxx domain name will more likely result in embarrassment and damage to the image and business reputation of brand owners. To alleviate these concerns, an opt-out mechanism is provided to brand owners who are not members of the adult entertainment industry to prevent others from registering their brands as .xxx domain names in bad faith. Instead of filing a .xxx domain name application for defensive purpose, brand owners can, during the Sunrise Period, apply to reserve the relevant .xxx domain names which correspond to their registered trademarks (which must be registered prior to 1 September 2011).

Once the domain names are reserved, they will be permanently set to resolve to a standard webpage indicating the status of the name as reserved and block all future applications of the same branded .xxx domain name. Yet, such reservation is not equivalent to a registration as it does not convey any right to the successful reservation request applicant. The WHOIS search of a reserved .xxx domain name will only show the registrar's information. An applicant for reservation of a .xxx domain name will be charged a one-time fee of around US$200 - US$300 (for 10 years).

Traditionally, brand owners have to incur considerable costs in filing domain name applications for different variations of their marks for defensive purpose and lodging complaints or lawsuits to recover domain names from cybersquatters. With this opt-out mechanism, it is hoped that brand owners can proactively protect their brands against cybersquatters of .xxx domain names in a more cost-effective manner. Brand owners are reminded to take prompt action during the Sunrise Period (which expires on 28 October 2011) if they desire to protect their trademarks before .xxx domain names go live to the public.

3. Domain Name and Trade Mark Scams in China

Domain Name Scams

For a few years, many brand owners have received emails from domain name registrars or IT consultant companies based in China claiming that someone is trying to register English domain names (usually .CN, .HK, .TW), Chinese domain names, Internet Keywords and/or Wireless Keywords that are identical or similar to the famous trade marks or domain names belonging to the brand owners, and urging the brand owners to immediately apply for registration to pre-empt the alleged bad faith applications. Usually, an urgent response within 2-3 days is required.

In most cases, the alleged applicant is a fictitious entity and the email is simply coaxed to solicit business. The email sender may or may not be a registrar accredited by the China Internet Network Information Center (CNNIC).

Upon receipt of such email, brand owners not familiar with the practice may make irrational or impulsive decisions to register the domain names and/or keywords in issue lest their names or marks will be taken by the others. There are however far too many possible domain name extensions and variations (e.g. adding a hyphen or the character "s"). It is simply not practical to register all the domain names and keywords that may be similar to one's name or trade mark. Further, a positive response to the scam may prompt more scams or unsolicited marketing emails.

In deciding whether to register for defensive purpose to avoid dilution and internet traffic diversion, a brand owner should evaluate the value of the name, the level of commercial risk, the chance of recovering the relevant domain names and/or keywords in the future (e.g. by filing an administrative complaint) and the costs for doing so.

Trade Mark Scams

Lately, apart from the domain name scams, some brand owners began to receive unsolicited emails or facsimiles in Chinese (usually marked "urgent") from some trademark agents in Mainland China claiming that someone has just applied (usually just one or two days before the message) for registration in all 45 classes of trade marks that are identical to the trade marks of the recipient but in respect of non-identical goods or services; and suggesting the brand owners to act by filing applications for the same mark in all classes. The trademark agents claim that if the brand owners respond in a timely manner, there is a pre-application opposition procedure which can handle the brand owners' trademark applications on a priority basis (implying that the brand owners' trademark applications will pre-empt the third party's bad faith applications).

However, there is no such "pre-application opposition procedure" under the PRC Trademarks Law. Basically, China follows the first-to-file principle for obtaining trade mark rights. Once an application is filed, it will join the queue for examination. Thankfully, the examination process has been accelerated and should be completed within a year. If the PRC Trademark office is satisfied that the mark is distinctive, complies with the law and there is no prior registration, it will preliminarily approve the application for publication in the PRC Trademark Gazette. The mark will proceed to registration if no one opposes within three months from the date of gazette.

All PRC trademark applications are processed in the manner outlined above. The law even has provisions to govern which applications may take priority if they happen to cover the same mark, same or similar goods or services and are filed on the same day. A trademark agent definitely does not have the capacity to determine whether a particular trademark application can be handled or processed with priority. Further, a trademark agent is not required under law to conduct any pre-application check if any instructions they receive may conflict with other brand owners. Moreover, it would be a breach of client privilege in the western system to disclose one's own client's application to another party.

Hence, brand owners should treat such messages with caution by marking appropriate dates in the diary to check the progress of the alleged application online before deciding if any action should be taken.