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Will the Trademark Clearinghouse kill off premium domains?

Kevin Murphy, April 18, 2013, 03:54:27 (UTC), Domain Policy

Rules proposed for the new Trademark Clearinghouse threaten to cut off some of new gTLD registries major sources of early revenue, according to registry providers.
Premium domain sales and founders programs are among the now industry-standard practices that would be essentially banned under the current draft of the TMCH rules, they say.
The potential problems emerged in a draft TMCH Requirements document circulated to registries 10 days ago and vigorously discussed during a session at the ICANN meeting in Beijing last week.
The document lists all of the things that new gTLD registries must and must not, and may and may not, do during the mandatory Sunrise and Trademark Claims rights protection launch periods.
One of the bits that has left registries confused is this:

2.2.4 Registry Operator MUST NOT allow a domain name to be reserved or registered to a registrant who is not a Sunrise-Eligible Rights Holder prior to the conclusion of the Sunrise Period.

What this means is that trademark owners get first dibs on pretty much every possible string in every gTLD.
“Trademark owners trump everything,” Neustar business affairs veep Jeff Neuman said during the Beijing meeting. “Trademark owners trump every possible use of every possible name.”
It would mean, for example, that if a new gTLD wanted to allocate some names to high-profile anchor tenants during a “founders program”, it would not be able to do so until after the Sunrise was over.
Let’s say the successful applicant for .shop wants to reserve the names of hundreds of shop types (book.shop, food.shop, etc) as premium names, to allocate during its founders program or auction later.
Because the .shop Sunrise would have to happen first, the companies that the own rights to, for example, “wallpaper” or “butcher” (both real US trademarks) would have first rights to wallpaper.shop and butcher.shop, even if they only planned to defensively park the domains.
Because there’s likely to be some degree of gaming (there’s a proof-of-use requirement, but the passing threshold is pretty low), registries’ premium lists could be decimated during Sunrise periods.
If ICANN keeps its TMCH Requirements as they are currently written, new gTLD registries stand to lose a lot of early revenue, not to mention control over launch marketing initiatives.
However, if ICANN were to remove this rule, it might give unscrupulous registries the ability to circumvent the mandatory Sunrise period entirely by placing millions of strings on their premium lists.
“Registries should have discretion to schedule their start-up phases according to their business plans so long as rights protection processes are honored, so that’s the balancing we’ve tried to do,” ICANN operations & policy research director Karen Lenz said during Beijing.
“It’s trying to allow registries to create requirements that suit their purposes, without being able to hollow out the rights protection intention,” she said.
The requirements document is still just a draft, and discussions are ongoing, she added.
“It’s certainly not our intention to restrict business models,” Lenz said.
Registries will get some flexibility to restrict Sunrise to certain registrants. For example, they’ll be able to disqualify those without an affiliation to the industry to which the gTLD is targeted.
What they won’t be able to do is create arbitrary rules unrelated to the purpose of the TLD, or apply one set of rules during Sunrise and another during the first 90 days of general availability.
The standard Registry Agreement that ICANN expects all new gTLDs to sign up to does enable registries to reserve or block as many names as they want, but only if those names are not registered or used.
It seemed to be designed to do things like blocing ‘sensitive’ strings, rather like when ICM Registry reserved thousands of names of celebrities and cultural terms in .xxx.
The Requirements document, on the other hand, seems to allow these names being released at a later date. If they were released, the document states, they’d have to be subject to Trademark Claims notices, but not Sunrise rules.
While that may be a workaround to the premium domains problem, it doesn’t appear to help registries that want to get founders programs done before general availability.
It seems that there are still many outstanding issues surrounding the Trademark Clearinghouse — many more than discussed in this post — that will need to be settled before new gTLDs are going to feel comfortable launching.

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Comments (20)

  1. It shall be amusing to see how many of the Benelux TMs from the .eu sunrise, among others attempting to game the system, make it into the TMCH, e.g. see:
    (all those marks were for “plectrums”, see: http://en.wikipedia.org/wiki/Plectrum )

    • gpmgroup says:

      Even a quick look at the proposed 2013 RAA shows ICANN still hasn’t fixed loopholes / ambiguities from the current RAA.
      With new gTLDs innovative people will run rings around ICANN. It’s likely history will look back on .eu fiasco as a gentle stroll in the park in comparison to what ICANN is going to do with new gTLDs.

      • Jean says:

        .eu a fiasco?
        It depends where you sit down: Registrant or Registry.

        • Rubens Kuhl says:

          Domainers are bad for registries, not only for registrants. Although they look like revenue in the short term, they lessen the strength of the TLD and make it look bad in the long term.

          • gpmgroup says:

            @ Rubens Given the “pre-registrations” sites do you honestly believe that the Domain Industry is not looking at “Domainers” and “Defensive” registrations in (non brand & non IDN gTLDs as a significant, if not the dominant source of revenue?
            If not do you honestly expect existing businesses to move to a “better name” in new gTLDs…. or run multiple websites in any number?

        • gpmgroup says:

          There were thousands of names secured using word&word trademarks to get exact matches as the & can’t be represented in domain names. Names like usa.eu where the American Embassy had its application rejected in favour of a “us&a” trademark.
          Innovation? Was it what Eurid wanted? Was it in the public interest? Does it matter? Was it a good thing or did it do long term damage?
          It was so pervasive that even Wikipedia has notes on it
          Interestingly Bob Parson criticized the use of shell companies…
          Has ICANN taken measures to prevent the use of shell companies in the new gTLD process or does it think such a strategy would provide the “innovation” it says it seeks?

  2. melvin says:

    People will also have no incentive to pay a high price for a domain, if they know that 2 minutes later it will be subjected to “Trademark Claims notices”. Yes its not an immediate UDRP but it sure is a headache and risk that a potential buyer or potential user who gets the name from the registry would think twice about.

    • Rubens Kuhl says:

      The Claims service is an added benefit to the registrant as it warns of what potential UDRP/URS filings might come before registering the domain.
      The information to trademark holders is just as easy to do with zone files and such services are already in-place today in the gTLD space.
      With Claims service covering only the first 90 days of general availability, TM holders will keep using zone files as a more ubiquitous approach.

  3. luk says:

    What stops the Registry to set the price for the TMCH Sunrise to 1 million dollars a domain?
    NOTE: to participate in Sunrise “proof of use” is required so just having the trademark is not enough (that say, the threshold of proof is not that high).

  4. Jean Guillon says:

    Founders program are already being sold…

  5. JS says:

    Can’t registries reserve a list of names, and release them (through auction etc.) post-sunrise under section 2.4.4.
    The only RPM requirement would then be to subject the domains to the Claims Services, which, the way I understand it, is simply a notification scheme.

  6. JS says:

    Sorry, I’ve just re-read 2.2.4, I see the ambiguity now ..

  7. People have short memories of what happened not only during .eu and George mentioned above but also for .info
    Trademark is subject to trademark squatting just as domains are subject to cybersquatting except for TM their is no downside, and no $100K per statutory damage

  8. Rubens Kuhl says:

    @gpmgroup I know a lot of new gTLD applicants that are counting on domainers to get a quick ROI. What I disagree is that being a sound business decision; if real enterpreneurs can’t get the domain they want in your TLD because a domainer bought it, they will look elsewhere, so both the registrant and the domainer will be unhappy.
    Defensive registrations, on the other hand, is not something that has too big a negative image impact on the TLD. It looks bad for the DNS industry as a whole, for sure.

  9. Many domainers are dropping their names right now, there must be a reason for this.

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