A quick and dirty discussion of defensive .xxx registration

The post below is written by Mitch Skinner, the lawyer who joined our firm earlier this year. He’s been crazy busy doing data licensing agreements for MLSs (CoreLogic, RPR, etc.) over the summer but took time to write this blog post thinking it would be of use to our clients. Mitch’s practice focus with the firm right now is on licensing and technology agreements, as well as copyright matters and trademark issues (as you can see below). But he handles a wide variety of other matters, too. Welcome Mitch in a comment and let him know what you think of his inaugural post here! -Brian

The online red-light district is about to open for business. The sponsored top-level domain (TLD) .xxx is designed for the adult entertainment industry and will be live soon. Many companies fear that their trademarks might be compromised if someone else registers them on .xxx—trademark owners would be distressed to see Realtor.xxx, Pepsi.xxx, Xerox.xxx, etc. Your company may want to protect its brand through defensive registration, but if so, you should be aware of an October 28 deadline.

Soon many new TLDs will become available, but .xxx is unique in that it was recently approved after many years of consideration by ICANN (the company that oversees the Internet’s naming conventions). This post describes the defensive registration process for .xxx, offers some advice about how to decide whether to use it, and offers some further thoughts about what’s coming next.

Defensive Registration Process

ICM Registry, LLC, the sponsor and company responsible for management of .xxx, has established three timeframes for claiming .xxx domain names. The stages are called “Sunrise,” “Landrush,” and “General Availability.” Sunrise is the defensive registration period and is limited to national trademark holders and adult industry folks who have a domain name with a TLD other than .xxx. There is an overview and flowchart here.

Sunrise runs from September 7 to October 28, 2011 and is divided into two categories: Adult entertainment industry applicants apply in “Sunrise A,” and non-adult industry applicants apply in “Sunrise B.” I imagine our readers fall into the latter category. The purpose of registering your mark in Sunrise B is to block anyone else from being able to claim and use it. At the end of the Sunrise period, if ICM receives no competing applications from Sunrise A for the domain name you have claimed, ICM will remove the requested domain name from the pool of available .xxx domain names. When a user attempts to visit the domain name, the search will resolve with a basic informational page indicating that the domain name is unavailable for registration. The same will happen if ICM receives a competing application from Sunrise B for the same domain name.

To apply for defensive registration in Sunrise B, an applicant must meet several requirements.

• The applicant must have a trademark registered on the United States Patent and Trademark Office’s (USPTO) principal register, or another national authority. 
• The trademark must be active, i.e., currently in use. 
• The trademark must have been registered prior to September 1, 2011. 
• The requested domain name must correspond exactly to the textual component of the registered trademark. 
• The trademark cannot include .xxx as part of the text. 

There are several implications of these defensive registration requirements. The following do not meet the requirements: common law marks (rights in a mark that arise just because you’ve used it for your products or services), state-registered marks, and registrations on the USPTO’s supplemental register.

Also, the domain name must be exactly the same as the registered trademark. For example, let’s say a fictitious broker owns a registered trademark, DOMICILEDECIDERS. That broker can only apply to defensively register domiciledeciders.xxx. It cannot defensively register domiciledecided.xxx, domiciledecisions.xxx, dimbeciledeciders.xxx, etc.

You may register your trademark defensively in Sunrise B, and an adult-industry company may also claim that name in the concurrent Sunrise A. In that case, ICM will notify both applicants of the competing claims for the domain, and the Sunrise A adult-industry applicant may proceed with registering the domain name. However, the Sunrise A applicant is put on notice of your competing intellectual property claim for any subsequent dispute proceeding.

The going rate to defensively register your mark as a Sunrise B application appears to be $200-$250. Registrars are listed here. In most cases, the defensive registration will be effective for 10 years.

Strategic Justification

If you meet the requirements above, you still need to decide whether to proceed with defensive registrations. As far as brand protection goes, $200-$250 is inexpensive. Further, the process is relatively simple and laid out very clearly on ICM’s webpage – so staff-time investment should be minimal.

However, the low cost may reflect low value – your association, MLS, or brokerage may not gain all the benefit it seeks. Remember, at this point you cannot defensively register domain names that are variations of your trademark. If your brand is strong enough to attract a cybersquatter, the cybersquatter will probably consider registering .xxx sites with variations of your mark (“typosquatting”). We previously posted a more detailed description of how this could play out.

Also, the point of the .xxx TLD is to indicate to web users that they are entering the adult entertainment portion of the Internet. If you are genuinely concerned that someone else would register your brand in a domain name with .xxx, maybe defensive registration (and a serious overhaul of the company image) makes sense. Otherwise, consumers and real estate folks will know what they’re getting into by following the .xxx link, and they’re probably unlikely to mistake sites there for your site(s).

There are other options for protecting your brand.

You could wait until December 6, 2011, for the General Availability time period and register .xxx domain names that did not meet the requirements above (e.g., variations on a trademark, unregistered marks, etc.). You could then set the domains to work similarly to Sunrise B applications: queries to these domain names would not resolve and would return a non-existent domain result. The cost of registering during the General Availability period is unknown. This approach will not work if someone else beats you to the punch.

You could wait and see if you encounter any problems. If no one misuses your marks (or variations of them) on .xxx, you will have saved the time and money needed to register. But a wait-and-see approach would likely be more expensive if you have to take action later, as it would involve pursuing a cybersquatter in arbitration under the ICANN Uniform Domain Name Resolution Policy (UDRP) or litigation under the Anticybersquatting Consumer Proteciton Act (ACPA). However, a well crafted cease and desist letter may also do the trick. Again, see our earlier post.

So I’m going to punt on the question. While the value of defensive registration seems minimal, so is the cost. For brand protection, $200 is a low price. Each association, MLS, or brokerage will need to conduct its own comparison of value and cost.

This is just the beginning

Seriously. We’re about to see all kinds of TLDS. On June 20, 2011, the ICANN Board of Directors approved a plan to allow for new TLDS by anyone that can successfully navigate the approval process (and afford it). Maybe you’ve heard about the MLS Domains industry effort? A list of potential new TLDS is here. A process similar to the .xxx campaign is likely to repeat itself with the introduction of each new domain. These new TLDs will start launching in early 2013.

If we draw any lesson from this, it is that having a federally registered trademark can prove to be valuable for protecting a brand. Every option for protecting your brand described above is easier if you have a federal trademark registration.

Thoughts?

Cheers!
-Mitch