August 16, 2011

Businesses Scramble To Protect Brands From XXX Domains

Lawyers, businesses and those behind the most notable brands in the United States are scrambling to prevent an x-rated rip-off of corporate Web addresses, as a new .xxx domain is set to launch this year.

The domain operator running the triple-x domain is accepting early applications from brand name owners who want control over their names. ICM Registry said it has received more than 900,000 "expressions of interest" from companies that want to protect their trademarks and block others from using them up to create sites such as Coke.xxx or Barbie.xxx.

Companies such as MTV, Budget Travel and the Red Cross are pre-registering for domains before adult-content providers get their hands on them, safeguarding them and avoiding future legal battles with cybersquatters who could be looking to register trademarks with the intention of reselling them.

And many mainstream businesses are complaining they are being forced to buy domain names they don't want and won't use, just to protect their brand names.

"Many feel they're being blackmailed to protect their brands," Kristina Rosette, a trademark lawyer at the law firm Covington & Burling, told Reuters. Requiring pre-registration fees to protect trademarks is not uncommon among domain registries, which then include the expected revenue in their business plans and projections, she added.

Stuart Lawley, founder of ICM Registry, which introduced the .xxx domain, first proposed the triple-x domain in 2000 to the Internet Corporation for Assigned Names and Numbers (ICANN), the international governing body that oversees top-level domains (TLDs) and reviews new applications. ICM Registry fought for more than ten years to get the .xxx domain listed and got final approval this past March.

Now that Lawley is finally able to launch ICM in December, he is dismissing any charges that he is blackmailing registrants to line his own pockets. "We're doing it on a cost-recovery basis. We don't make a dime out of it," he said, adding that the pre-registration fees would serve to cover the cost of verifying the applicant's identity and trademark ownership.

ICM is the latest to make a claim in the registry market. The most established registry owner, Verisign, operates .com and .net domains. Afilias owns .info and .mobi for sites designed for mobile devices. And beginning next year, ICANN will allow any company to apply for its own domain extension, such as .twitter and .amazon.

Many large companies own hundreds or thousands of domain names, Frederick Felman, CMO of MarkMonitor, which helps companies protect their brands online, told Reuters.

Along with the advent of .xxx, will also come cybersquatters, who register well-known trademarks to increase Web traffic and later sell them at an inflated price. Also at issue are the typosquatters, who register famous names with deliberate slight typographical errors, like Peppsi instead of Pepsi. Such threats of brand hijacking has alarmed companies who worry about the costs of defensive registrations.

A trademark owner that is victimized by cybersquatters or typosquatters must take legal action against the domain name holder, calling on ICANN's dispute resolution policy to reclaim the address. The process could take months and cost several thousands of dollars in legal fees.

When ICANN opens the door to new domains beginning next January, the cost of brand protection is going to skyrocket, said Felman.

Businesses that will likely be most affected by the .xxx domain launch are big name adult entertainment companies such as Playboy, Hustler and Canadian-based Manwin. They are not only refusing to pay for brand protection, but are also demanding that ICM block their domains free of charge.

Manwin "has placed ICM on notice that registration of its domain names without its consent will constitute a violation of Manwin's rights," it said in a statement. Hustler has sent a similar letter as well.

ICM responded to the legal threats with a seven-page report in July, claiming that a registry cannot be sued for trademark infringement. The letters, however, have put ICM on notice, which increases the possibility for liability if ICM sells the trademarked names.

Easyspace, a British registrar which has been taking preorders on behalf of businesses that want to protect their brands before official registration opens in September, said 80 percent of registrants have so far been from those outside the porn industry.

MTV Networks was one of the early pre-registrants, signing up to protect its VH1 and Comedy Central brands. "This is a unique launch," MTV spokesman Mark Jafar told Reuters in an emailed statement.

Jafar said that the company is registering names to prevent others from owning them, and have no plans to use the domains itself. He said MTV is registering more brands with .xxx than it normally would for a new domain.

ICM Registry says that the only companies or individuals that will be allowed to register for a .xxx domain are those offering sexually-oriented adult entertainment, or those who are trying to protect their company.

"Each case is researched by an outside consulting firm hired by ICM. If it involves a well-known brand, ICM itself will take the offending website down within 48 hours," BNET reported according to CBS News.

Between Sept. 7 and Oct. 28 trademark holders will be able to protect their brands by either purchasing a .xxx domain or block them from being sold. The first month is called the "sunshine period" when anyone can file to have their brand or company protected. Prices range from $199.99 for 10 years of blocking to $209.99, plus $99 per year for a domain name.

The second month will be the "landrush period" where members of the adult entertainment community can begin purchasing their .xxx domains for $199.99, plus $99 per year. Then, in December, the general public will be able to purchase domains for $99.99 per year.

But not all registrants have to pay the $100 to $300 fee. Under ICANN's rules, certain nonprofits including the Red Cross and the International Olympic Committee receive special protection in new domains because of their international status.

Red Cross has submitted a list of its brand names, along with their Spanish and French translations, which will be blocked from .xxx free of charge, according to a spokeswoman with the Red Cross.

People for the Ethical Treatment of Animals also signed up. However, instead of blocking its name, said PETA spokeswoman Lindsay Rajt, the organization will launch peta.xxx as a pornography site that draws attention to the plight of animals.


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