Comment: Retailers lead the charge in online domain applications

On 13 June, the movers and shakers of the technology world came to a standstill as the Internet Corporation for Assigned Names and Numbers (ICANN) announced the much-anticipated list of the new ‘generic Top Level Domains’, or gTLDs.

TLD refers to the suffix which appears at the end of a domain name. At the moment, there are 22 TLDs, including .com, .net and .org.  However, between 12 January and 30 May 2012, ICANN accepted applications for new generic TLDs. On 13 June, ICANN announced the list of thecompleted applications, which (despite an initial application alone costing a somewhat prohibitive US$185,000) totalled an impressive 1,930.

The retail industry was the fourth most active sector, with 55 unique applicants. Many applicants filed multiple applications; Amazon topping the rankings at 76 applications.  Some domains, such as .shop and .fashion, received multiple filings (9 and 4 respectively), meaning there will have to be a bidding war over ownership.

The applications themselves ranged from truly generic words to brand names.  On the generic end of the scale, applications included both retail phraseology such as .boutique, .shopping and .store, and specific product types including .beauty, .clothing and .shoes.

On the brand side, some businesses filed a single application for their core marks – ‘.calvinklein’ and ‘.gucci’, for example.  Others took a far broader strategic approach and filed for sub-brands, for example L’Oreal’s application included filings for its brands Garnier, Kiehls and Lancome.

Unsurprisingly, given the fees involved, the luxury brands were well represented, with applications being filed for .coach, .chanel, .hermes and .polo.  However, high street brands were also keen to join the gTLD party, with applications being made for .Gap, .Zara, .Mango, .TKMaxx and .Next.

In their application form, each applicant had to set out the ‘mission/purpose’ for their proposed gTLD.  ‘Speculative’ applicants (in other words, online businesses applying for generic words) generally cited entrepreneurial and financial reasons. 

For example, one applicant for .shop stated that it intends to “facilitate business-to-consumer shopping on the internet by creating a virtual theme around a defined domain space”. In other words, such speculators are likely to market their gTLDs to the relevant industry and then use registration and renewal fees as lucrative revenue generators.

In the context of applications made by brand owners, the stated rationales varied more wildly.  However, there are several obvious potential benefits for brands in obtaining a gTLD:

Defensive: Many brand-owner applicants emphasised defensive objectives in their application forms.  For example, Chanel stated: “The .chanel gTLD will provide an authoritative internet space for the Chanel Group to provide information, services and resources to consumers in a way that promotes trust, convenience and utility.”  By retaining control over the use of their trade mark, brand owners can eliminate user confusion and ensure brand trust and confidence.

Marketing opportunities: As having an online presence becomes the norm for retailers, gTLDs offer brands a unique opportunity for innovative marketing solutions. 

Community:  gTLDs may be used as a forum for bringing together supporters of a brand and/or cause.  For example, one of L’Oreal’s more obtuse missions for its .hair application was “bringing to market a trusted, hierarchical, and intuitive namespace for a self-defined community of individuals and organisations whose primary focus is on providing and exchanging information regarding hair care products, other beauty products, and general information related to personal beauty and hair care”.

Linguistic: One of the key benefits highlighted by ICANN for brand owners is the ability to increase market reach by making the internet completely accessible to users whose local languages use non-Latin characters. Brands applying for Chinese-character gTLDs included Richemont and L’Oreal.

Revenue generation: While most brand-owner applicants have been reserved as to commenting on the potential financial benefits of gTLDs, some applications did set out tentative strategies for licensing to affiliates and strategic partners.

So what happens next? The Reveal Day marked the beginning of a lengthy period of evaluation and potential objections for gTLD applicants, which is expected to last at least nine months. During this period, interested parties have an opportunity to file objections to the applications, on the grounds of infringement of legal rights, confusion with another gTLD, public interest/morality; or substantial opposition within a particular community targeted by the gTLD.

It is estimated that the first new, uncontested gTLDs will be announced in early 2013. Each owner of an open gTLD registry - one within which second-level domains will be made available to third parties - will then be required to adopt a ‘sunrise period’, an opportunity for eligible rights holders to register second-level domains corresponding to their brands, and a service providing notice to prospective domain registrants of potential conflicts with existing trademarks and to trademark owners of conflicting domain registrations.

While many brand owners were initially skeptical about the cost benefits of the new gTLDs, particularly given the limited visibility on how they will be manipulated by search engines, it is clear that many retailers have already jumped on the bandwagon (even if only for strategically defensive reasons). 

One thing is for sure though, for retail brands that secure their applications, the gTLD future is bright - it is a marketing team’s dream.

• Ruth Hoy, partner and co-chair of fashion, retail and design group, and Rebecca Kay, solicitor, at DLA Piper UK, London