Opening Statements

The XXX Factor: New Domain Names Could Lead to Trademark Problems for Businesses

Posted Nov 1, 2011 4:10 AM CDT
By Ed Finkel

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Come December, trademark holders will have one more thing to worry about: the triple-X factor.

That’s when Internet users will start to see a new top-level domain—those three letters (.com, .org, .net) following a URL. The Internet Corporation for Assigned Names and Numbers, the governing body that regulates domain names on the Web, approved the .xxx extension earlier this year after a decadelong squabble with religious and conservative groups.

The .xxx domain is largely expected to be used by sex-oriented websites, but that doesn’t mean that other businesses with trademarks and brand names can just sit back and ignore the launch. As has happened when ICANN approved other new top-level domain names such as .info or .biz, a variety of online poachers beat legitimate trademark holders to the punch and locked up those domain names in what some might describe as a high-tech shakedown.

But the motivation to do so with the latest top-level domain is even more naked than before. Given the particularly sensitive nature of the new domain, ICANN gave companies and their brands dibs over the .xxx version of their name—at least if they acted quickly. This fall, anyone who could establish their rights to a trademark had the opportunity to register the mark under the .xxx domain or ask that others be blocked from doing the same, according to a white paper from IP Rota, a provider of rights protection that processed and validated the applications.

The majority of companies chose to block any .xxx website with their brands or marks attached and paid a one-time fee of up to $300 to do so, according to IP Rota’s research. But if competing trademark holders made different requests—one to lock up the URL and one to block it, the former request won out, notes IP Rota.

Some have complained that this amounts to a shakedown, but most companies are resigned to dealing with the situation as they have with earlier top-level domain rollouts, says New York City lawyer David A. Donahue of Fross Zelnick Lehrman & Zissu.

“Companies are annoyed by it, but I think they realize by now it’s just a reality,” he says. “Unlike .info and other major releases of domain names, this isn’t something a brand owner can use to their advantage. It’s all downside. People are frustrated, but they’re gritting their teeth.”

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