What’s in a name? Maybe big trouble for businesses when it comes to Internet domains

From the Denver Business Journal.

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What’s in a name? Maybe big trouble for businesses when it comes to Internet domains

The regulating body overseeing Internet naming will usher in new custom domain names next year, and it will mean new opportunities for companies and radical changes in how firms protect their brands online.

Web domain registries will grow from 21 now — the common ones being .com, .net, .org, .biz — to hundreds of dot-whatevers starting in 2009.

The option to customize domains is expected to lead to brand-tailored Internet registries such as .coca-cola or .ibm, or genre registries with potentially massive cachet, such as .sports, .car and the like.

Even companies with no interest in having their own domain should take note — the potentially endless permutations of web addresses will complicate life for businesses already guarding against knock-off websites and online appropriation of their trademarks, said Erin Hogan, a trademark and brand management attorney for Denver-based Dorsey & Whitney LLP.

“It’s going to affect their budget to police their brand,” Hogan said. “The costs are going to increase exponentially.”

Custom domain owners will be able to create their own brand “island” on the Internet, with the power to issue brand-associated email addresses and possibly keep competing brands from having a presence in their domain.

The Internet Corporation for Assigned Names and Numbers (ICANN), the Santa Clara, Calif.-based organization that manages international web domains and settles disputes over them, still is writing final rules on how to manage the change.

ICANN is taking recommendations through Dec. 8. It’s scheduled to issue final rules in early 2009 before taking applications for new domains in midsummer.

ICANN charges $185,000 to apply for new top-level domains, which may be only partly refundable, Hogan said. That expense alone could keep domain “squatters” from seizing popular words and brands, but it also complicates the first-line defense companies now use to prevent their brand from being hijacked online.

Businesses defensively register web addresses that incorporate sound-alike terms or misspellings of their company name and products, buying variations of them in the most popular domain registries: .com, .net and .biz.

Ian Saffer, a Denver partner at San Francisco-based Townsend & Townsend & Crew, represents companies that have dozens, if not hundreds, of website addresses registered to protect their brand under the current system of domain registries. That strategy, he said, could be made obsolete by the enormity of variation in website names made possible by custom domains.

“The playing field just went from being 100 yards long and 50 yards wide to being 10,000 yards long and 10,000 yards wide,” he said.

It’s not yet clear how companies should react to the new domain reality because the rules are still being set, Saffer said.

The new domain system could create new opportunities for phishing scammers who set up phony websites to steal identities from customers believing they’re on a company’s legitimate site, or to siphon advertising revenue from companies’ own web pages.

Monitoring the Internet is already time-consuming, especially for businesses whose products or services have become synonymous with an industry niche.

Theresa Rickets, manager of legal services Fort Collins-based Water Pik Inc., spends time every week seeking out online sales of competing dental water jets that play off the well-known Waterpik brand.

The 150-employee company owns www.waterpick.com and other web addresses using common misspellings of its name. It pays an outside firm to track website registrations.

Rickets surfs online, trying to police instances in which her company believes competitors mislead consumers, such as an ongoing effort to stop online sales of oral irrigators using the name Aquapic.

She can only imagine how much harder the job will become with potentially endless varieties of domain names.

“It’s already difficult enough to do it with what there is now,” Rickets said. “A lot of companies already spend a lot of time and energy, and money if they outsource it, and the fear is that it’s only going to get exponentially worse.”

ICANN established rules to stop the practice, once common in the early days of the Internet, of speculators registering and then ransoming domain names of well-known brands.

Draft rules for custom domain registries include protections meant to prevent similar exploitation of established trademarks.

But companies not monitoring applications for new domains in coming months could find themselves in an expensive game of catchup, Hogan said.

They also could miss opportunities to further their brand online in new ways, she said.

“Companies can’t sit back and wait and see,” Hogan said. “Being a .com now is incredibly valuable, but relying on that continuing is really shortsighted.”