Lawyer: Domain Name Rule Changes Will Cost Governments

The rule changes set forth earlier this week by the Internet Corporation for Assigned Names and Numbers (ICANN) that will allow new generic top-level domain (gTLD) names could end up costing governments quite a bit of money, whether they apply to own one of the extensions or not.

Instead of the traditional .gov, .org or .com gTLDs currently in use, starting on Jan. 12, 2012, various city and state names and almost any word can be applied for and purchased. That cost is an estimated $185,000 fee, plus a $25,000 annual price-tag to operate the gTLD. But the legal fees associated with protecting a government entity’s name may ultimately be pricier, according to Scott Bain, chief litigation counsel of the Software & Information Industry Association, a trade association representing the software and digital content industries.

Governments without the funds to apply for their own gTLD face the possibility of someone else buying the extension and being forced to tangle with that purchaser in court in order to block it, Bain said. Although the high cost and yearly fee theoretically would curtail most common cyber-squatters from actually buying a gTLD and fully exploiting it, Bain maintained the real worry is the thousands of domains that could spawn from each new extension.

The resulting website names could be bought up in droves by cyber-squatters, leading to another round of significant litigation costs and employee hours lost in trying to address the issue.

“Say someone has ‘.world’ as a gTLD and someone registers ‘sacramento.world,’” Bain explained, using Calfiornia’s capital city in a fictional example. “Is the city of Sacramento going to have the money and time to look for and object to that? Imagine that 1,000 times over with all the new gTLDs.”

Public Confusion Likely

Random domain names can currently be registered for a relatively cheap $20 or less per year. Although the affordability is great for those individuals or businesses looking to use a domain for a legitimate use, it could also pose some serious fiscal and operational effects on local and state governments looking to protect their image and provide open information to citizens.

“It is no longer going to be the case that something that is .gov or .org typically would be the first and trusted place where someone looks for information from a government,” Bain said. “Consumers are going to have to be extra careful that when they go to a site, it may or may not be what it purports to be.”

Bain said that governments “just aren’t going to have the money to review all the gTLDs and all the domains within them,” and ICANN “opened the floodgates” with its new rules, which he said exponentially increases the risk of consumer confusion and fraud if trademark owners find their names being used by another party.

“As a trademark owner or a city, you have to make sure the gTLD itself doesn’t infringe your rights, but that’s just the beginning,” Bain said. “Once it is launched and operational, each of those will then sell domain names. ... There are going to be opportunities that people will try to buy them up and make money off of peoples’ confusion.

“We’re in a situation where it is damage control mode, honestly,” Bain added. “Whether you are a city or state you are going to have to try and limit the confusion.”