The domain name registry behind the forthcoming ‘.xxx’ registry has revealed that trademark owners will need to pay up to $300 per trademark term they wish to block from the adult-only space. The figure, which the trademark community has been anxiously waiting, is the headline fact from ICM Registry’s rights protection white paper. The document is published today by ICM partner IPRota, which is running this special sunrise, to coincide with the INTA annual meeting.

Because trademark owners will be obliged to register their terms through domain name registrars, not direct with ICM, the exact fee will vary. Registrars set their own fees on top of a baseline fee set by the registry. However, ICM expects registrars to charge $200 to $300, meaning that the registrar could be making at least $100 per term on top of the baseline fee set by ICM. Most of a registrar’s mark-up will cover its own costs, of course; a mark owner will certainly not be happy to learn that its registrar is making a significant profit from the blocking system.

Looking at the costs with one recent example indicates exactly how much it could cost a large mark owner to block its key terms from the space. At this month’s US Congressional hearing into ICANN’s new gTLD programme, Mei-lan Stark, senior vice president, intellectual property at Fox, stated that: “If there were 400 new gTLDs launched… we’d be looking at a list of 300 to 400 names that we’d have to defensively register in each. Therefore, a minimum of $12 million investment.” Using the same number of terms Fox apparently considers valuable (300 to 400), one could expect its cost of participating in the ‘.xxx’ blocking sunrise to be $120,000. That’s a considerable amount to pay for merely blocking your trademarks from a domain name registry with which you do not want to be associated. Other brand owners may have even more key terms – some portfolios cover thousands of marks – pushing costs up even higher. While Stark’s arithmetic was questioned by the domain name industry (for assuming that Fox would need registrations in every single new gTLD registry, when many see the point of the expansion as a way of segmenting the market away from generic categories such as ‘.com’), it is sensible to assume that the method stands up when applied to ‘.xxx’.

Drilling down further into the white paper reveals some even more interesting facts about the sunrise. How can a trademark owner block a new term created and brought to market some time after the end of the sunrise? ICM states rather vaguely that “a service to deal with this requirement will be introduced in 2012 but it is unlikely to be as cost effective as the options offered during sunrise”. That’s rather unfortunate for mark owners, who will yet again not have a choice. If they want their mark blocked from ‘.xxx’, they will have to pay the fee, which will likely be more than $300. Every trademark counsel now needs to ask him or herself: how many new brand names and trademarks does my company create every year, and will I receive enough budget to cover this ‘.xxx’ tax for each? (And, of course, due to ICM’s vagueness on this point, trademark counsel cannot yet advise their GCs how much that tax will be.) The strategy of applying to block even potential marks during the sunrise in order to make a saving will fail, because the mark owner needs a valid registration (although an intent-to-use registration may still work).

Additionally, ICM admits in the white paper that it can only guarantee that the blocks stay in place “for as long as they reasonably can” – that is to say, the 10 years for which ICM has the ‘.xxx’ contract from ICANN. In theory, if responsibility for ‘.xxx’ changes hands after that contract ends, anything is possible.

The final, but no less significant, fact from the white paper is that the sunrise will commence in September and last for 30 days. The full white paper can be downloaded at the IPRota website.

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RE: $300 to block your trademark from ‘.xxx’ – but that’s the tip of the iceberg

With .xxx domains costing from $75 at retail, there's a potential deterrent to large-scale cybersquatting.

It may well turn out that a post-launch enforcement strategy using UDRP or other mechanisms may be more cost-effective.

As you indicate, however, it's impossible to know for sure. I certainly don't envy the person who has to make the call.

Kevin Murphy, Domain Incite on 16 May 2011 @ 09:07

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