Why Defensive .XXX Registration Is Only the Beginning of a Branding Nightmare

David K. Mitnick is the founder and president of Domain Skate, LLC, an Internet company that focuses on domain name arbitration disputes. This post was co-authored by Howard Greenstein.

If you did not know about ICANN’s decision to release the .xxx gTLD (global Top Level Domain) earlier in the year you probably do now. You may have been surprised to receive a barrage of emails from various registrars like GoDaddy and Register.com hawking domains in the Internet’s new red light district (unless you are already in the adult entertainment business). The comprehensive email and marketing campaigns that the registrars have unleashed to publicize the .xxx registry can only lead one to assume that existing adult entertainment industry has been clamoring for this new slice of the web, or that ordinary folks are quitting their jobs and starting new careers as adult web site entrepreneurs. However, as Mashable has previously pointed out, neither seems to be the case.

SEE ALSO: XXX Domains: An Obvious Failure

That article explains the .xxx gTLD has led to a virtual stampede by legitimate businesses and institutions to defensively register their names in the .xxx domain in order to protect those names from falling into the wrong hands and being used with adult content. The Salt Lake Tribune reported earlier in the week that Brigham Young University has purchased several domains in the .xxx registry. Some believe this unintended (though eminently foreseeable) consequence of the .xxx registry has made it an epic failure.

I agree, and yet there’s more for brand managers at companies of all sizes to think about. Some of the commercial success of the .xxx gTLD is attributable to defensive registrations ? a unique form of Internet extortion whereby legitimate institutions are forced to pay for .xxx domains even though they have no intention of ever using them. According to the .xxx registry, there have already been over 160,000 .xxx domain registrations as of December 12th. Back-of-the-envelope calculations indicate that at about $100 a domain (based on public one year pricing at GoDaddy) that’s a windfall of roughly $16 million for registrars, with about $29,000 going to ICAAN. Thus, in a perverse twist, the .xxx registry’s commercial success is being funded in part by the non-adult entertainment world because the .xxx gTLD has the unique potential to damage a brand.

The .xxx gTLD is just the tip of the iceberg as the Internet readies itself for the launch of ICANN’s new gTLD program on January 12, 2012. Brand owners will have to be ready, just as with the .xxx launch, to make sure they can grab those assets they deem most valuable when there are suddenly hundreds of new gTLDs foisted on the marketplace. It will also be important for corporate counsel and IP attorneys to brush up on the UDRP process, by which companies can file complaints when parties register domains which are identical to or include their company trademarks and variations. What can be done now to prepare for this?

Identify valuable marks in your company’s trademark portfolio that you will want to protect and that are worthy of obtaining defensive registrations.Designate someone in your organization or an outside attorney/consultant to follow the latest extension applications with ICANN so you can stay in front of the curve and identify those extensions that may be relevant to your business before your corporate names/assets are lost to third parties or squatters.Create a budget that will be dedicated to obtaining these assets, and figure out who will be responsible for registering names on your behalf.Begin thinking comprehensively about your company’s Internet strategy and make sure that going forward, future product/trademark development is done with an eye toward co-existing in an expanded Internet.

You don’t want to be surprised by the new global Top Level Domain program, and you don’t want to be scrambling when a relevant TLD launches.

Image courtesy of iStockphoto, ToolX

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