Bloomberg News

Web-Name Change May Spur Lawsuits, Internet Overseer’s CEO Says

January 12, 2012

Jan. 11 (Bloomberg) -- The nonprofit organization overseeing the Internet’s address system is bracing for a wave of lawsuits from a program that may add hundreds of top-level domains such as .apple and .nyc.

“Some parties will choose to use litigation,” Rod Beckstrom, chief executive officer of the Internet Corporation for Assigned Names and Numbers, said in an interview today at Bloomberg’s Washington office. “This is the most significant opening of the domain-name system in the history of the Internet and a lot of parties around the world have very significant economic interests.”

Icann, manager of the Web’s address system under a U.S. Commerce Department contract, will start accepting applications for new top-level domains tomorrow. The Marina del Rey, California-based group may approve hundreds of new Web address extensions to the right of the “dot,” including company and brand names, cities and almost any word in any language.

General Electric Co., Coca-Cola Co. and more than 50 other U.S. companies oppose the program, saying it will increase their costs, confuse customers and fuel Internet fraud. The organization will put aside about $60,000 of every $185,000 fee for each domain-name application to cover litigation that may arise from the program, Beckstrom said.

Icann’s board approved the domain-name expansion in June to spur online innovation and competition. The application period closes April 12, and Icann will publish a list as early as May showing who applied for each domain-name, Beckstrom said. The list would let companies and organizations see how competitors are responding to the expansion, he said.

‘Do Not Sell’

American Express Co., Johnson & Johnson and Ford Motor Co. are among companies that signed a petition in November saying the program would force them to “spend ever-greater amounts of time and resources” protecting their brands online and calling on the Commerce Department to persuade Icann to postpone the application period.

The Association of National Advertisers, which has rallied brand owners’ opposition to the program, suggested changes on Jan. 9 that include a “do not sell” list aimed at saving companies from having to defensively buy domains.

Beckstrom said the expansion, discussed and debated by Icann for six years, won’t be delayed or scaled back, though “nothing is final” about the program.

“There will be some change and tweaks, would be my forecast,” Beckstrom said, adding that any modifications would be considered through Icann’s deliberation process.

Doubling Budget

The domain-name expansion may generate revenue that may let Icann double its $85 million annual budget, he said. The organization operates under a zero-dollar Commerce Department contract that expires in March, and the agency has requested proposals on a new contract.

Icann has come under pressure from U.S. lawmakers and regulators to postpone or curb the program. Senator Jay Rockefeller, a West Virginia Democrat who leads the Senate Commerce Committee, called for delaying or limiting the expansion in a Dec. 28 letter to the Commerce Department.

The Federal Trade Commission said in a Dec. 16 letter that the expansion will create “dramatically increased opportunity for consumer fraud” and urged Icann to turn it into a pilot program and reduce the number of suffixes that are introduced.

--Editors: Steve Walsh, Michael Shepard

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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