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Bloomberg News a Brand Cautionary Tale as Web Adds New Names

April 15, 2013 Presses Brand Names to Buy Defense as Web Adds Names

Harvard was among “10 or 20” universities paying to protect their academic brands after .xxx was added in 2011, at a cost of $162 and $299 for each address, so they couldn’t be used as online destinations for sexually explicit material. Photographer: Brent Lewin/Bloomberg

Harvard University paid as much as $299 to register the last time the World Wide Web’s global overseer added a domain name to familiar ones including .com and .net. Rather than seeking a new opportunity, it signed up to keep from being used as a porn site.

As the Internet’s first major expansion since 2004 adds suffixes including .fail and .sex to the existing 22 names to the right of the dot, brand owners such as Coca-Cola Co. (KO:US) and Ford Motor Co. (F:US) may be similarly forced to pay up to prevent cybersquatting on a massive scale, said Daniel Jaffe, executive vice president of the Association of National Advertisers, a trade group whose members wield 10,000 brands.

“The pressure to defensively register is tremendous,” Jaffe said in an interview. “We have major, major trademark concerns.”

The Internet Corporation for Assigned Names and Numbers, the non-profit that manages the Web’s address system under a contract with the U.S. Commerce Department, each week unveils a batch of new domains it has cleared from among 1,930 applications. They include some from major corporations such as Wal-Mart Stores Inc., Johnson & Johnson (JNJ:US) and Inc.

Each new suffix creates millions of possible addresses to be sold by registries. There are 106 million variations in .com alone, according to Verisign Inc. (VRSN:US), the Reston, Virginia-based global registry for .com and other domains.

Los Angeles-based Icann as of April 5 had cleared 93 new names, mainly in non-Roman script such as Chinese or Arabic.

Brand Protection

Icann, which is charging $185,000 for rights to a new right-of-the-dot name, is expanding the Web over qualms from the U.S. Federal Trade Commission and brand-name companies including Coca-Cola, Ford, Procter & Gamble, General Electric Co. and Johnson & Johnson.

The companies, in a 2011 petition to the Commerce Department, said domain expansion would require them to spend “ever-greater amounts of time and resources simply to protect their brands.”

Although Congress passed a law in 1999 barring cybersquatting -- the speculating in Web addresses of companies or brands with the intent to sell those for a profit -- not all nations followed and companies have waged costly battles.

The nonprofit has portrayed the expansion as a way to allow companies and other brand owners to create specific online identifiers. Copyright holders have protections under the new system, Brad White, an Icann spokesman, said in an e-mail.

New measures “were put in place to help rights holders protect their marks and to mitigate the need for defensive registrations,” White said.

Scam Opportunities

The protections haven’t been tested, nor have systems for removing domain names that are found to violate trademarks, said Jaffe, of the advertisers’ group.

“Many of our members have thousands if not tens of thousands of trademarks,” Jaffe said. “Even the richest companies cannot afford to protect all of their prized brands.”

At Icann’s meeting last week in Beijing, countries told the group to ensure those selling and using new domains comply with laws and safeguard certain generic names -- among them .money, .pay, and .save as well as .poker, .book and .weather.

Under Icann procedures, the non-profit’s board is to consider the advice from the governmental committee, which has representatives from the U.S., U.K., Germany, China, Japan and the European Commission.

“The expansion could create opportunities for scammers to defraud consumers online, shrink law enforcement’s ability to catch scam artists, and divert the resources of legitimate businesses into litigating and protecting their own good names,” Julie Brill, a Federal Trade Commission member, said in a March 20 speech to the Association of National Advertisers.

Trademark Violations

Harvard was among “10 or 20” universities paying to protect their academic brands after .xxx was added in 2011, at a cost of $162 and $299 for each address, so they couldn’t be used as online destinations for sexually explicit material, Stuart Lawley, chief executive officer of ICM Registry Ltd. that sells .xxx Web addresses, said in an interview.

University officials remain vigilant. The school “may register its name with some of these new domains and take other steps as necessary in order to protect Harvard’s trademark rights,” Kevin Galvin, a Harvard spokesman, said in an e-mail.

Dearborn, Michigan-based Ford, which has applied through Icann for .ford and .lincoln, hasn’t publicly discussed what it may do when other domains go live, Scott Monty, global head of social media, said in an interview.

“We’re going to watch that space and see how it plays out,” Monty said.

Petro Kacur, a spokesman for Atlanta-based Coca-Cola, in an e-mail declined to comment.

Protecting .Corp

For Lawley, of the Palm Beach, Florida-based .xxx registry, the small number of schools that moved to ward off bawdy Web links shows “it wasn’t a huge thing” to have a new set of Web addresses available.

About 70,000 of the initial 210,000 registrations were defensive, Lawley said. He said the registry on its own blocked about 10,000 names from being used, including kings, queens and celebrities such as Kim Kardashian and Lawley’s neighbor, retired basketball player Michael Jordan.

The wholesale price charged by ICM for defensive registry was $162, and applicants may pay as much as $299, Lawley said.

Risk-averse companies may defensively register in some but not necessarily all new domains, Josh Bourne, a managing partner at FairWinds Partners LLC, a Washington-based advisory group on domain-name strategy, said in an interview.

“If you’re IBM there’s a pretty clear business reason to register,, or,” he said. “There’s scant returns from registering or”

Still, Bourne said, nervous companies may flinch before unsavory associations. He spun an imaginary conversation at Milan-based Prada SpA (1913): “Have we thought about Tell me we’re registering”

Prada declined to provide an on-the-record statement.

To contact the reporter on this story: Todd Shields in Washington at;

To contact the editor responsible for this story: Bernard Kohn at

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