Order Out of Chaos

As Web domain names proliferate, enterprises must plan

Youve got to feel for Gene Bolmarcich. As trademark counsel at Caterpillar Inc., in Peoria, Ill., Bolmarcich already spends huge chunks of his time as a watchdog, protecting the companys online brand—and its 600 registered .com, .net and .org URLs—from cybersquatters. Now, with two official new top-level domains—.biz and .info—set to go live this fall and dozens more popping up like weeds all over the Web, Bolmarcich may soon be overwhelmed.

"Its a pain in the neck," Bolmarcich said about the opening of new domains. "If a company owns the .com, what advantage is it to own .biz? Caterpillar doesnt have any plans to use it in a different way. This is all about just, once again, protecting the trademarks."

Bolmarcich and Caterpillar arent the only ones feeling the pain. As TLDs (top-level domains) proliferate, corporate attorneys and domain name managers in IT and e-business groups are being forced to spend more time and money to register URLs they may or may not actually use and to defend those URLs from online predators and competitors.

As the environment becomes more chaotic, experts say, e-businesses will increasingly need to take a much more structured, formal approach to protecting their online brands. That means creating cross-functional teams that can decide how aggressively a company should pursue registrations in new domains and whether their goal is simply to protect existing trademarks and brands or to possibly market new Web addresses to customers. It also means getting better control over policies and procedures for registering domain names and communicating them throughout the organization.

.biz and .info are the first two of the seven new TLDs that have already been approved by the Internet Corporation for Assigned Names and Numbers, the Internets official domain name overseer. But thats just the beginning. Outside of ICANNs purview, private companies are introducing alternative domains such as .shop and .free. One, New.net Inc., of Pasadena, Calif., has introduced 30 such extensions so far.

At the same time, other new domains are gaining attention as some operators of the 243 country-code domains attempt to popularize their extensions and market them as general designations. All of those new domains mean more URLs for e-businesses to register and manage and more potential for disruption by cybersquatters.

Even before the number of TLDs began to blossom, however, policing URLs and trademarks online was no easy task, particularly for e-businesses intent on protecting their online brands.

Caterpillar was certainly one of those. Since the spring of last year, the maker of heavy machinery has retrieved about 50 domain names by sending cease-and-desist letters to companies registering names that came too close to its brand names, such as CAT. The company has retrieved almost 70 more by using ICANNs UDRP (Uniform Domain-Name Dispute-Resolution Policy), which began in December 1999 and allows court action or arbitration through organizations such as the World Intellectual Property Organization to resolve domain disputes.

The names Caterpillar and CAT are particularly crucial, and protecting them probably comprises about 95 percent of Bolmarcichs work.

And its not just evil cybersquatters that Caterpillar and Bolmarcich must guard against. A common problem for Caterpillar is the use of its trademarks in the URLs and sites of its business partners, companies involved in selling parts and providing service to customers of Caterpillars heavy machinery, Bolmarcich said.

The company has maintained that its trademark should not be used in the domain names of dealers and other third-party companies. That means Bolmarcich has had to seek URL registrations overseas as well as in the United States. Although Caterpillars activity in country codes has so far been a lower priority, the company has registered names in about 10 domains for countries such as Spain, Bolmarcich said. And now, with new domains springing up in the United States, Bolmarcich said he will need to redouble his efforts.

"We pretty much have every good domain name one could imagine having any marketable value, and we feel good about that," he said. "The bad news now is that they just threw .biz and .info at us, and now we have to register all these domain names ourselves or fight the same battle again in these new domain spaces."

Caterpillar is in good company. The average Global 2000 company will have at least 300 name variants registered by this year, according to Gartner Inc., a consultancy based in Stamford, Conn. The introduction of new domain names will force many organizations to develop an overall strategy for registering many names in multiple domains, and that process could cost the typical large company as much as $90,000, said Ted Chamberlin, a Gartner analyst.

Of course, not all companies are large enough or have the resources to attempt to register every possible name under every new TLD. For many, experts say, the real challenge will be deciding just how many names in how many domains to snap up and defend.

With about 120 employees, Dialpad Communications Inc. is a relatively small company, just the type that has had to make those kinds of trade-offs.

When the company launched its voice-over-IP service in 1999, Dialpad leaders discovered that others were right on its heels, registering domain names with combinations of its key brand in generic domains and in country codes, said Miguel Alcantar, who coordinates domain name registration as manager of the international expansion group at Dialpad, in Santa Clara, Calif.

The registrants included cybersquatters, competitors and even companies that wanted to forge partnerships with Dialpad. Right away, Dialpad officials said they knew that protecting and managing the companys domain names would be critical to its future. But the small company had to pick and choose.

"Our approach has been very restrained and selective," Alcantar said. "Were a small company, and we refuse to be overregistering."

So far, Dialpad has registered about 150 domain names, including names in a few dozen country codes where it might target its service. Its strategy overseas, for instance, has been to register its brands in the most popular domain name in a given country rather than all of them. Now, Dialpad officials are trying to determine which names to protect in the new TLDs.

As new TLDs proliferate, the process of deciding which names to defend will be increasingly important, experts say. To make those decisions, Gartners Chamberlin recommends that companies create a cross-functional team that includes IT, marketing and legal department representatives who can determine the essential names.

"You cant defend everything, but be focused and say, We have 10, 20, 50 names critical to business initiatives," Chamberlin said.

It may not be easy to get different stakeholders to agree on which names to invest in protecting. Still, experts say, companies cant afford to do nothing. Taking a wait-and-see approach to the new TLDs could lead to "a second coming of dot-com," Chamberlin said, with companies having to wage expensive legal fights over the use of their trademarks.

Good odds

the good news, experts say, is that, at least in the cases of .biz and .info, businesses with existing trademarks have some advantages in registering new URLs that never existed in .com.

With .biz, trademark holders can file intellectual property claims through Aug. 6, prior to any official new registration. Information about those claims will be provided to any registrants trying to register a conflicting name. The intellectual property claims can also be used to bolster a companys chances of retrieving a name in a dispute-resolution process.

Trademark holders have even better odds of registering the names they want in .info. That TLD is providing a 30-day sunrise period beginning this month during which companies can register their trademarks.

J. Kevin Gray, a partner in the intellectual property practice at Jenkens & Gilchrist P.C., in Dallas, advises his corporate and small-business clients to do the upfront work of making intellectual property claims and registering in the new TLDs because it makes pure economic sense. Filing an IP claim in .biz, for instance, costs $90, plus as much as $200 more for outside legal counsel. Pursuing a UDRP proceeding after the fact because a name wasnt registered would cost about $5,000 for both the filing and legal counsel, Gray said. (For more on how the UDRP works, see The Hot Line, above.)

On top of that, by not registering key brands and trademarks, companies risk losing Web traffic if customers begin searching for them in .biz and .info, a risk Gray advises companies against taking. It remains to be seen just how popular the new TLDs will become, and for now most companies such as Caterpillar are reluctantly planning to register in them primarily for defensive reasons.

Some companies, though, have turned to alternatives to .com for their primary Web addresses. Officials at Intertainer Inc., a provider of video-on-demand services, decided a year ago to register their corporate name with .tv. Although the domain is officially the country code for the tiny island of Tuvalu, it is now being marketed by The .tv Corp., of Los Angeles, as a more generic extension.

With .tv, Intertainer was hoping to differentiate itself by having an extension associated with its line of business. By the end of last year, the company began marketing .tv as its primary site in materials such as brochures, ads and press releases. The company also owns Intertainer.com, but that site forwards visitors to the .tv site.

"Being a fully broadband, video-on-demand company, it really defined us a little more," said Terrence Coles, senior vice president of content at Intertainer, in Culver City, Calif. "It made a big difference in consumer perception in what they were expecting."

Unlike Intertainer, however, most e-businesses see all the new TLDs not so much as a marketing opportunity as an administrative burden.

For companies such as First Union Corp., of Charlotte, N.C., the answer is to better coordinate the process of creating and managing new URLs. Doing so, company officials said, lowers the risk of missed registration renewals, domain names held hostage by disgruntled former employees and other types of Web site disruptions.

First Union three months ago began centralizing domain name management within its eChannels division, which is responsible for its online initiatives, including the main Firstunion. com site. Before that, individual business units were allowed to directly register domain names themselves, making it hard to track and manage them, said Angel Rodriguez, vice president of business operations for the eChannels division.

After gaining control of First Unions URL registration process, one of the eChannel divisions first moves was to seek out a primary registrar that could help the company consolidate and manage the 350 or so domain names it already owns. The company is in negotiations with one such registrar now. Like many companies that had allowed just about any business unit to register a URL, First Union had found itself dealing with many different registrars. Consolidating domain names with one or a few registrars, experts say, has become increasingly common among corporations, especially as registrars begin offering services to help manage and track domains.

First Union also has developed an internal tool for its intranet that will allow employees to request new URLs. The tool, which will be deployed beginning this summer, follows a three-tiered approval process that allows the eChannels division, along with departments such as marketing and legal, to sign off on names. To make sure no one circumvents the process, the eChannels group worked with the network services team in IT to set up the process so only approved Web addresses are activated on the companys Domain Name System servers, said Raymond Mayers, eChannels IT leader.

Companies such as First Union are smart to focus now on getting a better handle on the URL registration and management process, experts say. Thats because, going forward, its only going to get more complicated. ICANN is likely at some point to add more TLDs beyond the seven new ones its already approved. Private companies like New.net continue to roll out new domains. And registrars are even testing multilingual domain names, a process that could result in many new domain names.

All of which has brought Caterpillars Bolmarcich to a perhaps unsurprising conclusion: "You cant ever fully defend yourself," he said.

Maybe not, but he and other corporate domain name managers are preparing their arsenals to try.