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More domain names, more branding woes.

New rules that will dramatically expand the number of domain names on the Internet have sparked warnings that Canadian companies that want to defend their brands will face heavy costs.

The naming rules, set to come into effect next year, will encourage "cybersquatters" who can harm a brand's identity, and force companies to spend large amounts to attract customers to multiple domains, independent Montreal media agency Media Experts Inc. said in a report.

In June, the organization that handles domain name rules decided that, starting next year, websites will no longer be limited to the 22 existing endings such as .com or .org, or the 250 country-specific domains such as .ca or .uk. The Internet Corporation for Assigned Names and Numbers, or ICANN, said it will allow any number of suffixes, such as .books, .car, or even .facebook or .coke.

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The agency said at the time that the decision will "unleash the global human imagination," opening up huge opportunities for companies and organizations to expand their online presence. A complex application system and high registration fees will keep out people wanting to abuse the system, ICANN officials said.

But over the past month, the advertising world has risen up in opposition to the move. In the United States, the Interactive Advertising Bureau and the Association of National Advertisers both warned that the changes could damage brand owners.

The battle has now moved to Canada, where Media Experts' report says some people will register names in bad faith, in order to take advantage of well-known brands. Only companies with deep pockets will be able to defend themselves by registering their own suffixes, taking legal action against interlopers, or monitoring new registrations, it says.

The new rules "introduce needless complexity and cost at a time when business needs to be more focused on efficiencies," Media Experts executive chairman Mark Sherman said. Many companies have been slow to embrace the digital revolution and this creates additional barriers and costs, he added.

While the safeguards are supposed to prevent abuses, some people are already positioning themselves to grab generic domains such as .beer and .chocolate, Mr. Sherman said, and that could cause headaches for people in those businesses. Canada could be hit hard, he said, because many of our companies aren't big enough to take legal action to protect themselves.

Mr. Sherman also questioned the utility of adding thousands of new domains. Consumers can already easily search for very specific information, and having customized domains to facilitate navigation seems unnecessary, he said.

The association that represents Web advertisers, the Interactive Advertising Bureau of Canada, said it fully supports Mr. Sherman's views. "We don't like the new policy and the new requirements at all," IAB Canada president Paula Gignac said. She said the IAB will soon be publishing its official position, asking ICANN to withdraw or revise its new rules.

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Under the new system, consumers could end up going to websites that "will look legitimate … but potentially not be associated with the proper company," she said.

John McKeown, an intellectual property lawyer at Cassels Brock and Blackwell LLP in Toronto, said the advertising world's worries may be overblown.

The high cost of registering new domain names – $185,000 (U.S.) per application – and the stringent registration process with background checks designed to eliminate cybersquatters and criminals, should prevent most abuses, he said.

Mr. McKeown said some advertising agencies may be worried that the new domain environment will allow consumers to find companies and products more easily on the Internet, thus cutting back on the need for traditional advertising.

For many businesses, however, the new domain name regime could open up significant opportunities, he said.

In any event, it is probably too late to change ICANN's policy, which was drafted after wide consultation and is set to come into effect next year, he said. Applications for the new name endings – called generic top-level domains, or gTLDs – will be accepted from Jan. 12 until April 12, and come into effect after that.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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