After years of debate and uncertainty, the Internet Corporation for Assigned Names and Numbers (“ICANN”) recently gave the .XXX top-level domain (“TLD”) its final seal of approval. ICANN, through the ICM Registry – the operator behind the .XXX registry – will soon issue a new sponsored top-level domain (“sTLD”) specifically for the adult entertainment industry, with the .XXX extension. The .XXX sTLD gives adult content on the Internet a clearly marked home, making it easier for Internet users to recognize and filter adult content websites. For trademark owners in other industries, however, the creation of the new .XXX sTLD opens the proverbial can of worms for infringement of their reputable brand names. If you have a trademark registration and would like to avoid the potential for “www.yourbrandhere.xxx,” the time to act is now.

To combat the potential for cybersquatting and other infringing activities involving the misuse of well-known brand names, ICANN has arranged a “Sunrise” period, which began September 7, 2011, during which owners of trademark registrations can “opt-out” of the .XXX domain names to prevent their brand from being used with a .XXX sTLD. Similarly, during this period, trademark owners in the adult entertainment business will have the opportunity to register .XXX domain names containing their trademarks to “opt-in” to the new sTLDs.

To opt-out or opt-in, trademark owners must be able to prove: (1) they own a trademark registration for the mark slated to be used in the domain name; (2) the registration was issued before the opt-in or opt-out request is submitted; and (3) the registration is in a jurisdiction where the trademark owner does substantial business in conjunction with the registered mark. Upon verification of their trademark registration rights, trademark owners outside the adult entertainment community can block their domains from being used in the .XXX sTLD. Each opt-out application covers a single mark and will not prevent third parties from registering variations of the excluded mark in the .XXX domains, including misspellings of the protected mark. The ICM Registry has explained that “the Sunrise period offers businesses a comprehensive rights protection mechanism where they can protect their brands and trademarks. We are advising businesses to either opt-in or opt-out and want to give them the best opportunity to do so at the launch of our new TLD. Given the high level of interest in the domain, we see that many businesses wish to be proactive in avoiding any brand conflicts.”

Due to the level of interest in the new sTLD, ICANN recently expanded the Sunrise period to 52 days, giving trademark owners until October 28, 2011 to opt-out (or in) of the use of .XXX domain names for their brand. After the Sunrise period ends, members of the adult entertainment industry and others will be able to register any .XXX domain that has not already been blocked or claimed through the opt-in/opt-out process, without consideration to whether they can establish any prior trademark claim to the particular domain name. The sole requirement for registration of a .XXX domain following the Sunrise period will be demonstrating that the registrant operates in the adult entertainment industry. Future challenges to .XXX domain name uses that infringe trademarks will not be foreclosed, but the process will become more difficult and expensive.

Trademark owners are advised to consult counsel soon regarding the potential impact of the new .XXX sTLDs on their intellectual property interests and to evaluate whether action must be taken during the Sunrise period to protect valuable trademark rights.