Time to panic?  The Internet is about to change dramatically.

Ever since Al Gore invented the Internet (or so I’ve heard), users have relied on a limited number of top-level domains, or “TLDs.”  A top-level domain is the end portion of a web address — e.g., .com, .net, .org, .biz, .gov, or, everybody’s newest, favorite, and most scandalous TLD, .xxx.  Last year, the Internet Corporation for Assigned Names and Numbers (“ICANN”) — a non-profit corporation/venue for nerds to rule the world that manages most TLDs, IP addresses, and basically anything that involves the interwebs — approved the creation of new TLDs called generic top-level domains, or “gTLDs”.  In announcing that move, ICANN cited the need to increase competition and choice in the world wide web (because we know that there certainly isn’t enough competition and choice in the entire Internet).  Any legal entity may apply to create and manage a gTLD.  And that’s why, as people are finally starting to realize, things might start getting a little crazy(er) on the Internet.

First, some background and logistics.  Currently, there are 22 TLDs in use (including last year’s addition of .xxx), plus over 200 country-based domains  (such as .us, .de, or .eu).  Within each TLD is operated a number of “second-level domains,” which consist of the words in between “www.” and the TLD (e.g., the “apple” in www.apple.com).

ICANN’s recent decision, however, allows any legal entity with $185,000 to spare (plus sufficient resources to cover a $25,000 annual administration fee) to apply to create and manage a new TLD.  Any organization that survives the application process and registers its chosen gTLD will havecomplete control over that gTLD.   It can sell second-level domain names for a price it chooses or it can ban public use altogether.  For example, if United Airlines applied for and is approved for a .united gTLD, it will have complete control over that top-level domain.  It can either sell a .united second level domain name to United Healthcare (e.g. www.healthcare.united) OR it can decide to be a total d-bag and refuse to let anyone else use that gTLD.  And now that ICANN has announced that .com can be .anything, by this time next year there may over a thousand in multiple categories such as place domains (e.g. .nyc, .tx, .taipei), keyword domains (e.g. .hotel, .watch, .apparel) or even brand domains (e.g. .apple, .gap, .walmart).

It doesn’t take much creativity to see the potential for mischief here:  as was the case when the .xxx TLD was released last year, brand-conscious companies now have yet another place to worry about people trading on their name on the Internet..  While ICANN believes that this high price will serve as a bar to entry for domain name squatters, even ICANN figures that there will be 1,000–1,500 new gTLDS in use by March 2013.  The gTLD’s can be in different languages and can be controlled by any organization (private or governmental).  So if you love coffee, have $185,000 to spare, and don’t mind running a registry, then you can apply to manage the .coffee gTLD (and have fun torturing Starbucks by making them buy www.starbucks.coffee from you).  Sure, the price tag is high.  But it’s not like immature people with ungodly sums of money to burn ever buy pointlessly expensive things on a lark…right?

ICANN has taken some steps to protect against such abuses, other than slapping a $185K sticker price on the new TLDs.  Once the early application window officially closes, ICANN will publicly post all the gTLD applications it received.   Third parties will then have 7 months to file objections to the potential gTLDs.  There are 4 bases for objections:  string confusion (an existing TLD operator or gTLD applicant objects because the applied for gTLD is confusingly similar to another existing or proposed gTLD), limited public interest (the gTLD is contrary to generally accepted legal norms of morality and public order), community based (there is substantial opposition to the application from an established institution associated with a significant portion of the community that the gTLD targets, such as a coalition of watch makers objecting to Rolex controlling the .watch gTLD), and a legal rights objection.

The legal rights objection is the most relevant and useful objection for companies and high-profile individuals who are sweating bullets about the new gTLDs.  A legal rights objection can be raised by any party that has valid rights in the gTLD.  The legal rights objection essentially allows trademark owners to oppose the new gTLD application on the basis that the applied for domain would infringe on the trademark owner’s existing rights, and provides a basis for celebrities to protect the use of their names (so there goes my plan to file www.adorbs.brangelina).  However, it costs $10,000 just to file an objection, and if the gTLD applicant has a legitimate right to that gTLD, then the legal rights objection will fail.

Companies who, because of cost or inattention, fail to object to a gTLD can still protect themselves by recording their trademarks with ICANN’s Trademark Clearinghouse.  The Trademark Clearinghouse will be up and running by October 2012 and it will maintain a database of registered trademarks that new gTLD registrars can connect to.  It will essentially act as a central storage unit of trademark information.  A trademark owner has three months to submit its trademarks to the Trademark Clearinghouse before the new gTLDs go live in early 2013.

Entering a registered trademark in the Clearinghouse offers people different types of protection.  These trademark owners will have the opportunity to register a second level domain name that constitute their trademark for all the gTLDs before registration is available to the general public.  This is called the Sunrise Period.  The Sunrise Period basically allows eligible rightsholders an early opportunity to register second level domain names in all the new gTLDs.  In addition, any entity attempting to register a second-level domain name that is already recorded in the Trademark Clearinghouse will be notified that its proposed second level domain name consists of an existing trademark.  Likewise, a trademark owner that registers its mark in the Trademark Clearinghouse will be notified of any possibly infringing second level domain name registrations in all the gTLDs.  Think of it as a home security system for trademarks on the Internet, complete with text-message notifications:  “Your house is being robbed.  You should probably do something about it.”  Thanks, Clearinghouse!

ICANN has also set up dispute resolution procedures — and because ICANN loves nothing more than a good acronym with a dramatic-sounding name, they’ve called it the Uniform Rapid Suspension System, or “URS.”  The URS provides an expedited procedure for addressing clear cases of possible gTLD trademark infringement; in essence, it’s a streamlined process that is a quicker alternative to the existing procedure available for general domain name disputes.

As with any topic that involves the politics and policies of the Internet, sometime this can all just seem like a bunch of alphabet soup.  But the Internet — which has, of course, always been a bit of a Wild West for all things intellectual property — is about to become an even scarier and more dangerous place for brand owners…and an even more potentially confusing place for web consumers.  Luckily, if you ever get lost out there, there are always safe havens.  Like this.  Or this.  Or this.