When new domain extensions are introduced to the market there is typically a “sunrise period”. During this period companies can claim to have rights to certain domains, usually because of trademark ownership. For example, Microsoft can claim rights to Microsoft.extension. The idea is to prevent domain name squatters from snapping up trademarked names.
But sunrise domain applications are filled with fraud. People try to trademark generic domains, like mortgage.extension, with the hopes of laying claim to the domain through the process. (In the United States you can’t just get a trademark for a name; it needs to be something used in commerce. But that doesn’t stop people from trying.)
To show the extent of this problem, consider that over 200 entities filed sunrise applications for the sex.eu domain. How that many entities can lay claim to the term “sex” is beyond me.
Alternative root systems, like New.net, create even more problems for sunrise period applications. New.net has created a number of its own domain extensions, such as .shop and .law. These extensions only work in browsers with a special plug-in or with certain internet service providers. Only a fraction of web users can actually navigate to a site with a .shop extension. But what if someone registers something.shop at New.net and files a trademark on the name? Suppose that ICANN releases a new .shop extension in the next few years. Will someone that filed a trademark while using a domain from New.net get rights to the name?
This isn’t far fetched. After all, ICANN just released .travel domain names. New.net has been offering these for years. New.net also offers .xxx domains, which ICANN is considering as a future domain.
There’s a good thread at DNForum called “The Great .EU fraud begins…” You can read it here (registration may be required).