.SWATCH New gTLD Application

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New gTLD Application Submitted to ICANN by: The Swatch Group Ltd

String: SWATCH

Originally Posted: 13 June 2012

Application ID: 1-2121-49660

Applicant Information

1. Full legal name

The Swatch Group Ltd

2. Address of the principal place of business

Seevorstadt 6

Biel ⁄ Bienne  CH-2501

CH

3. Phone number

+41 32 343 68 11

4. Fax number

+41 32 343 69 11

5. If applicable, website or URL

http:⁄⁄www.swatchgroup.com⁄

Primary Contact

6(a). Name

Mr. Rene Lorenceau

6(b). Title

Head of Internet Business Development

6(c). Address

6(d). Phone Number

+41 32 343 66 32

6(e). Fax Number

+41 32 343 69 11

6(f). Email Address

This email address is being protected from spambots. You need JavaScript enabled to view it.

Secondary Contact

7(a). Name

Mr. Joshua Bourne

7(b). Title

FairWinds Partners LLC, Managing Partner

7(c). Address

7(d). Phone Number

+1 202 223 9081

7(e). Fax Number

7(f). Email Address

This email address is being protected from spambots. You need JavaScript enabled to view it.

Proof of Legal Establishment

8(a). Legal form of the Applicant

Corporation

8(b). State the specific national or other jursidiction that defines the type of entity identified in 8(a).

Switzerland

8(c). Attach evidence of the applicant's establishment.

Attachments are not displayed on this form.

9(a). If applying company is publicly traded, provide the exchange and symbol.

SIX_Swiss_Exchange;UHR (bearer stock) and UHRN (registered stock)

9(b). If the applying entity is a subsidiary, provide the parent company.

9(c). If the applying entity is a joint venture, list all joint venture partners.

Applicant Background

11(a). Name(s) and position(s) of all directors

11(b). Name(s) and position(s) of all officers and partners

11(c). Name(s) and position(s) of all shareholders holding at least 15% of shares

Community of heirs of N. G. Hayek Not Applicable

11(d). For an applying entity that does not have directors, officers, partners, or shareholders: Name(s) and position(s) of all individuals having legal or executive responsibility

Applied-for gTLD string

13. Provide the applied-for gTLD string. If an IDN, provide the U-label.

SWATCH

14(a). If an IDN, provide the A-label (beginning with "xn--").

14(b). If an IDN, provide the meaning or restatement of the string in English, that is, a description of the literal meaning of the string in the opinion of the applicant.

14(c). If an IDN, provide the language of the label (in English).

14(c). If an IDN, provide the language of the label (as referenced by ISO-639-1).

14(d). If an IDN, provide the script of the label (in English).

14(d). If an IDN, provide the script of the label (as referenced by ISO 15924).

14(e). If an IDN, list all code points contained in the U-label according to Unicode form.

15(a). If an IDN, Attach IDN Tables for the proposed registry.

Attachments are not displayed on this form.

15(b). Describe the process used for development of the IDN tables submitted, including consultations and sources used.

15(c). List any variant strings to the applied-for gTLD string according to the relevant IDN tables.

16. Describe the applicant's efforts to ensure that there are no known operational or rendering problems concerning the applied-for gTLD string. If such issues are known, describe steps that will be taken to mitigate these issues in software and other applications.

Swatch Group Ltd. (“Swatch Group”) foresees no known rendering issues in connection with the proposed .SWATCH gTLD for which it is applying. This answer is based upon consultation with Swatch Group’s selected back-end provider, VeriSign, Inc., which has successfully launched a number of new gTLDs over the last decade. In reaching this determination, the following data points were analyzed:

-ICANN’s Security Stability Advisory Committee (SSAC) entitled Alternative TLD Name Systems and Roots: Conflict, Control and Consequences (SAC009);

-IAB - RFC3696 “Application Techniques for Checking and Transformation of Names”

-Known software issues which Verisign has encountered during the last decade launching new gTLDs;

-Character type and length;

-ICANN supplemental notes to Question 16; and

-ICANN’s presentation during its Costa Rica regional meeting on TLD Universal Acceptance.

17. (OPTIONAL) Provide a representation of the label according to the International Phonetic Alphabet (http://www.langsci.ucl.ac.uk/ipa/).

Mission/Purpose

18(a). Describe the mission/purpose of your proposed gTLD.

18.1 THE SWATCH GROUP LIMITED

The Swatch Group Ltd (ʺSwatch Groupʺ) is an international group active in the design, manufacture, and sale of finished watches, jewelry, watch movements and watch components as well as electronic systems. Swatch Group supplies nearly all components required by its eighteen watch brands, and Swatch Group companies supply movements and components to third-party watchmakers in Switzerland and around the world. Swatch Group employs over 28,000 people in over 50 countries, and its 2011 gross sales totaled 7.143 billion Swiss francs.

Swatch SA (“Swatch”) is a subsidiary of Swatch Group and is a popular watch brand with some of the most well-known and recognized watches in the world. Today, the Swatch.com website serves as both a source of news and information, as well as a digital storefront for certain regions of the world. Through this website, customers in the United Kingdom, United States, Germany, Sweden, Switzerland, Japan, France, and Italy (and soon other countries) can purchase a range of Swatch-branded watches and jewelry online.

18.1.1 MISSION AND PURPOSE OF .SWATCH

Swatch Group has filed this application for a .SWATCH gTLD to serve as a trusted, hierarchical, and intuitive namespace for the goods and services that Swatch Group provides to its customers on a global basis. Through a unified corporate approach, Swatch Group also intends to submit an application for a .OMEGA gTLD.

Although ICANN has not specifically recognized a .BRAND gTLD specification in the current round, it is widely anticipated in the brand-owner community that this will become a specialty subset of gTLDs. The .SWATCH gTLD is intended to be one of those .BRAND gTLDs, with the goal of protecting Swatch Group’s online presence and identity, expanding its marketing and promotion efforts, providing a secure channel for online products and services, and offering a platform on which to consolidate many of the intellectual property activities of Swatch Group.

Swatch Group intends to initially limit registration and use of domain names within the .SWATCH gTLD to Swatch Group, as well as its qualified subsidiaries and affiliates, in particular to Swatch. This initial, limited use will allow Swatch Group to establish its operations and achieve full sustainability. This limited distribution, coupled with the other requirements set forth in Specification 9 of the template Registry Agreement, is intended to exempt Swatch Group from its annual Code of Conduct Compliance requirements.

After Year 3, Swatch Group will evaluate whether opportunities exist to carry out the business strategy for the gTLD through expansion that continues the sustainable operations of the registry through fee-based registrations to parties other than Swatch Group and its qualified subsidiaries and affiliates.

18.1.2 POTENTIAL BUSINESS PLAN

Swatch Group currently plans a four-stage rollout for the .SWATCH. The dates of the following stages are subject to change depending upon business, strategic, and industry factors at the time.

1. Stage One

The initial stage of implementation of the gTLD will involve Swatch Group registering a limited number of .SWATCH second-level domain names.

This initial use will provide Swatch Group’s IT and security personnel the time to run a number of tests to ensure seamless and secure access using the .SWATCH gTLD domain names, interoperability with various software and Web-based applications, and unbroken and secure use of all names. This initial allocation will also allow the appropriate Swatch Group staff to coordinate with the internal and external staff responsible for the delegation and setup phases of the .SWATCH gTLD to ensure a proper transition from delegation to full operation.

2. Stage Two

Once all testing has been successfully completed, Swatch Group will begin allocating domain names in .SWATCH for more widespread internal corporate use, including by Swatch. During this same period of time, Swatch Group will begin evaluating strategies to migrate traffic away from its current patchwork network of second-level domain names, which are registered in a variety of TLDs, to the .SWATCH gTLD.

It is in Stage Two that Swatch Group will evaluate expanding the operations of the gTLD to permit registration by other registrants such as licensees and strategic partners. Should an assessment of its expansion strategy lead to a decision to extend registration rights to other parties, this expansion is currently planned to take place during Stage Three, and likely after the first three years of operation. However, any expansion would be conditioned upon a review of the Specification 9 (Registry Code of Conduct) set forth in the template Registry Agreement to ensure compliance with Swatch Group’s business model.

3. Stage Three

The third stage is planned to implement the permanent migration of Internet traffic away from the TLDs in which Swatch Group’s domain names are currently registered, and toward the .SWATCH gTLD. It is in this stage that Swatch Group also may implement its decision to extend registration rights to other affiliated parties, such as licensees and strategic partners, depending upon compliance with Specification 9 as noted above.

After consideration of the following factors: analysis of Swatch Group’s existing domain name portfolio, internal analysis of marketing initiatives, and the fact that Swatch Group will have full control over the number of registrations in the .SWATCH gTLD namespace, Swatch Group is confident that the number of domain name registrations will be less than 10,000 in the first five years of operation.

4. Stage Four

Based on its experience with any expansion implemented in Stage Three, Swatch Group will assess whether its business plan and expansion strategy should be augmented by extending registration rights to a broader class of licensees, and potentially customers of Swatch Group and the Swatch brand. It is anticipated by Swatch Group that changes to the domain name industry, and particularly the impact of .BRAND gTLDs, will take at least five years to be realized and assessed. Any decision to expand the gTLDs beyond corporate, qualified subsidiary⁄affiliate, and licensee use will take into account this experience as well as the technical analysis of potential expansion.

The potential use of the .SWATCH gTLD will also be driven by Swatch Group’s future business strategies as identified in its annual report and investor filings, see http:⁄⁄www.swatchgroup.com⁄en⁄investor_relations.

Utilizing current projections based upon Swatch Group’s existing businesses, future business plans, current domain name portfolio, and other strategic factors, Swatch Group estimates second-level domain name registrations to be in line with the projections set forth in the financial template provided in its response to Question 46 of this application.

18(b). How do you expect that your proposed gTLD will benefit registrants, Internet users, and others?

18.2 HOW DO YOU EXPECT THAT YOUR PROPOSED GTLD WILL BENEFIT REGISTRANTS, INTERNET USERS, AND OTHERS?

Swatch Group believes that a proposed .SWATCH gTLD has the potential to offer the following benefits to Internet users and consumers:

- Establish a trusted, multilingual source of information and online marketplace for the millions of consumers that purchase goods and services through Swatch Group’s online retail stores, for investors and third parties seeking information, and for the general Internet user population;

- Provide Swatch Group with short and memorable Internet addresses that enable increased navigation to products, services, advertising campaigns, public interest content, public awareness initiatives, etc.;

- Eliminate the cost of, and need for, defensive registrations by other brands because domain names will only be allocated by Swatch Group to Swatch Group and qualified subsidiaries and affiliates;

- Develop a potential platform for the secure access to, purchase of, and distribution of Swatch Group products and information to consumers in order to minimize the potential for counterfeit or infringing goods and services; and

- Increase consumer awareness to potentially minimize incidents of phishing and malware often associated with domain names that incorporate the SWATCH mark or variations of said mark that are registered by cybersquatters and⁄or criminal elements.

Additionally, Swatch Group maintains country-specific websites for its consumers around the world and maintains multi-lingual websites for many of its markets. Most Swatch Group websites are hosted under the Swatch.com domain name using a hierarchical and structured naming convention that incorporates both linguistic and geographic pointers. Specifically, the naming convention is http:⁄⁄www.swatch.com⁄CC_LL⁄home.html, where the two-character “CC” designation corresponds to the ISO-3166 country code, United States (US), France (FR), Argentina (AR), etc., and the two-character “LL” designation corresponds to the language of the website, English (EN), Spanish (ES), French (FR), etc. In addition to these websites hosted under the Swatch.com domain name, Swatch Group has registered its mark at the second level in most ccTLDs, e.g., Swatch.ca, Swatch.ch, Swatch.jp, etc. As identified in the response to Question 22 of this application, Swatch Group believes that the .SWATCH gTLD can provide an online single-source identifying function for its current and future customers around the world, instead of the present mix-and-match approach that Swatch Group is forced to resort to in order to deliver online content to consumers in each of the world’s major regions.

18.2.1 WHAT IS THE GOAL OF YOUR PROPOSED GTLD IN TERMS OF AREAS OF SPECIALTY, SERVICE LEVELS, OR REPUTATION?

The primary mission and purpose of the .SWATCH gTLD is to provide a trusted, hierarchical, and intuitive online marketplace to deliver Swatch Group retail content; information on Swatch Group’s brands, business, and focus; and other goods and services. As Swatch Group continues to expand, it is the company’s desire to pursue and develop opportunities to market and distribute its online content and products to consumers in its native Switzerland, in the United States, and internationally on various platforms, including the Internet and mobile devices, among others.

Given that customers increasingly demand access to Swatch Group products and services through a variety of channels, which include domain names and the address bar, Swatch Group believes that a .SWATCH gTLD has the potential to provide an innovative, virtual avenue to Swatch Group products that will deepen and broaden its relationship with consumers.

Most importantly, Swatch Group will be able to provide access to its products and online content in a namespace void of piracy, cybersquatting, and other malicious activities. Providing consumers with a trusted experience is paramount to Swatch Group, and a .SWATCH gTLD will be used to further that goal. While retail companies such as Swatch Group fight a never-ending battle to protect valuable intellectual property from piracy on the Internet, a .SWATCH gTLD potentially offers legitimate consumers a safe and intuitive means of accessing authorized content from Swatch Group and its qualified subsidiaries and affiliates.

Swatch Group is supportive of existing anti-cybersquatting legislation and consumer protection measures, including the U.S. Anti-Cybersquatting Consumer Protection Act (ACPA) and others. As Swatch Group invests in expanding the domain name space through the establishment of a .SWATCH gTLD, it will also actively prevent cybersquatting, fraud, phishing, and other malicious activities within the .SWATCH gTLD. Maintaining the highest standards within the .SWATCH gTLD will give Swatch Group the opportunity to take a proactive approach to protecting intellectual property rights and fostering a cleaner, safer online experience for all Internet users.

18.2.2 WHAT DO YOU ANTICIPATE YOUR PROPOSED GTLD WILL ADD TO THE CURRENT SPACE, IN TERMS OF COMPETITION, DIFFERENTIATION, OR INNOVATION?

As a branded gTLD, the primary driving factors of a .SWATCH gTLD are differentiation and innovation. The number of domain names registered will not measure the success of the gTLD, but rather success will be judged by the level of consumer recognition and trust that is placed in the .SWATCH gTLD. Using these levels as benchmarks, Swatch Group strives to build consumer recognition and trust in the usage of the .SWATCH gTLD that rise to the levels found in the .EDU and .GOV gTLDs.

As noted above, Swatch Group is a leading global retail company that leverages numerous distribution channels and emerging technologies to deliver its online content, products, and services to its customers internationally. A .SWATCH gTLD has the potential to serve as a cornerstone of this online strategy, if potential benefits that ICANN has projected become a reality.

18.2.3 WHAT GOALS DOES YOUR PROPOSED GTLD HAVE IN TERMS OF USER EXPERIENCE?

Swatch Group believes that the .SWATCH gTLD will provide a trusted destination for the millions of consumers worldwide that purchase the company’s retail goods and services, as well as for those who seek information that Swatch Group provides, such as investors and members of the press. In addition to providing consumers with short, memorable, and intuitive domain names, consumers will know all domains and content are owned and controlled by Swatch Group, thus protecting users from potential infringing, pirated, or harmful content within the .SWATCH gTLD.

The initial use of the .SWATCH gTLD will involve a limited number of second-level domain names. This initial use will provide Swatch Group’s IT and security personnel the ability to run a number of tests to ensure seamless and secure access to Swatch Group’s websites and interoperability with various software and Web⁄mobile-based applications. Once appropriate security and stability issues have been satisfactorily addressed, Swatch Group will likely begin allocating domain names for internal corporate use and may redirect new .SWATCH domain names to pre-existing content. This phased rollout will likely take place over a multi-year period, but is subject to change depending upon a range of external factors.

During this same period of time, Swatch Group will evaluate potential strategies to migrate all traffic away from the current network of second-level domains registered in various gTLDs to the .SWATCH gTLD. This will provide customers with a centralized, trusted online source for its products and services.

18.2.4 PROVIDE A COMPLETE DESCRIPTION OF THE APPLICANT’S INTENDED REGISTRATION POLICIES IN SUPPORT OF THE GOALS LISTED ABOVE.

Swatch Group currently intends for the .SWATCH gTLD to be exclusively used by Swatch Group and its qualified subsidiaries and affiliates. Because of this controlled use, any registration and use requirements are more appropriately vested in corporate⁄affiliate agreements and not in a domain name registration agreement.

Notwithstanding these concerns, Swatch Group will incorporate all required ICANN consensus policies and other legal⁄policy requirements imposed on new gTLD applicants into the terms and conditions of the domain name registration agreement that each partner will execute.

18.2.5 WILL YOUR PROPOSED GTLD IMPOSE ANY MEASURES FOR PROTECTING THE PRIVACY OR CONFIDENTIAL INFORMATION OF REGISTRANTS OR USERS? IF SO, PLEASE DESCRIBE ANY SUCH MEASURES.

As a global retail company, Swatch Group recognizes firsthand that privacy protection is an evolving area of law in which there is no international standard. However, due to the fact that every domain name will be registered to Swatch Group or a qualified subsidiary of affiliate, at least during the initial stages of operation, Swatch Group has a vested interest to ensure that accurate and current domain name information is readily available in connection with each .SWATCH domain name. Swatch Group’s current privacy policy is available online at http:⁄⁄www.swatchgroup.com⁄en⁄services⁄privacy_policy. It is anticipated that Swatch Group will seek to operate the .SWATCH gTLD in a manner that is consistent with this policy, provided that it is not in conflict with any ICANN consensus policy.

In addition, Swatch Group intends to include contractual provisions to protect confidential and personal data in its registrar agreement, including provisions modeled after language in the template Registry Agreement that has been successfully utilized by existing ICANN gTLD registry operators. The template Registry Agreement states, “Registry Operator shall (i) notify each ICANN-accredited registrar that is a party to the registry-registrar agreement for the TLD of the purposes for which data about any identified or identifiable natural person (‘Personal Data’) submitted to Registry Operator by such registrar is collected and used under this Agreement or otherwise and the intended recipients (or categories of recipients) of such Personal Data, and (ii) require such registrar to obtain the consent of each registrant in the TLD for such collection and use of Personal Data. Registry Operator shall take reasonable steps to protect Personal Data collected from such registrar from loss, misuse, unauthorized disclosure, alteration or destruction. Registry Operator shall not use or authorize the use of Personal Data in a way that is incompatible with the notice provided to registrars.ʺ

18.2.6 DESCRIBE WHETHER AND IN WHAT WAYS OUTREACH AND COMMUNICATIONS WILL HELP TO ACHIEVE YOUR PROJECTED BENEFITS.

Swatch Group sees the potential for this gTLD to play a large role in Swatch Group’s future online strategic initiatives. While the extent of likely benefits is currently uncertain due to questions of consumer recognition, the adoption of new gTLDs, and the response from search engines in the marketplace, all of which may influence the communication, marketing, and use strategies of the gTLD, Swatch Group anticipates a phased-in approach to using and promoting the gTLD, as described above.

Swatch Group’s current best thinking involves an implementation of .SWATCH domain names in a multi-stage approach as set forth in Section 18.1.2 above. The actual usage of .SWATCH domain names will dictate what public communications and consumer outreach initiatives are undertaken to encourage navigation to .SWATCH gTLDs. This is not limited to, but may include advertising, media outreach, email campaigns, etc.

18(c). What operating rules will you adopt to eliminate or minimize social costs?

18.3 WHAT OPERATING RULES WILL YOU ADOPT TO ELIMINATE OR MINIMIZE SOCIAL COSTS (E.G., TIME OR FINANCIAL RESOURCE COSTS, AS WELL AS VARIOUS TYPES OF CONSUMER VULNERABILITIES)?

Swatch Group’s proposed operating rules to initially limit registration to Swatch Group and its qualified subsidiaries and affiliates will provide a trusted online environment for consumers to access Swatch Group’s online content and, by default, will minimize social costs. This verified destination provides consumers with a centralized, trusted source for Swatch Group goods and services with a substantially lower risk of fraud and⁄or scams.

Swatch Group does not anticipate consumer vulnerabilities. In addition, there is no need for other trademark and brand owners to defensively register second-level domains in the gTLD. In fact, Swatch Group’s expectation is that the usage of a .SWATCH gTLD will eliminate many of the vulnerabilities that Swatch Group customers and consumers face on the wider Internet today.

18.3.1 WHAT OTHER STEPS WILL YOU TAKE TO MINIMIZE NEGATIVE CONSEQUENCES⁄COSTS IMPOSED UPON CONSUMERS?

Swatch Group believes that the proposed operation of the .SWATCH gTLD as set forth in this application has no known negative consequences or cost implications to consumers. To the contrary, the proposed operation of this registry will likely lead to direct and quantifiable benefits to consumers by providing a unified framework for the access to, and distribution of, Swatch Group’s goods and services, instead of the current patchwork of domain names registered across various gTLDs and ccTLDs.

18.3.2 HOW WILL MULTIPLE APPLICATIONS FOR A PARTICULAR DOMAIN NAME BE RESOLVED, FOR EXAMPLE, BY AUCTION OR ON A FIRST-COME⁄FIRST-SERVE BASIS?

Swatch Group does not envision multiple applicants for the same domain name, as domain names will initially only be allocated to Swatch Group and its qualified subsidiaries and affiliates.

18.3.3 EXPLAIN ANY COST BENEFITS FOR REGISTRANTS YOU INTEND TO IMPLEMENT (E.G., ADVANTAGEOUS PRICING, INTRODUCTORY DISCOUNTS, BULK REGISTRATION DISCOUNTS).

Swatch Group does not envision any pricing, introductory discounts, or bulk registration discounts because these marketing⁄commercial initiatives appear to be inconsistent with the mission and purpose of the .SWATCH gTLD as a trusted online source identifier. However, should Swatch Group, at some future date, consider permitting third parties (customers) to register domain names in the .SWATCH gTLD, Swatch Group would reevaluate this practice at that time and reserves the right to impose a nominal fee in the future to licensees and strategic partners permitted to register domain names in the .SWATCH gTLD.

18.3.4 NOTE THAT THE REGISTRY AGREEMENT REQUIRES THAT REGISTRARS BE OFFERED THE OPTION TO OBTAIN INITIAL DOMAIN NAME REGISTRATIONS FOR PERIODS OF ONE TO TEN YEARS AT THE DISCRETION OF THE REGISTRAR, BUT NO GREATER THAN TEN YEARS. ADDITIONALLY, THE REGISTRY AGREEMENT REQUIRES ADVANCE WRITTEN NOTICE OF PRICE INCREASES. DO YOU INTEND TO MAKE CONTRACTUAL COMMITMENTS TO REGISTRANTS REGARDING THE MAGNITUDE OF PRICE ESCALATION? IF SO, PLEASE DESCRIBE YOUR PLANS.

Swatch Group is committed to providing the domain name registration periods set forth in the Registry Agreement. However, as noted above, because this will be a branded gTLD, the registration and use of the domain name is conditioned upon a separate contractual relationship with Swatch Group. Therefore, providing contractual commitments in a domain name registrant agreement regarding the magnitude of price escalations does not seem relevant or appropriate. Additionally, as noted above, the current business model envisions Swatch Group providing domain name registrations to itself and its qualified subsidiaries and affiliates at no cost, at least for the first three years of operation.

Swatch Group acknowledges that the current template Registry Agreement requires that the Registry Operator “shall offer registrars the option to obtain registration periods for one to ten years at the discretion of the registrar.” However, Swatch Group, as the initial sole registrant within the .SWATCH gTLD, will only be registering domain names on an annual basis. This is done to better account for costs on an annual basis as well as to provide for more concise financial statements in Question 46 of this application, e.g., no multi-year registration or deferred revenue.