Domainers Win A Round As ICANN Reveals That URS Will Not Be In DAGv3

Domain investors can breathe at least a temporary sigh of relief following Wednesday’s revelation that the much feared and reviled Uniform Rapid Suspension (URS) policy will not be included in the third version of the Draft Applicant Guidebook (DAG) for new gTLDs to be released by ICANN in the first week of October. The disclosure came in the course of testimony delivered by ICANN COO Doug Brent at a hearing on “The Expansion of Top level Domains and Its Effect on Competition” held September 23rd by the House Judiciary Committee’s Subcommittee on Courts and Competition Policy.

Brent’s written statement contained this new information on the disposition of the final report of the Implementation Recommendation Team (IRT) formed by ICANN’s Intellectual Property Constituency’s (IPC):

Some new elements of in the new gTLD process, to provide appropriate rights protection, and based in part on the IRT recommendations, will appear in the next DAG. These include both “thick” Whois information (the requirement that a registry maintain and offer Whois information in a centralized way), and a dispute mechanism for use after a registry has been created. In order to address concerns that some of the recommended solutions might impinge on existing policies such as the Uniform Domain Name Dispute Resolution Policy (UDRP) or could themselves be the subject of policy development, ICANN will be asking the GNSO to begin an expedited review of some of the recommended solutions in an attempt to reach consensus on an optimal path for launching new gTLDs with robust mechanisms to ensure the protection of legal rights. (Emphasis added).

Following his testimony, in response to a question from Subcommittee Chairman Rep. Hank Johnson, Brent elaborated that the URS and the IP Clearinghouse were two of the IRT recommendations that would not be in DAGv3 and that would be subject to further GNSO review.

ICANN’s analysis – recognizing that the URS could crowd out the UDRP and constitute a new policy requiring GNSO review — and its ultimate decision bear a remarkable resemblance to the critique and recommendation submitted by ICA in a July 6th comment letter on the final IRT Report:

The proposed URS will almost entirely displace the UDRP at all new gTLDs. It deprives registrants of due process rights, lacks adequate sanctions against complainant abuse, provides inadequate time for registrant response, and fails to provide an acceptable means of substantive appeal. It is a major new policy proposal and one that is unacceptably slanted in favor of trademark interests, and it would be outrageous for ICANN to ignore the clear lack of community consensus on this proposal and attempt to implement it absent further review through an expedited PDP.

We don’t think it’s worth splitting hairs over whether expedited GNSO review is tantamount to an expedited Policy Development Process – especially as we are now sailing in completely uncharted ICANN procedural waters – but the GNSO’s involvement should help restore some semblance of balance to trademark protections for new gTLDs.

ICA greatly appreciates that ICANN recognized the validity of the deep concerns over the URS articulated not just by us but by its own ALAC and NCUC, as well as by the many individuals and companies who submitted detailed written comments and spoke out at its Sydney meeting as well as at consultations held in New York, London, and other locales. For our part we intend to engage constructively in Seoul next month, and after, to help shape a true consensus policy that fully protects the legitimate rights of trademark owners but that also recognizes that registrants have important legal rights which must be respected and accorded full procedural and substantive due process.

Testimony delivered by Richard Heath, President of the International Trademark Association, made clear that the “attempt to reach consensus” alluded to by Brent faces great challenges. For, in INTA’s view, the IRT recommendations may not be strong enough, and should be tested (on existing gTLDs like .com, we presume) before there is any opening of the new gTLD application window:

But whether the IRT recommendations are sufficient and cost-effective, particularly given ICANN’s intention to introduce an unlimited number of gTLDs, has yet to be demonstrated…INTA believes that new trademark protection mechanisms must be developed and tested and existing DNS management functions improved before new gTLDs are introduced.

An attachment to Heath’s testimony details INTA’s position that the URS should be further biased in trademark owners’ favor by saddling a domain registrant with the burden of proving it has legitimate rights in the domain, and by replacing the proposed “clear and convincing evidence” standard for the URS with the lesser burden of “preponderance of the evidence” – a measure of proof identical to that of the UDRP, and a change that would eliminate all doubt that the URS is meant to entirely displace it (notwithstanding that complainants already prevail in 5 out of 6 UDRP actions).

In making his overall case for new gTLDs, Brent struck out at those calling for additional economic studies before new gTLDs were launched:

In the end, calling for a delay in the entry of new gTLDs only serves to perpetuate existing market conditions: concentration within some existing registries, most short generic strings unavailable, and those that trade on the value of the current marketplace, holding portfolios based upon the value of current .COM names. (Emphasis added.)

We’ve read that sentence multiple times and are still are not sure what ICANN means by its reference to domain portfolio owners, whose registration fees pay for a sizeable chunk of the ICANN infrastructure. In any event, the value of .com names is based upon the general public perception that .com is by and large the Internet — and whether new gTLDs change that mindset, or so confuse ordinary consumers as to reinforce it and further raise the value of those portfolios, remains to be seen.

Despite taking on the forces of delay, Brent’s own testimony referenced new studies that could lead to yet more studies, and all of that would seem to add up to yet more delay for new gTLDs. For example, in regard to the very same economic studies he defended:

ICANN will retain economists to review and summarize work to date regarding the costs and benefits of new gTLDs, putting that work into the context of the questions some have said remain open, and then evaluate whether additional study is required.

Likewise, on the four overarching issues that ICANN has pledged to adequately address prior to any launch of new gTLDs:

ICANN is also preparing to seek further input and guidance from the GNSO on certain of the Overarching Issues, including Trademark Protection, to continue the ongoing community consultation and assistance in the formation of the implementation process. ICANN is dedicated to its mission and core values of bottom‐up, consensus driven work, even though this consultation may result in additional delays in publishing the final DAG and moving forward with implementation. (Emphasis added.)

Rep. Rick Boucher, questioning ICANN’s commitment to competition given the “perpetual monopoly” it had awarded to VeriSign under the .com settlement, expressed sharp concern about the potential anti-competitive effects of easing registry-registrar separation for new gTLDs. In response, Brent volunteered that ICANN had antitrust experts reviewing the matter but that their work would take some time, and that he could not put a firm date on when the application window will open. Later, responding to Rep. Jason Chaffetz, Brent conceded that the projected February 2010 launch date for new gTLDs will “likely be missed”.

Given the continuing controversy and these successive rounds of studies one wonders if ICANN might not have been better advised to opt for incremental change, in the form of an objective and uniform application procedure and a clear priority system for more limited rollout of new gTLDs, rather than announcing that it would entertain unlimited applications and anticipated about 500 to be submitted in the first round – recalling the adage that it is easier to boil a frog by putting him in the pot and slowly turning up the heat than by attempting to toss him into a churning cauldron.

On the other major focus of the hearing, the fate of the U.S.-ICANN relationship once the current Joint Project Agreement (JPA) expires on September 30th, Brent was more cryptic:

While these discussions are continuing between ICANN’s CEO and the NTIA, my understanding is that all parties are striving for a relationship that is long standing and that accommodates these important principles, that will call for continuous improvement and periodic reviews of ICANN’s accountability and transparency, and security and stability, among other things.

…After 30 September 2009 ICANN wants to make even more commitments. Some of these include that ICANN should remain a nonprofit corporation based in the United States, in a lasting relationship with the U.S. government, and maintain a particular focus on ongoing transparency and accountability.

While discussions are occurring between ICANN’s CEO and the NTIA, my understanding is that both are striving for a long standing relationship that accommodates these important principles. I understand there will be focus on ICANN conducting periodic community‐driven reviews of ICANN’s accountability and transparency, and security and stability, among other things. ICANN is committed to being led and reviewed by its stakeholders and remaining open, innovative and capable of addressing the change occurring in the global Internet now and in the future.

One day after the hearing, The Economist (http://www.economist.com/businessfinance/displaystory.cfm?story_id=14517430) reported that a new agreement of unlimited duration will be announced in which the U.S. cedes some of its authority over ICANN to the “Internet community”. Indeed, we have just received an invitation to an ICANN graduation party to be held on October 1st at the Altitude Ballroom/Rooftop Terrace of the posh new W Hotel in downtown Washington “to recognize the conclusion of the Joint Project Agreement with the U.S. Department of Commerce and to acknowledge ICANN’s continuing responsibilities to Internet users globally”. We shall wait to read the reportedly 4-page “Affirmation of Commitments” (let’s dub it the AOC, since everything ICANN requires its own acronym) but we suspect its wording will allow ICANN to argue to foreign regimes that it has been set free from U.S. control, while telling Congress that the U.S. retains a special and timeless relationship. Unfortunately, the greater oversight role that it reportedly carves out for foreign governments will likely translate into ICANN’s ostensible private sector leadership yielding some ground to multinational politics.

As for the other witnesses, eNom Founder Paul Stahura expressed his frustration at being blocked for years from launching .web to compete head on with .com, and argued forcefully (but likely futilely) against any further delay in opening the application window for any and all gTLD proposals. Yet he predicted:

“…the number of new gTLDs will be limited by the stringent technical and financial requirements imposed by ICANN. In my view we are unlikely to see more than a doubling of TLDs that currently exist.”

If he is correct that the number of gTLD applications will be a scant 21, 1/25th of ICANN’s projection, that raises further questions about ICANN’s steadfast commitment to any numerical application limits.

Finally, NetChoice Executive Director Steve DelBianco told Congress that it and the Commerce Department needed to “focus ICANN on its core mission and hold it accountable to stakeholders”, questioned virtually every premise underlying the new gTLD program, and strongly advocated that the launch of International Domain Names (IDNs) at incumbent gTLDs should precede any introduction of new gTLDs.

This hearing marked the end of one era for ICANN’s relationship with the U.S. and the start of its successor. When an ICANN official next testifies before Congress that relationship, while likely still of a unique character, will have probably yielded some authority to multinational oversight. Given the recent Governmental Advisory Committee (GAC) letter updating its position on new gTLDs (see https://www.internetcommerce.org/GAC_to_ICANN_gTLDs) that may further inhibit the scope and timing of their introduction.

What’s becoming clear is that unless ICANN devises a way to break this ongoing logjam there is a risk that the new gTLD project could become the Second Avenue Subway of the Internet (see http://en.wikipedia.org/wiki/Second_Avenue_Subway for background on the NYC transit project that has remained “a dream” for 75 years).

(Note: The full statements of witnesses at the September 25th hearing can be found at http://judiciary.house.gov/hearings/hear_090923.html and a link to its webcast is available at http://judiciary.house.gov/hearings/calendar.html . The ICA’s written submission to ICANN regarding the final IRT report can be found here.)

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