30
Nov

Thanksgiving Day Comment Labels .XXX RA Revision a Turkey

Following up on its critical statement delivered to the ICANN Board at the recent Hyderabad public meeting, ICA submitted a Thanksgiving Day comment letter decrying the insertion of URS into the .XXX Registry Agreement (RA) via contract negotiation and declaring—
“GDD staff should demonstrate their clear commitment to ICANN’s bottom-up policymaking process by ceasing and desisting from seeking top-down imposition of new gTLD RPMs in legacy gTLD RA negotiations until the RPM Review WG has completed its work reviewing those RPMs and its final recommendations – including whether those RPMs should become Consensus Policy — have been acted upon by the GNSO Council and ICANN Board.”

While the Global Domain Division (GDD) continues to maintain that such acceptance of new gTLD RPMs by older TLDs is strictly voluntarily and agreed to in balanced bilateral negotiations, that version of events lacks credibility when GDD staff starts each negotiation by taking the position (in the words of its head), “SO BASICALLY THE NEGOTIATIONS ARE — THE REGISTRIES COME AND ASK FOR SOMETHING AND WE TELL THEM PLEASE ADOPT THE NEW gTLD CONTRACT”. That is especially true in this instance, when the registry operator stands to reap very substantial financial rewards by agreeing with that GDD suggestion.

While the .XXX RA received only a few comments, we are pleased that our colleagues in the Business Constituency BC) once again stood firmly for the principle that policy decisions must emerge from the ICANN community through the standard bottom-up policy development process, stating:
The BC sustains its procedural objection to these proposals, through which GDD staff unilaterally seeks to establish a new status quo for registry agreements. By substituting its judgment for established policy, we respectfully believe that staff exceeds its powers and overrides safeguards intended to preserve transparency and inclusion within the multi-stakeholder community… Although the BC has been a strong advocate for the new RPMs as applied to new gTLD registries, this PDP continues to consider fundamental questions about how the new RPMs should function and how they could evolve in the future.
The GNSO may ultimately articulate a Consensus Policy that calls for different measures for legacy gTLDs than are now being used with the new gTLDs. If the GDD persists in forcing registries to adopt these preConsensus Policy RPMs, it may widely implement procedures that do not align with the GNSO’s ultimate conclusions. Further, as ICANN policy staff has recognized, application of the RPMs to legacy gTLDs raises certain transition issues that are not addressed by implementation via contract. Finally, in the absence of such RPMs being Consensus Policy, registrants may have legal grounds to question their imposition…. Moreover, the ICANN Bylaws reserve the power to set gTLD policy to the GNSO. The new RPMs have not, in their current form, received the uniform support from GNSO constituents and, as discussed above, have not undergone the procedure set forth in the Bylaws to become Consensus Policies. While greater consistency as between registry agreements is a worthwhile goal, and convenient for ICANN in terms of contractual compliance, it cannot supersede consistency of action in accord with ICANN’s Bylaws.

Unfortunately, the Intellectual Property Constituency (IPC) continues to endorse the GDD’s fiction of voluntary registry adoption, stating in its comment:
The IPC applauds ICM Registry LLC (ICM) and other Registry Operators that choose to implement rights protection mechanisms (RPMs) contained in the base New gTLD Registry Agreement. The IPC also encourages Registry Operators to voluntarily adopt industry best practices beyond the minimum rights protections required by ICANN, such as adding new restrictions against abusive registrations and suspension mechanisms, implementing blocking prior to registration, and creating new dispute procedures… The IPC also encourages ICANN to educate Registry Operators that the required RPMs are not a “ceiling” but a “floor”–the minimum required– and the Internet community is best served by Registry Operators that strive to go above and beyond the minimum by adopting industry best practices. ICANN need not undertake a policy development process for Registry Operators to voluntarily implement new RPMs.

The IPC overall appears to take the somewhat shocking and dangerous position that an ICANN-accredited registry can at any time unilaterally invent and enforce registration restrictions, suspension mechanisms, blocking mechanisms, and entirely new dispute procedures simply by labeling them “rights protections” without regard to relevant ICANN policy or registrant legal rights.

The ICA comment concludes with this statement:
“Given the history of flimsy and self-serving justifications by GDD staff and the ICANN Board for similar actions taken in 2015, we are under no illusion that this comment letter will likely be successful in effecting removal of the URS and other new gTLD RA provisions from the revised .XXX RA. Nonetheless, we strenuously object to this GDD action that intrudes upon and debases ICANN’s legitimate policymaking process, and urge the GDD and Board to reconsider their positions, and to ensure that GDD staff ceases and desists from taking similar action in the context of future RA renewals and revisions until the RPM Review WG renders the community’s judgment as to whether the URS and other new gTLD RPMs should become Consensus Policy and such recommendation is reviewed by HNSO Council and the ICANN Board.”

ICA will continue to monitor this proposed RA revision – and all subsequent renewals of legacy gTLDs (including the 2017 renewal of .Net) – and to speak out against staff actions that subvert ICANN’s established policymaking process.

The full text of our comment letter follows—

VIRTUALAW LLC

Philip S. Corwin, Founding Principal 1155 F Street, NW  Suite 1050

Washington, DC 20004 202-559-8597/Direct

202-559-8750/Fax

202-255-6172/Cell

psc@vlaw-dc.com

 

 

 

November 24, 2016

 

 

By E-Mail to  comments-xxx-amendment-12oct16@icann.org

 

Internet Corporation for Assigned Names and Numbers 12025 Waterfront Drive, Suite 300

Los Angeles, CA 90094-2536

 

 

Re: Proposed Amendment to .XXX Registry Agreement to Transition to New Fee Structure and to Adopt Additional Safeguards

 

 

Dear ICANN:

 

I am writing on behalf of the members of the Internet Commerce Association (ICA). ICA is a not-for-profit trade association representing the domain name industry, including domain registrants, domain marketplaces, and direct search providers. Its membership is composed of domain name registrants who invest in domain names (DNs) and develop the associated websites, as well as the companies that serve them. Professional domain name registrants are a major source of the fees that support registrars, registries, and ICANN itself. ICA members own and operate approximately ten percent of all existing Internet domains on behalf of their own domain portfolios as well as those of thousands of customers.

This letter addresses the Proposed Amendment to .XXX Registry Agreement to Transition to New Fee Structure and to Adopt Additional Safeguards that was published for public comment on October 12, 2016.

 

 

Executive Summary

·         ICA has no objection the phased registry fee reduction contained in the revised RA.

·         However, the net annual benefit of $281,500 to be realized by ICM registry brings into question whether its agreement to other GDD-proffered provisions of the RA was truly “voluntary”, given the large financial benefit to it and the ability of GDD staff to deny a final agreement unless their initial negotiating position was agreed to by ICM.

·         The 2016 launch of the PDP Review of All Rights Protection Mechanisms in All gTLDs, which is tasked with recommending whether new gTLD RPMs should become Consensus Policy for legacy gTLDs, makes it particularly inappropriate for GDD staff to continue seeking that de facto policy result in non-transparent, bilateral RA negotiations that contravene the policymaking process set forth in the Bylaws.

·         No further action should be taken by ICANN in regard to the proposed RA for this sponsored TLD until there is clear evidence that IFFOR, the policy-setting entity for .XXX, has reviewed and approved it.

·         GDD staff should demonstrate their clear commitment to ICANN’s bottom-up policymaking process by ceasing and desisting from seeking top-down imposition of new gTLD RPMs in legacy gTLD RA negotiations until the RPM Review WG has completed its work reviewing those RPMs and its final recommendations – including whether those RPMs should become Consensus Policy — have been acted upon  by the GNSO Council and ICANN Board.

 

 

Reduction of Per Transaction Registry Fee
ICA has no objection to the principal material benefit provided by the revised RA to ICM Registry, the registry operator for .XXX, which is a phased reduction of its per transaction registry fee from the current level of $2.00 to the standard registry fee of $0.25 by mid-2018. The initial high level fee was based upon ICANN concerns that this adult content sponsored TLD (sTLD) could result in substantial litigation and related expenses for ICANN. Those concerns have not been realized, and there no longer seems to be any substantive reason to continue charging eight times the standard registry fee to the operator of .XXX. GDD should properly have approved the phased fee reduction without pressing for additional unrelated concessions by ICM as conditions for approval.

 

This 87.5 reduction will, based upon a published report that .XXX currently holds 170,000 domains, will be worth $297,500 in annual reductions at that level of sTLD domain registrations, bringing the annual fees paid by ICM to ICANN down from $340,000 to $42,500. As the revised RA also contains an increase in the quarterly fee payable to ICANN from $2,500 to $6,500, the total net annual benefit at current registration levels will be reduced to $281,500.

 

The very substantial financial benefit to be reaped by ICM Registry – aggregating to an additional $2.815 million in retained revenue over the decade following full implementation – illustrate precisely why the concept of “voluntary” agreement by a registry seeking beneficial changes in its RA in closed door, non-transparent negotiations with GDD staff is a false but convenient fiction. In this instant case we have two negotiating parties. ICM Registry, presented with the opportunity for retaining substantial additional domain revenues, and already subject to Uniform Rapid Suspension (URS) and other new gTLD rights protection mechanisms (RPMs) at its .adult, .porn and .sex new gTLDs, cannot be expected to take the integrity of maintaining bottom-up, multistakeholder policy development into account and elevate it over its own financial interest. And GDD staff has already illustrated their willful blindness to the policy implications of pressing legacy gTLDs to adopt new gTLD (RPMs).

 

Thus, two parties with no central role in ICANN’s policy development process are effectively permitted to collude in closed door negotiations on a decision with broad policy implications. With each legacy TLD revision in which GDD staff succeeds in imposing new gTLD provisions that are not yet ICANN Consensus Policy they  create de facto consensus policy, one negotiation at a time. This is wrong and it should stop.

 

De Facto Consensus Policy Through Non-Transparent Contract Negotiations

The underlying policy issue created by GDD pursuit of the imposition of new gTLD RPMs on legacy gTLDs through contract negotiations was raised to a high profile within the ICANN community in 2015 when the revised RAs for .travel, .cat and .pro were challenged by multiple segments of the ICANN Community.

ICA’s comment letter of June 21, 2015 stated in part:

The ICA is strongly opposed to the inclusion of new gTLD rights protection mechanisms (RPMs), particularly Uniform Rapid Suspension (URS), in this renewal agreement (RA) for a legacy gTLD. We believe that this attempt by ICANN contracting staff to create de facto Consensus Policy via individual registry contract, absent a relevant Policy Development Process (PDP), is a glaring example of the type of top down, unaccountable action that should be targeted by enhanced accountability measures accompanying the IANA transition proposal. Contracts with legacy gTLDs can contain and enforce Consensus Policy, but it is an impermissible violation of ICANN’s Bylaws for contracts to attempt to create Consensus Policy…. The potential addition of these RPMs to legacy gTLDs through this inappropriate avenue will have a substantial and deleterious effect on ICANN’s policymaking process going forward, will create a new and dangerous precedent whereby de facto Consensus Policy can be created by contractual fiat in violation of ICANN Bylaws, and will substantially and adversely affect third parties around the world consisting of the existing registrants of more than one hundred million legacy gTLD domains.

In addition to ICA, that general line of reasoning was echoed by the Electronic Frontier Foundation, IP Justice, and ICANN’s Business Constituency (BC) and Non-Commercial Stakeholders Group (NCSG).

On July 31, 2015 GDD staff published its Report of Public Comments regarding the Proposed Renewal of .TRAVEL Sponsored TLD Registry Agreement. In defense of the inclusion of the URS in the proposed .Travel Registry Agreement and other RAs, the report stated:

Although the URS was developed and refined through the process described here, including public review and discussion in the GNSO, it has not been adopted as a consensus policy and ICANN staff has no ability to make it mandatory for any TLDs other than those subject to the new gTLD registry agreement. Accordingly, ICANN staff has not moved to make the URS mandatory for any legacy TLDs, and it would be inappropriate for staff to do so. In the case of .TRAVEL and other legacy TLD registry agreement renewals (.JOBS) and proposed renewals for .CAT and .PRO registry agreements, inclusion of the URS was developed as part of the proposal in bilateral negotiations between the registry operator and ICANN.  (Emphasis added)

This self-serving justification takes the position that GDD’s opening position in these negotiations is not an attempt to make any particular revision “mandatory”, and that a registry’s agreement to a GDD request is entirely “voluntary” within the context of balanced, bilateral negotiations. It is true that under ICANN’s new standard registry agreement any registry operator has a presumptive right of renewal of its RA – but only of the exact same RA, with no material changes in its terms and conditions. But all three of the registries accepting URS in their 2015 renegotiations sought and received material beneficial changes in their RAs that GDD staff had the exclusive power to approve, and to condition upon the acceptance of other unrelated revisions.

To the collective dismay of ICA and other parties that objected to the 2015 actions, ICANN’s Board chose to back GDD staff rather than defend the community-based policymaking process. On February 3, 2016, in response to “Reconsideration Requests 15-19 (the ICANN Business Constituency & the ICANN Noncommercial Stakeholder Group (NCSG)) and 15-20 (The Internet Commerce Association)”, ICANN’s Board adopted the Board Governance Committee’s denial of the two referenced Requests.

That action was based upon the flimsy rationale that—

The inclusion of the new gTLD RPMs in the Renewed Registry Agreements is part of the package of agreed-upon terms resulting from the bilateral negotiations between ICANN and each registry operator, and not, as Requesters claim, a “unilateral decision by ICANN contractual staff.” The Requesters present no evidence to the contrary – i.e., that applying the new gTLD RPMs to the Renewed Registry Agreements was based on a unilateral decision by ICANN staff. The Requesters suggest that the Board should have reviewed all of ICANN staff’s communications with the .CAT, .TRAVEL, and .PRO registry operators in order to confirm that the negotiations were in fact bilateral. Such contention, however, does not support reconsideration. 

The Board’s decision was based upon the false premise that the negotiations between a registry operator requesting material and beneficial alterations in its RA can be bilateral and balanced when GDD staff have placed requested changes on the table at the start of negotiations and have the unrestricted power to deny the requested RA changes unless their requests are acceded to. The Board also failed to review the full record of communications between the negotiating parties to judge whether the final draft agreement was coerced by GDD staff.

The myth of “voluntary” acquiescence to GDD negotiating demands is even more stark in the present case, in which ICM stands to benefit in the amount of almost $300k per annum simply by acquiescing to them. The disparity in bargaining power is even more pronounced in the instant case, in which ICM has sought and will receive substantial continuing monetary benefits. The interest of the ICANN community in maintaining a transparent and bottom-up policy development process was not represented by either party to this negotiation.

 

GDD Continues to press for RPM Adoption as a Condition of Negotiation Agreement

Notwithstanding the lack of full transparency in the current comment request, there is little doubt that inclusion of the URS was done at the behest of the GDD in its negotiations with ICM.

In the three RAs at issue in 2015, the request for public comment clearly stated:

With a view to increase the consistency of registry agreements across all gTLDs, ICANN has proposed that the renewal agreement be based on the approved new gTLD Registry Agreement as updated on 9 January 2014.

In the current instance the history of how agreement to the URS came about is vague, with the request for comment stating only:

During the course of discussions, ICM informed ICANN that ICM would agree to add both additional safeguards contained in the form new gTLD Registry Agreement, and a phased implementation of a reduction of fees based on ICM’s compliance with the terms of the .XXX Registry Agreement.

The mystery of whether URS inclusion in the revised .XXX RA was sought by GDD was cleared up at the Public Forum held at ICANN 57 in Hyderabad, India on November 8, 2016. During the Forum I made a statement (included in the Appendix at the end of this letter) regarding the proposed revisions.

In response, GDD head Akram Atallah stated:

SO BASICALLY THE NEGOTIATIONS ARE — THE REGISTRIES COME AND ASK FOR SOMETHING AND WE TELL THEM PLEASE ADOPT THE NEW gTLD CONTRACT. AND IF THEY PUSH BACK ON IT AND THEY SAY THEY DON’T WANT SOMETHING, WE CAN FORCE THEM TO TAKE IT. (Emphasis added)

In Mr. Atallah’s defense, the raw transcript may be mistaken and the word he used in the second sentence may have been “can’t”. If that was his assertion, we must question its real world accuracy based upon the feedback we have received from contracted parties regarding the tough negotiating position that ICANN’s GDD and Legal staff take in such RA revision discussions.

Yet, regardless of whether ICM eagerly embraced URS or initially resisted it, Mr. Atallah was quite clear in his response that, in each and every negotiation in which a registry “asks for something”, GDD staff tells them “Please adopt the new gTLD contract” as its initial bargaining position – even though that contract contains multiple provisions which remain “implementation details” and have not been adopted as “Consensus Policy” through proper GNSO procedures and Board adoption.

 

Launch of the PDP Review of All Rights Protection Mechanisms in All gTLDs

From a policy development perspective, the principal difference between last year’s actions and the instant case is the intervening creation of the PDP Review of All Rights Protection Mechanisms in All gTLDs. The Working Group’s (WG) Charter was approved by the GNSO Council on March 15, 2016.

That Charter’s “List of Potential Issues for Consideration in This PDP” includes this overarching one:

Should any of the New gTLD Program RPMs (such as the URS), like the UDRP, be Consensus Policies applicable to all gTLDs, and if so what are the transitional issues that would have to be dealt with as a consequence?

The actions of GDD staff in proposing adoption of new gTLD registry provisions by incumbent gTLDs severely prejudices the work of the PDP by creating de facto policy decisions in advance of its preliminary report and recommendations. Further, the GDD’s position in RA negotiations is materially flawed in that it fails to consider and address important “transitional issues”, including the necessary legal steps to bind legacy gTLD registrants to use of the URS when it has not been adopted as a Consensus Policy through proper PDP methodologies.

I spoke to this matter in my Public Forum Statement at ICANN 57, stating:

SO I’LL END WITH THIS QUESTION: I DON’T KNOW WHAT THE RPM WORKING GROUP IS GOING TO RECOMMEND ON URS BECOMING CONSENSUS POLICY. MY OWN MIND IS COMPLETELY OPEN ON THIS POINT DEPENDING ON WHAT OUR WORK FINDS AND WHAT CHANGES MIGHT BE MADE IN IT.

BUT IF WE WERE TO RECOMMEND THAT URS SHOULD NOT BE CONSENSUS POLICY … WOULD GDD STAFF CONTINUE THIS PRACTICE IN NEGOTIATIONS? IF THE ANSWER IS NO, THEN I MAINTAIN IT’S INAPPROPRIATE FOR THEM TO DO IT NOW. AND IF THE ANSWER IS THAT THEY’RE GOING TO KEEP DOING IT EVEN IF WE COME OUT AGAINST IT BEING CONSENSUS POLICY, THEN DOESN’T THAT RENDER THAT PART OF OUR CHARTER WORK A SOMEWHAT IRRELEVANT EXERCISE IN FUTILITY?

In response, Mr. Atallah stated:

IF THE POLICY COMES BACK AND SAYS THAT THE URS IS NOT SOMETHING THAT WE WANT TO HAVE AS A POLICY, OF COURSE, WE WOULD SUPPORT THAT.

Although the response is a tad ambiguous, read in its best light it indicates that GDD staff might cease their practice of suggesting adoption of new gTLD RPMs by legacy TLDs in RA renewal or revision negotiations if the WG recommends against their adoption as Consensus Policy.

If that is a correct reading of GDD’s position, then the proper action for it to take going forward is to cease and desist from urging legacy gTLDs to adopt those RPMs in RA negotiations while the RPM Review WG is active, because a recommendation of the WG that the RPMs not become Consensus Policy would merely be an extension of the status quo. If it is an incorrect reading, then the PDP deliberations of the WG on this central question are indeed an irrelevant exercise in futility and make a mockery of ICANN’s purported commitment to a bottom-up policymaking process.

For the record, ICA has taken no position on whether URS or any other relevant new gTLD RPM should become ICANN Consensus Policy applicable to .Com and other legacy gTLDs. Our position on that matter shall be based upon the PDP’s review and findings regarding the actual implementation of the URS, and particularly whether it is being uniformly administered as a narrow supplement to the UDRP in which bad faith registration and use are demonstrated by clear and convincing evidence. Our position will also be dependent on whether any alterations of the URS are recommended – and, in particular, whether a domain transfer option is recommended with its potential to turn the URS into a rapid and inexpensive means of hijacking valuable legacy domains.

(For the record, while I am one of three Co-Chairs of the RPM Review WG, that position gives me a co-equal voice solely on administrative matters, and no authority whatsoever to steer that very large WG to any particular policy recommendation.)

 

Lack of IFFOR Review and Approval of the Revised RA

The revised RA on which we are commenting also raises unique issues insofar as .XXX is a sponsored TLD for which a governing, policy-setting organization was required due to the controversial nature of the adult content hosted at .XXX domains.

That organization, the International Foundation for Online Responsibility (IFFOR) is, according to its own description, constituted as follows:

IFFOR comprises a Board, Policy Council and staff which work together in developing and approving IFFOR’s work.

The Board comprises three members, on two-year terms, one of whom is chosen by ICM Registry.

The Policy Council comprises nine members, representing four stakeholder groups. Five members represent the sponsored community for dot-xxx domains, and then there is one representative for each of the other groups that represent: free expression; child advocacy; privacy and security. The ninth member is chosen by ICM Registry.

The staff comprises an Executive Director and Manager of Public of Participation, and an Ombudsman.

 

Most important for the present circumstance, IFFOR develops policies that apply to all owners of .XXX domain names, and its Baseline Policies contain a provision that is directly relevant to the same trademark protection concerns that underlie the URS:

 

  1. Prohibition on Abusive Registrations

No registrant may register an abusive string in the sTLD including, without limitation, strings that infringe the intellectual property rights of a third party, including common law trademark rights; strings that are obvious variants of well-known trademarks not belonging to the registrant; first and last names of an individual other than the individual or his/her agent or names that suggest the presence of child abuse images. (Emphasis added)

 

IFFOR is referenced in the request for public comment in the following way:

 

Additionally, ICANN reviewed the most recent IFFOR audit report of the Registry Operator’s CRS and found that the system is not only fully functional, but exceptionally functional and compliant for its intended purposes. ICM conveyed its belief that IFFOR’s Audit Report and trend analysis demonstrate effectiveness regarding mitigating abuse on the .XXX gTLD and further maintained that the .XXX gTLD no longer carries risk, for either ICANN or the Internet stakeholders initially concerned with the launch of .XXX. ICM explained that the data shows that the system has been enhanced beyond its original capabilities and has now demonstrated high levels of utility for its operation and ease of use, which is evidenced by a pattern of decline in cases.

 

However, there is no further indication that IFFOR had any role in reviewing and approving the proposed RA, despite the presence of RPM provisions that relate to trademark protection and therefore are clearly within IFFOR’s existing Policy remit. Additionally, the fact that IFFOR’s Audit Report found that .XXX no longer carries risk for ICANN (a conclusion that ICANN implicitly accepted given its agreement to reduce registry fees by 87.5%), as well as that IFFOR’s existing anti-infringement policy is effectively preventing significant infringement, plus the fact that .XXX are restricted solely to members of the Sponsored Community, calls into question why the URS was even introduced into the RA negotiations — save for GDD’s preexisting decision to seek its imposition in each and every RA renegotiation.

Given the lack of any clear evidence that the revised RA has been reviewed or approved for IFFOR, final action by ICANN should be deferred until that process occurs.

 

 

Conclusion

 

Unfortunately, while we have no objection to granting ICM the .XXX registry fee reduction it has justifiably sought, we must object to the proposed RA’s approval given GDD’s imposition of extraneous new gTLD RA provisions into a legacy TLD agreement, and the consequent de facto creation of policy in regard to matters that are presently under consideration by a GNSO-chartered PDP.

 

Given the history of flimsy and self-serving justifications by GDD staff and the ICANN Board for similar actions taken in 2015, we are under no illusion that this comment letter will likely be successful in effecting removal of the URS and other new gTLD RA provisions from the revised .XXX RA. Nonetheless, we strenuously object to this GDD action that intrudes upon and debases ICANN’s legitimate policymaking process, and urge the GDD and Board to reconsider their positions, and to ensure that GDD staff ceases and desists from taking similar action in the context of future RA renewals and revisions until the RPM Review WG renders the community’s judgment as to whether the URS and other new gTLD RPMs should become Consensus Policy and such recommendation is reviewed by HNSO Council and the ICANN Board.

 

We appreciate the opportunity to provide these comments on the proposed revision of the .XXX RA. We hope they are helpful to the further consideration of this matter by ICANN and its community.

 

 

Sincerely,

Philip S. Corwin

 

Counsel, Internet Commerce Association

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix – Transcript of Public Comments of Philip S. Corwin at ICANN 57 Public Forum, Hyderabad, India, November 8, 2016 (raw transcript edited for accuracy)

 

 

>>PHILIP CORWIN: GOOD MORNING. PHILIP CORWIN. I WEAR MANY HATS IN THE ICANN WORLD ONE OF THEM AS A COUNCILLOR FOR THE BUSINESS CONSTITUENCY ON THE GNSO COUNCIL. ANOTHER IS CO-CHAIR OF TWO WORKING GROUPS INCLUDING ONE REVIEWING ALL RPMs AT ALL GTLDS. BUT THE HAT I’M WEARING FOR THIS STATEMENT IS THAT OF COUNSEL TO THE INTERNET COMMERCE ASSOCIATION.

 

YOU ALL RECALL THAT LAST YEAR GLOBAL DOMAINS DIVISION STAFF NEGOTIATED .CAT, PRO AND TRAVEL, REGISTRY AGREEMENT RENEWALS ALL OF WHICH INCLUDED SO-CALLED VOLUNTARY ADOPTION OF UNIFORM RAPID SUSPENSION. ICA PROTESTED THAT AS DID MANY OTHERS SAYING THAT IT WAS MAKING POLICY THROUGH CONTRACT NEGOTIATIONS. WE FILED A RECONSIDERATION REQUEST AS DID THE BC AND THE NCSG JOINTLY. AND THAT HASN’T HAPPENED VERY OFTEN. AND I WANT TO NOTE HERE THAT MY BC COLLEAGUES FAVOR ADOPTION OF URS AS CONSENSUS POLICY BUT TOOK A VERY PRINCIPLED STAND AGAINST GETTING TO THAT RESULT THROUGH THIS MANNER.

 

BUT GDD AND THE BOARD IN THAT PROCESS SAID THAT, OF COURSE, IT WOULD BE WRONG TO FORCE URS ON REGISTRY OPERATORS THROUGH NEGOTIATIONS BUT THAT THESE RESULTS WERE VOLUNTARY AND, THEREFORE, OKAY.

 

NOW, ON OCTOBER 12th, ICANN PUBLISHED FOR PUBLIC COMMENT A RENEWAL AGREEMENT FOR .XXX IN WHICH THEY TOO AGREE TO URS FOR A 87% REDUCTION IN THEIR REGISTRY FEES. ONE HAS TO WONDER WHAT A REGISTRY OPERATOR WOULDN’T AGREE TO IN EXCHANGE FOR THAT TYPE OF REDUCTION.

 

SO I’LL END WITH THIS QUESTION: I DON’T KNOW WHAT THE RPM WORKING GROUP IS GOING TO RECOMMEND ON URS BECOMING CONSENSUS POLICY. MY OWN MIND IS COMPLETELY OPEN ON THIS POINT DEPENDING ON WHAT OUR WORK FINDS AND WHAT CHANGES MIGHT BE MADE IN IT.

 

BUT IF WE WERE TO RECOMMEND THAT URS SHOULD NOT BE CONSENSUS POLICY — [TIMER SOUNDS.] CAN I JUST FINISH THIS? — WOULD GDD STAFF CONTINUE THIS PRACTICE IN NEGOTIATIONS? IF THE ANSWER IS NO, THEN I MAINTAIN IT’S INAPPROPRIATE FOR THEM TO DO IT NOW. AND IF THE ANSWER IS THAT THEY’RE GOING TO KEEP DOING IT EVEN IF WE COME OUT AGAINST IT BEING CONSENSUS POLICY, THEN DOESN’T THAT RENDER THAT PART OF OUR CHARTER WORK A SOMEWHAT IRRELEVANT EXERCISE IN FUTILITY? THANK YOU VERY MUCH.

 

>>AKINORI MAEMURA: THANK YOU VERY MUCH. [APPLAUSE] ANYONE TAKES? NO?

 

>>CHERINE CHALABY: AKRAM, DO YOU WANT TO MAKE A COMMENT ON THAT, PLEASE?

 

>>AKRAM ATALLAH: SURE, THANK YOU. SO BASICALLY THE NEGOTIATIONS ARE — THE REGISTRIES COME AND ASK FOR SOMETHING AND WE TELL THEM PLEASE ADOPT THE NEW gTLD CONTRACT. AND IF THEY PUSH BACK ON IT AND THEY SAY THEY DON’T WANT SOMETHING, WE CAN FORCE THEM TO TAKE IT. IT’S A NEGOTIATION BETWEEN TWO PARTIES, AND I THINK IT’S WITHIN THE REMIT OF THE CORPORATION TO NEGOTIATE ITS CONTRACTS. IF THE POLICY COMES BACK AND SAYS THAT THE URS IS NOT SOMETHING THAT WE WANT TO HAVE AS A POLICY, OF COURSE, WE WOULD SUPPORT THAT. THANK YOU.

 

>>PHILIP CORWIN: I APPRECIATE THE LAST PART OF YOUR STATEMENT, AKRAM. THANK YOU VERY MUCH.

 

(Emphasis added)

22
Nov

ICA on the Record at ICANN 57 Hyderabad

At the recent ICANN 57 meeting held in Hyderabad, India a full Public Forum session was held on Tuesday, November 8th. Utilizing the open mike, ICA Counsel Philip Corwin addressed the ICANN Board regarding the recent announcement that ICM Registry had agreed to adopt the new gTLD rights protection mechanism (RPM) of Uniform rapid Suspension (URS) at the .xxx adult content registry in exchange for ICANN’s agreement to reduce its registry fee by a hefty 87.5%. This is the first time since the controversial revised registry agreements (RA) for .cat, .pro and .travel were unveiled last year that staff of ICANN’s Global Domain Division (GDD) have used the RA negotiations process to achieve expansion of new gTLD RPMs into gTLDs that preceded the program.

 

Corwin pointed out that the ongoing Policy Development Process (PDP) to review all RPMs at all gTLDs, which he co-chairs, is tasked with recommending whether the URS and other new gTLD RPMs should become ICANN Consensus Policy and therefore applicable to legacy gTLDs – but that GDD’s practice of requesting their adoption by registry operators seeking RA renewals or revisions undermined the primacy of the ICANN community in making such policy decisions.

 

In his response to Corwin’s statement, GDD head Akram Atallah conceded that GDD continues to press legacy registries to adopt the new gTLD RPMs, stating “THE REGISTRIES COME AND ASK FOR SOMETHING AND WE TELL THEM PLEASE ADOPT THE NEW gTLD CONTRACT”.  However, he also indicated that GDD might respect the determinations of the WG, further stating, “IF THE POLICY COMES BACK AND SAYS THAT THE URS IS NOT SOMETHING THAT WE WANT TO HAVE AS A POLICY, OF COURSE, WE WOULD SUPPORT THAT.”

 

ICA will be filing a comment letter on the proposed .XXX RA by the deadline of November 24th.

 

Here is the edited-for-clarity transcript of the Public Forum statement and exchange—

 

 

>>PHILIP CORWIN: GOOD MORNING. PHILIP CORWIN. I WEAR MANY HATS IN THE ICANN WORLD ONE OF THEM AS A COUNCILLOR FOR THE BUSINESS CONSTITUENCY ON THE GNSO COUNCIL. ANOTHER IS CO-CHAIR OF TWO WORKING GROUPS INCLUDING ONE REVIEWING ALL RPMs AT ALL GTLDS. BUT THE HAT I’M WEARING FOR THIS STATEMENT IS THAT OF COUNSEL TO THE INTERNET COMMERCE ASSOCIATION.

 

YOU ALL RECALL THAT LAST YEAR GLOBAL DOMAINS DIVISION STAFF NEGOTIATED .CAT, PRO AND TRAVEL, REGISTRY AGREEMENT RENEWALS ALL OF WHICH INCLUDED SO-CALLED VOLUNTARY ADOPTION OF UNIFORM RAPID SUSPENSION. ICA PROTESTED THAT AS DID MANY OTHERS SAYING THAT IT WAS MAKING POLICY THROUGH CONTRACT NEGOTIATIONS. WE FILED A RECONSIDERATION REQUEST AS DID THE BC AND THE NCSG JOINTLY. AND THAT HASN’T HAPPENED VERY OFTEN. AND I WANT TO NOTE HERE THAT MY BC COLLEAGUES FAVOR ADOPTION OF URS AS CONSENSUS POLICY BUT TOOK A VERY PRINCIPLED STAND AGAINST GETTING TO THAT RESULT THROUGH THIS MANNER.

 

BUT GDD AND THE BOARD IN THAT PROCESS SAID THAT, OF COURSE, IT WOULD BE WRONG TO FORCE URS ON REGISTRY OPERATORS THROUGH NEGOTIATIONS BUT THAT THESE RESULTS WERE VOLUNTARY AND, THEREFORE, OKAY.

 

NOW, ON OCTOBER 12th, ICANN PUBLISHED FOR PUBLIC COMMENT A RENEWAL AGREEMENT FOR .XXX IN WHICH THEY TOO AGREE TO URS FOR A 87% REDUCTION IN THEIR REGISTRY FEES. ONE HAS TO WONDER WHAT A REGISTRY OPERATOR WOULDN’T AGREE TO IN EXCHANGE FOR THAT TYPE OF REDUCTION.

 

SO I’LL END WITH THIS QUESTION: I DON’T KNOW WHAT THE RPM WORKING GROUP IS GOING TO RECOMMEND ON URS BECOMING CONSENSUS POLICY. MY OWN MIND IS COMPLETELY OPEN ON THIS POINT DEPENDING ON WHAT OUR WORK FINDS AND WHAT CHANGES MIGHT BE MADE IN IT.

 

BUT IF WE WERE TO RECOMMEND THAT URS SHOULD NOT BE CONSENSUS POLICY — [TIMER SOUNDS.] CAN I JUST FINISH THIS? — WOULD GDD STAFF CONTINUE THIS PRACTICE IN NEGOTIATIONS? IF THE ANSWER IS NO, THEN I MAINTAIN IT’S INAPPROPRIATE FOR THEM TO DO IT NOW. AND IF THE ANSWER IS THAT THEY’RE GOING TO KEEP DOING IT EVEN IF WE COME OUT AGAINST IT BEING CONSENSUS POLICY, THEN DOESN’T THAT RENDER THAT PART OF OUR CHARTER WORK A SOMEWHAT IRRELEVANT EXERCISE IN FUTILITY? THANK YOU VERY MUCH.

 

>>AKINORI MAEMURA: THANK YOU VERY MUCH. [APPLAUSE] ANYONE TAKES? NO?

 

>>CHERINE CHALABY: AKRAM, DO YOU WANT TO MAKE A COMMENT ON THAT, PLEASE?

 

>>AKRAM ATALLAH: SURE, THANK YOU. SO BASICALLY THE NEGOTIATIONS ARE — THE REGISTRIES COME AND ASK FOR SOMETHING AND WE TELL THEM PLEASE ADOPT THE NEW gTLD CONTRACT. AND IF THEY PUSH BACK ON IT AND THEY SAY THEY DON’T WANT SOMETHING, WE CAN FORCE THEM TO TAKE IT. IT’S A NEGOTIATION BETWEEN TWO PARTIES, AND I THINK IT’S WITHIN THE REMIT OF THE CORPORATION TO NEGOTIATE ITS CONTRACTS. IF THE POLICY COMES BACK AND SAYS THAT THE URS IS NOT SOMETHING THAT WE WANT TO HAVE AS A POLICY, OF COURSE, WE WOULD SUPPORT THAT. THANK YOU.

 

>>PHILIP CORWIN: I APPRECIATE THE LAST PART OF YOUR STATEMENT, AKRAM. THANK YOU VERY MUCH.

25
Oct

Dirty Deed: URS Coming to .XXX

ICANN Global Domain Division (GDD) staff are at it again, engaging in top down policy decision-making through contract negotiations with older registries that pre-date the new gTLD program. The latest example is the announcement of a “Proposed Amendment to .XXX Registry Agreement to Transition to New Fee Structure and to Adopt Additional Safeguards” that would provide the adult content gTLD with an 87% percent reduction in its per transaction registry fees to ICANN — in exchange for implementing Uniform Rapid Suspension (URS) and other unidentified rights protection measures (RPMs).

We’ve seen this dirty movie before. Back in 2015 ICANN announced that the negotiated renewal registry agreements (RAs) for .Cat, .Travel and .Pro would all contain the URS because GDD staff had made the policy decision that legacy gTLD RAs should be “consistent” with the new gTLD RA. That position was adopted even though the new gTLD RPMs had been established as provisional implementation details, and the question of whether they should become Consensus Policy applicable to legacy gTLDs was to be explored and decided upon in the proper, bottom up consensus fashion by a then-pending working group (WG) to review all RPMs (that WG since launched in spring 2016).

That 2015 imposition of the URS via contract negotiations was overwhelmingly opposed by those who commented on the proposed RA. For example, the Electronic Frontier Foundation (EFF) weighed in with a letter taking the position that “ICANN should not apply URS to the .travel domain, or to any additional domains, by the unaccountable means of staff inserting new conditions into the renewal of the registry operator’s contract. Rather, the public policy implications of such a move demand that a full PDP be undertaken first.”

When GDD staff published the Report of Public Comments on .Travel in July 2015, it addressed the controversy with this self-exculpatory rationale:

Although the URS was developed and refined through the process described here, including public review and discussion in the GNSO, it has not been adopted as a consensus policy and ICANN staff has no ability to make it mandatory for any TLDs other than those subject to the new gTLD registry agreement. Accordingly, ICANN staff has not moved to make the URS mandatory for any legacy TLDs, and it would be inappropriate for staff to do so. In the case of .TRAVEL and other legacy TLD registry agreement renewals (.JOBS) and proposed renewals for .CAT and .PRO registry agreements, inclusion of the URS was developed as part of the proposal in bilateral negotiations between the registry operator and ICANN. (Emphasis added)

GDD subsequently approved the three revised RAs with the URS included. In response, ICA as well as ICANN’s Business Constituency (BC) and Non-Commercial Stakeholder Group (NCSG), appealed the decision by filing formal Requests for Reconsideration. ICANN’s Board finally acted on those requests in February 2016, in a decision stating:

The Requesters’ claims do not support reconsideration. The inclusion of the new gTLD RPMs in the Renewed Registry Agreements is part of the package of agreed-upon terms resulting from the bilateral negotiations between ICANN and each registry operator, and not, as Requesters claim, a “unilateral decision by ICANN contractual staff.” … the Board’s approval of the Renewal Registry Agreements[s] for .CAT, .PRO, and .TRAVEL] is not a move to make the URS mandatory for any legacy TLDs, and it would be inappropriate to do so.

The Board’s rationale requires the suspension of disbelief that a legacy registry operator can “voluntarily” agree to accept a new gTLD RPM that is proposed by GDD staff in exchange for an alteration of its RA that the registry operator believes is essential for the successful and more profitable operation of the registry. Of course, there is no way to know exactly what occurs during such negotiations, as they are closed door proceedings. And in the instance of the proposed .XXX amendment, there is also no way to know if GDD staff took an initial negotiating position urging adoption of provisions of the new gTLD registry contract, since the Announcement is conspicuously silent in providing any explanation of who broached the subject. But there’s no reason to believe that GDD has ever backed away from its consistency viewpoint, and urging supplicant registries in need of RA changes to adopt URS seems awfully close to a mandate. So add lack of transparency to deliberate interference in the policymaking process.

In the present instance, ICM Registry was laboring under a $2 per domain transaction fee imposed by ICANN in 2011 to “account for anticipated risks and compliance activities”. Those risks and activities never materialized at .XXX in any significant way, and ICM has since launched the new gTLDs of .Porn and .Sex paying only the standard $.25 transaction fee. As the request for public comment on the proposed changes states:

In February 2016 and pursuant to Section 4.3 of the .XXX Registry Agreement, ICM requested to engage in good faith negotiations regarding possible changes to the terms of the Agreement, including, without limitation, to Section 7.2 regarding fees and payments to ICANN. ICM’s request is that ICANN amend the .XXX Registry Agreement to lower the per transaction registry fee from $2.00 per transaction to the per transaction fee contained in the new gTLD Registry Agreement.

The proposed Amendment to the .XXX RA states in part:

  1. A new Section 3.1(i) is hereby added to the Agreement as follows: “(i) Protection of Legal Rights of Third Parties. Registry Operator must specify, and comply with, the processes and procedures for registration-related ongoing protection of the legal rights of third parties as set forth Appendix 8 attached hereto (“Appendix 8”). (Emphasis added)

And that Appendix 8 reads as follows:

.XXX AGREEMENT APPENDIX 8 MINIMUM REQUIREMENTS FOR RIGHTS PROTECTION MECHANISMS

 

  1. Rights Protection Mechanisms. Within 30 days following the first Registry Level Transaction Fee Adjustment Approval Date, Registry Operator shall implement and adhere to the rights protection mechanisms (“RPMs”) specified in this Specification. In addition to such RPMs, Registry Operator may develop and implement additional RPMs that discourage or prevent registration of domain names that violate or abuse another party’s legal rights. Within 30 days following the first Registry Level Transaction Fee Adjustment Approval Date, Registry Operator will include all RPMs required by this Appendix 8 and any additional RPMs developed and implemented by Registry Operator in the registry-registrar agreement entered into by ICANN accredited registrars authorized to register names in the TLD.
  2. Dispute Resolution Mechanisms. Within 30 days following the first Registry Level Transaction Fee Adjustment Approval Date, Registry Operator will comply with the following dispute resolution mechanisms as they may be revised from time to time:
  3. the Trademark Post-Delegation Dispute Resolution Procedure (PDDRP) adopted by ICANN (posted at http://www.icann.org/en/resources/registries/pddrp). Registry Operator agrees to implement and adhere to any remedies ICANN imposes (which may include any reasonable remedy, including for the avoidance of doubt, the termination of the Registry Agreement pursuant to Section 6.1(a) of the Agreement) following a determination by any PDDRP panel and to be bound by any such determination; and
  4. the Uniform Rapid Suspension system (“URS”) adopted by ICANN (posted at http://www.icann.org/en/resources/registries/urs), including the implementation of determinations issued by URS examiners. (Emphasis added)

We in no way fault ICM Registry for pursuing a reduction in registry fees that were eight times the standard rate. We do fault GDD staff for once again pursuing policy changes though RA negotiations – as well as ICANN’s Board, which ignored the community’s protests over interference in the policy process and blessed this unsavory practice last year.

ICA will of course file a protesting comment letter by the deadline, but we are under no illusions on the outcome. Staff will again maintain that the proposed RA resulted from balanced and bilateral negotiations and that all provisions were voluntarily acquiesced to — and if asked again, the Board will almost surely back them.

Fortunately, GDD staff will not have the same opportunity in regard to .Com in this decade, as the recent ICANN Board approval of that RA’s extension through 2024 should assure that the RPM Review WG will be the body that decides whether and in what form the URS will come to .Com and other major legacy gTLDs. Assuring that the standard policy process would apply to .Com was a significant reason for ICA’s non-objection to that RA extension, and that assurance seems even more valuable after the publication of the proposed .XXX amendment.

 

20
Oct

NTIA Approves .Com RA Extension

Verisign has just filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC) revealing that the National Telecommunications and Information Administration (NTIA) has approved the extension of the .Com registry Agreement through November 30, 2024.

We previously reported that, on September 15th, ICANN’s Board approved the .Com RA extension’ and simultaneously approved an extension of the existing $7.85 ceiling on .Com wholesale prices through 2024. Notwithstanding that price cap extension, the wholesale pricing of .Com domains could be revisited by ICANN and Verisign if NTIA does not extend the separate Cooperative Agreement (CA), currently in force through  November 30, 2018; or does extend it but with a different pricing control.

As described in the SEC filing, the NTIA action took the form of two separate amendments to the CA, as follows:

On October 20, 2016, Verisign and the U.S. Department of Commerce (the “DOC”) entered into Amendment Number Thirty-Three (33) (“Amendment 33”) to the Cooperative Agreement between Verisign and the DOC. Except as modified by Amendment 33, the terms and conditions of the Cooperative Agreement, remain unchanged. Amendment 33 relieves, releases and discharges Verisign from all root zone operation, management and maintenance responsibilities, obligations or requirements under the Cooperative Agreement, including but not limited to, those contained within Amendments 11 and 31. Following this release, the RZMA between Verisign and ICANN became effective.

On October 20, 2016, Verisign and the DOC entered into Amendment Number Thirty-Four (34) (“Amendment 34”) to the Cooperative Agreement between Verisign and the DOC. Except as modified by Amendment 34, the terms and conditions of the Cooperative Agreement, remain unchanged. Under the terms of Amendment 34, the DOC approves the amendment to the Registry Agreement as in the public interest, which extends the term of the Registry Agreement to coincide with the eight-year term of the RZMA. In addition, the DOC retains the right to conduct a public interest review for the sole purpose of determining whether the DOC will extend the term of the Cooperative Agreement before it expires on November 30, 2018. Verisign agrees to cooperate with such a review and to work in good faith to reach mutual agreement with the DOC to resolve issues identified in such review and to work in good faith to implement any agreed upon changes as of the expiration of the current term of the Cooperative Agreement. (Emphasis added)

The Root Zone Maintainer Service Agreement (RZMA) referenced in both amendments was the major component of the CA. With its termination, and transfer of the RZMA counterparty role from NTIA to ICANN, about all that remains of the CA is the wholesale price cap. So in essence when the NTIA decides whether to extend the CA beyond 2018 or let it terminate it will be deciding whether .Com should continue to be subject to a wholesale price cap. If the NTIA conducts a public interest review to determine whether the CA will be extended beyond 2018 it will likely solicit input from the public.

The NTIA’s approval of the .Com RA extension also contains the caveat that “This approval is not intended to confer federal antitrust immunity on Verisign with respect to the .com Registry Agreement, as amended.” However, it is highly unlikely that Verisign would ever face antitrust scrutiny for its .Com pricing while it is charging a government-imposed wholesale price.

In addition to its SEC filing, Verisign has also just published a separate FAQ document providing its explanation of these developments; it is published in full at the end of this post. Let’s focus on these two questions and answers:

Q: Will the Department of Commerce extend the Cooperative Agreement?

A: The Department of Commerce has reserved the right to conduct a public interest review to determine whether the Cooperative Agreement should be extended.

Q: Will the public interest review result in changes to Verisign’s pricing for .com domain name registrations?

A: The purpose of the public interest review will be solely to determine whether the Cooperative Agreement should be extended. (Emphasis added)

That second answer is factually correct, yet incomplete – because a decision to terminate the CA would end the U.S. government imposed price cap on .Com. As we noted when reporting on the ICANN Board’s approval of the .Com RA, its adopted Resolution contained this language:

Whereas, the proposed Amendment also requires Verisign and ICANN to cooperate and negotiate in good faith to: (1) amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; and (2) as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions in the existing Registry Agreement remain unchanged.

The .Com RA extension became effective on October 1, 2106 when the IANA transition occurred, so ICANN and Verisign are now committed to review the RA and amend it to make it consistent with any future changes to the CA. As we read that Resolution provision, if NTIA decides not to extend the CA, or extends it with a different price control provision, the RA would no longer be consistent with it and good faith negotiations would ensue to make it so.

The direct relationship between the CA and the continuation of the .Com price freeze was outlined in the August 31st letter from the Department of Justice to Sen. Cruz, which stated:

We note that the current extension proposal contemplated by ICANN and Verisign does not change the price cap contained in the 2012 .com Registry Agreement, which will remain in effect through November 30, 2018. Nor does the current extension proposal alter the price cap in Amendment 32 of the Cooperative Agreement. Moreover, if NTIA were to approve an extension of the .com Registry Agreement, it would have the right in its sole discretion to extend the term of the Cooperative Agreement with the current price cap in place until 2024 at any time prior to November 30, 2018, the date on which the Cooperative Agreement is currently scheduled to expire. If this occurs, the $7.85 fee cap would be extended another six years to 2024. (Emphasis added)

As the last sentence makes clear, if NTIA determines not to extend the CA and lets it expire then the $7.85 fee cap would no longer be in effect.

Now it’s true that since DOJ wrote that letter ICANN’s Board approved the RA extension accompanied by an amendment to the RA extending the $7.85 price cap through 2024. But it’s also true that the very same RA obligates ICANN and Verisign to engage in good faith negotiations to bring the RA into consistency with any changes in the CA – and its termination would certainly be a major change.

The bottom line is that NTIA’s approval of the .Com RA extension constitutes the last official act to extend Verisign’s role as registry operator through at least 2024, and probably beyond as it does not alter the RA’s presumptive renewal clause.

But it does not determine .Com pricing beyond 2018, as whether the price cap or some other form of pricing control continues past 2018 depends on the NTIA’s future  decision on whether and in what form to extend the CA. And that NTIA decision will be followed up by ICANN-Verisign negotiations to render the RA consistent with the CA.

 

Here’s the full text of Verisign’s FAQ document on today’s development:

 

Frequently Asked Questions

Q: Has the Cooperative Agreement been amended to remove Verisign’s root zone

maintainer obligations?

A: Yes, those functions will now be performed by Verisign for ICANN under the

Root Zone Maintainer Service Agreement, which ICANN posted for public review at

https://www.icann.org/iana_imp_docs/63-root-zone-maintainer-agreement-v-1-0

Q: Who will authorize changes to the root zone file?

A: ICANN will authenticate and verify submitted changes, which are then submitted to

Verisign for publication, per the RZMA.

Q: Has the term of the .com Registry Agreement been extended?

A: Yes, the Department of Commerce has approved the extension as in the public

interest. The registry agreement term now ends on November 30, 2024.

Q: Was the Cooperative Agreement extended?

A: No. However, the Department of Commerce has the right, in its sole discretion, to

extend the Cooperative Agreement before it is scheduled to expire on November 30,

2018.

Q: Will the Department of Commerce extend the Cooperative Agreement?

A: The Department of Commerce has reserved the right to conduct a public interest

review to determine whether the Cooperative Agreement should be extended.

Q: Will the public interest review result in changes to Verisign’s pricing for .com

domain name registrations?

A: The purpose of the public interest review will be solely to determine whether the

Cooperative Agreement should be extended.

Q: What happens if issues arise during the public interest review?

A: The parties have agreed to work in good faith to reach mutual agreement to resolve

any issues.

 

6
Oct

In Extending .Com RA, ICANN Board also Extended Price Freeze Through 2024

We have previously reported that, at is September 15th meeting, ICANN’s Board approved the proposed extension of the .Com registry Agreement (RA). What we did not know at the time was that the Board simultaneously approved an extension of the existing $7.85 ceiling on .Com wholesale prices through 2024.

 

That additional information recently became available when ICANN published its Preliminary Report | Regular Meeting of the ICANN Board for the September 15th meeting. The full text regarding the Board’s approval of the .Com RA extension is reproduced at the end of this blog, with key provisions related to wholesale pricing highlighted.

 

The key passage in that meeting narrative is:

The Vice Chair informed that Board that staff worked with Verisign to address this comment by proposing to revise the version of the amendment posted for public comment by adding additional language to extend the maximum price provision through 30 November 2024. The Board continued its discussion of the proposed amendment with the understanding that the amendment would be revised to reflect the noted change.

 

A revised version of the adopted RA extension language has also been published. The relevant language change reads as follows:

(b) Section 7.3(d)(i) of the Agreement is hereby deleted and replaced in its entirety by the following new Section 7.3(d)(i): “(i) from the Effective Date through November 30, 2024, US $7.85;”

 

There are two important caveats to keep in mind in understanding the import of this ICANN Board action:

  1. While the revised .Com RA now extends the price freeze through 2024, the issue could be raised again in negotiations between ICANN and Verisign if the US decides not extend the Cooperative Agreement (CA) in 2018, or does extend it but alters the pricing terms. That’s because the RA extension amendment also contains this provision—

Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Amendment Effective Date, to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce.

 

Under that provision, if the CA is terminated or revised in 2018 that would lead to discussion of amendments to the RA necessary for consistency with the CA. The Department of Justice recently advised Senator Cruz that the RA extension has no effect on the .Com price freeze, and that NTIA has the authority to extend the price freeze through 2024.

 

So what ICANN’s Board has done with this action is, in effect, pre-approve an extension of the existing .Com price freeze in anticipation that the NTIA may extend it through 2024. But what NTIA will actually do in the next two years cannot be predicted at this time, and if that agency takes a different course of action then ICANN and Verisign will enter into new discussions to reconcile the RA and CA (or reconcile the RA with the expiration of the CA).

 

  1. By extending the RA now, rather than having it come up for renewal in 2018, the possibility of ICANN staff pushing Verisign to adopt URS or other new gTLD RPMs in .Com contract renewal negotiations – as they did last year for .cat, .pro, and .travel — has been eliminated. That was one of the principal considerations underlying ICA’s non-objection to the RA extension, along with an understanding that it would have no effect on the price freeze.

 

However, adoption of those RPMs by .Com was advocated by trademark and other interests who commented on the proposed RA extension, and could come up in the talks between ICANN and Verisign that the amended RA requires “to preserve and enhance the security and stability of the Internet or the TLD”.

 

But the question of whether and in what form URS should become an ICANN Consensus Policy applicable to legacy gTLDs like .Com will likely be addressed by the RPM Review Working Group when it issues its phase one preliminary report and recommendations in 2017, and its decision should have substantial impact on any subsequent security and stability discussions between ICANN and Verisign.

 

 

Here’s the relevant language of the Preliminary Report —

 

 

.COM Registry Agreement Amendment

Ram Mohan abstained noting potential conflicts of interest. The Vice Chair presented the agenda item. He gave the Board an overview of the proposed amendment to the .COM registry agreement to extend the term of the agreement to 2024. The original term of the registry agreement was set to expire in 2018. He reported that there were some concerns raised during the public comment period about clarifying whether the maximum price provision in the .COM registry agreement would continue. The Vice Chair informed that Board that staff worked with Verisign to address this comment by proposing to revise the version of the amendment posted for public comment by adding additional language to extend the maximum price provision through 30 November 2024. The Board continued its discussion of the proposed amendment with the understanding that the amendment would be revised to reflect the noted change.

The Vice Chair stated that another topic of concern raised during the public comment period was about moving the existing.COM registry agreement to the form of the New gTLD Registry Agreement. The Board considered this concern, and took note of the provision in the proposed amendment obligating Verisign to ICANN to negotiate in good faith in two years potential changes to the registry agreement in order to preserve and enhance the security of the Internet or the TLD.

The Board also discussed the extension of the term of the .COM registry agreement as it relates to other provisions in the existing .COM registry agreement that might allow for future changes of the agreement. As part of this discussion, the Board considered the provisions in the .COM registry agreement concerning renewals being upon similar terms of the largest five gTLDs, and provisions addressing the implementation of consensus policies developed through the GNSO policy development process.

As part of its deliberations, the Board also considered comments raised by some members of the community about whether approving the proposed amendment raised concerns about fairness and whether similarly situated parties were unjustifiably receiving different treatment.

The Board discussed the interplay between the proposed amendment to the .COM registry agreement and the Root Zone Maintainer Services Agreement (RZMA) approved by the Board on 9 August 2016. The Board considered whether the proposed resolutions needed to be revised to make sure the dates of the two agreements would be aligned as anticipated. After discussion, the Board took the following action:

Resolved (2016.09.15.09a), the text of the proposed resolution to amend the .COM registry agreement is modified to make approval of the amendment subject to the execution of the RZMA.

The Board adopted the following amended resolution regarding the proposed .COM amendment2:

Whereas, ICANN and Verisign engaged in discussions on a proposed amendment to the 1 December 2012 .COM Registry Agreement (“Amendment”) and agreed to extend the term of the Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement in order to enhance the security, stability and resiliency of root zone operations.

Whereas, the proposed Amendment also requires Verisign and ICANN to cooperate and negotiate in good faith to: (1) amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; and (2) as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions in the existing Registry Agreement remain unchanged.

Whereas, ICANN commenced a public comment period from 30 June 2016 to 12 August 2016 <https://www.icann.org/public-comments/com-amendment-2016-06-30-en> on the proposed Amendment. Ninety-nine (99) comment submissions were posted by both individuals and organizations/groups.

Whereas, the Board carefully considered the comments and the staff summary and analysis of comments.

Whereas, ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

Resolved (2016.09.15.09b), the proposed amendment to the .COM Registry Agreement <https://www.icann.org/sites/default/files/tlds/com/com-amend-1-pdf-30jun16-en.pdf> is approved, subject to the RZMA being executed, and the President and CEO, or his designee(s), is authorized to take such actions as appropriate to finalize and execute the Amendment.

All members of the Board present voted in favor of Resolutions 2016.09.15.09a – 2016.09.15.09b. One member of the Board was unavailable to vote on the Resolutions. The Resolutions carried.

Rationale for Resolutions 2016.09.15.09a – 2016.09.15.09b

Why the Board is addressing the issue now?

On 1 December 2012, ICANN and Verisign, entered into a Registry Agreement under which Verisign operates the .COM top-level domain. The agreement is set to expire on 30 November 2018. ICANN and Verisign have negotiated a proposed Amendment, which was posted for a 42-day ICANN public comment period between 30 June 2016 and 12 August 2016. At this time, the Board is approving the proposed Amendment for the continued operation of .COM TLD by Verisign.

What is the proposal being considered?

The proposed Amendment: (1) extends the term of the .COM Registry Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement (RZMA) between ICANN and Verisign; (2) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; (3) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the terms of the .COM Registry Agreement as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions of the existing Registry Agreement remain unchanged.

Which stakeholders or others were consulted?

ICANN engaged in bilateral negotiations with Verisign to agree to the terms of the proposed Amendment. The proposed Amendment was then published for public comment from 30 June 2016 to 12 August 2016. Following the public comment period, the comments were summarized and analyzed.

What concerns or issues were raised by the community?

There were 99 comment submissions from individuals and groups/organizations during the 42-day public comment period. Some commenters were generally supportive of the proposed Amendment while others raised concerns. A summary and analysis of the comments is provided below and also posted at <https://www.icann.org/en/system/files/files/report-comments-com-amendment-09sep16-en.pdf>.

What significant materials did the Board review?

As part of its deliberations, the Board reviewed various materials, including, but not limited to, the following materials and documents:

What factors has the Board found to be significant?

The Board carefully considered the public comments received for the proposed Amendment, along with the summary and analysis of those comments.

The Board acknowledges that some commenters were generally supportive of the proposed Amendment, and some expressed general support but also asked ICANN and/or Verisign to clarify the relationship of the Cooperative Agreement and proposed Amendment, particularly around pricing, and the provisions or topics that would be the subject of good faith negotiations by the second anniversary of the effective date of the proposed Amendment.

While the Board acknowledges the suggested changes to the proposed Amendment to specify what provisions will be discussed by the two-year anniversary of the proposed Amendment, the Board notes that the language as drafted in the proposed Amendment balances providing a commitment to engage in negotiations, while providing leeway to consider future topics related to preserving and enhancing the security and stability of the Internet or the TLD in this changing landscape.

With respect to revising the proposed Amendment to account for potential changes to, or cancelation of the Cooperative Agreement between Verisign and the Department of Commerce, the Board notes that the proposed Amendment already takes into account the Cooperative Agreement. The proposed Amendment includes language, requiring ICANN and Verisign to engage in good faith negotiations to make changes to the .COM Registry Agreement as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

The Board also acknowledges that there were several comments submitted relating to prices for .COM domain names. Some commenters suggested that the current price cap in the Registry Agreement must remain in place, while others recommended that prices must be reduced. The Board notes that Section 7.3(d) of the .COM Registry Agreement specifies the maximum price that Verisign can charge for registry services. The proposed Amendment does not change this provision.

The Board also acknowledges the comments submitted opposing the presumptive renewal right provision in the .COM Registry Agreement and suggestions that the presumptive renewal right should be taken away if certain events occur, such as an uncured material breach of the Registry Agreement. Others suggested that instead of extending the .COM Registry Agreement, it should be put out for a competitive public tender to ensure that the registrants are charged lower prices. The Board notes that the presumptive right of renewal in Section 4.2 of the .COM Registry Agreement is a provision that is in all of ICANN’s registry agreements. The provision allows a registry operator the right to renew the agreement at its expiration, provided that the registry operator is in good standing at the time of renewal as set forth under the terms of the presumptive renewal provision. This presumptive renewal provision is in place to ensure stability, security, and reliability in the operation of the TLD, i.e., to encourage long-term investment in robust TLD operations. This has served public interest by encouraging investment in the TLD registry infrastructure and improvements in reliability of the TLD operations. ICANN has previously described the rationale for presumptive renewal for registries: “Absent countervailing reasons, there is little public benefit, and some significant potential for disruption, in regular changes of a registry operator. In addition, a significant chance of losing the right to operate the registry after a short period creates adverse incentives to favor short-term gain over long-term investment. On the other hand, the community, acting through ICANN, must have the ability to replace a registry operator that is not adequately serving the community in the operation of a registry.”

The Board acknowledges the comments that the .COM Registry Agreement should be brought in line with new safeguards and intellectual property protections found in the New gTLD Registry Agreement. Some of the commenters noted that certain legacy gTLD Registry Operators have adopted the general form of the New gTLD Registry Agreement (e.g. .PRO, .CAT, .TRAVEL) including the additional enhancements and safeguards, and .COM should be required to do the same. Some suggested that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition. The Board notes that the proposed Amendment posted for public comment is a simple extension of the current term of the agreement, and moving to the form of the new gTLD Registry Agreement would require longer discussion and community consultation. Proposing a simple Amendment at this time to extend the term of the .COM registry agreement is intended to maintain the stable, secure, and reliable operations of the .COM TLD.

The Board also notes that the proposed Amendment provides a provision that commits ICANN and Verisign to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed amendment in order to preserve and enhance the security of the Internet or the TLD. This language was negotiated to provide an opportunity for future discussions that may be needed to discuss potential changes to preserve and enhance the security of the Internet or the .COM TLD.

The Board acknowledges comments asking for confirmation that Verisign will be required to implement future developed consensus policies that may provide for additional safeguards and enhancements. The Board notes that Section 3.1 (b) of the .COM Registry Agreement states that, “At all times during the term of this Agreement and subject to the terms hereof, Registry Operator will fully comply with and implement all Consensus Policies found at http://www.icann.org/en/general/consensus-policies.htm, as of the Effective Date and as may in the future be developed and adopted in accordance with ICANN’s Bylaws and as set forth below.”

The Board acknowledges the comments that opposed the early renewal of the .COM Registry Agreement and the linkage to the Root Zone Maintainer Agreement (RZMA). These comments noted that the root zone maintainer infrastructure should never have become “inextricably intertwined” with Verisign’s .COM operations. Some questioned how linking the two agreements would enhance the security, stability and resiliency of root operations and argued that the linkage represents a single source of failure. These commenters urged ICANN technical staff to begin exploring how some practical separation between root zone and .COM technical operations might be achieved if that eventuality ever arises, and to assure that such action does not pose a threat to the security and stability of the DNS.

The Board notes that Verisign has been providing “registration services” under its Cooperative Agreement with NTIA for many years, which was broadly defined to include root zone maintainer function and .COM Top Level Domain registry services. Given the unified nature of these two functions under the Cooperative Agreement, much of the infrastructure supporting the root zone maintainer function is “intertwined” with Verisign’s TLD operations for .COM. A key component of ensuring security of the root operations was making sure that those operations continued to benefit from its historic association with the .COM operations. This was achieved by the proposed simple extension of the .COM Registry Agreement to coincide with the term of the new RZMA. While the terms of the agreements are linked together in the sense that they would expire at the same time, the agreements do not contain any provisions linking the performance of the obligations under the .COM Registry Agreement with the obligations under the RZMA. In fact, the Root Zone Maintainer Services Agreement (“RZMA”), approved by the ICANN Board on 9 August 2016, includes provisions that provide the community the ability – through a consensus-based, community-driven process – to require ICANN to transition the root zone maintainer function to another service provider three years after the effective date of the agreement.

The Board acknowledges the comments suggesting that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition.

The Board notes that the Bylaws enumerate core values that should guide the decisions and actions of ICANN in performing its mission, and ICANN takes seriously its commitment to those values. As provided in the Bylaws, the “core values are deliberately expressed in very general terms, so that they may provide useful and relevant guidance in the broadest possible range of circumstances. Because they are not narrowly prescriptive, the specific way in which they apply, individually and collectively, to each new situation will necessarily depend on many factors that cannot be fully anticipated or enumerated; and because they are statements of principle rather than practice, situations will inevitably arise in which perfect fidelity to all eleven core values simultaneously is not possible. Any ICANN body making a recommendation or decision shall exercise its judgment to determine which core values are most relevant and how they apply to the specific circumstances of the case at hand, and to determine, if necessary, an appropriate and defensible balance among competing values.” When considering the comments and approval of the proposed Amendment, the Board has taken into consideration the relevant core values in order to balance the competing priorities.

The Board further acknowledges comments concerning competitive issues and providing a level playing field. Article II, Section 3 of ICANN’s Bylaws state, “ICANN shall not apply its standards, policies, procedures, or practices inequitably or single out any particular party for disparate treatment unless justified by substantial and reasonable cause, such as the promotion of effective competition.” The Board notes the .COM Registry Agreement contains many different terms that are not present in other registry agreements. These unique terms might be considered either favorable or unfavorable depending on one’s point of view. For example, the price control provision in Section 7.3 of the .COM registry agreement tightly controls the ability of the registry operator to raise prices in a manner that is not present in any other registry agreement.

Are there positive or negative community impacts?

ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

The Board’s approval of the proposed Amendment is intended to ensure the continued stable, secure, and reliable operations of the .COM TLD.

Are there fiscal impacts or ramifications on ICANN (strategic plan, operating plan, budget); the community; and/or the public?

There is no significant fiscal impact expected if the Board approves the proposed Amendment.

Are there any security, stability or resiliency issues relating to the DNS?

There are no expected security, stability, or resiliency issues related to the DNS if the Board approves the proposed Amendment

 

20
Sep

ICANN Board Approves .Com RA Extension

ICANN has just released the Approved Board Resolutions from its meeting of Thursday, September 15th, and one of its major actions was to approve the proposed extension of the .Com registry Agreement (RA) through November 2024. The complete text of the Resolution and the rationale for its adoption can be found at the end of this post.

Wholesale prices of .Com domains are unaffected by the RA extension and remain frozen at $7.85 through the end of November 2018 under the terms of the separate Cooperative Agreement between Verisign and the NTIA. As the Department of Justice explained in an August 31st letter to Sen. Ted Cruz, once the RA is extended the NTIA will have full leeway to extend the price freeze through 2024.

ICA had filed a public comment, in which we indicated non-opposition to the proposed extension so long as it did not affect .Com pricing or get tied to policy decisions that should not properly be injected into contract negotiations between ICANN and registries.

As stated in the Executive Summary of ICA’s comment letter:

  • ICA has no objection to the proposed .Com RA extension as it simply provides the same additional six year contract term that Verisign would be entitled to in 2018 under its contractual right of presumptive renewal. It will have the salutary effect of preventing GDD staff from attempting to impose the URS and other new gTLD RPMs on .Com during a time when an active ICANN Working Group is exploring the policy question of whether any of these RPMs should become Consensus Policy applicable to legacy gTLDs.
  • Our non-objection is based on our understanding that the contract term extension will have no impact on the pricing of .Com domains, as the current price freeze they are subject to is contained in the separate Cooperative Agreement between Verisign and the NTIA.
  • While we have no general objection to ICANN’s practice of non-interference with the pricing policies of gTLD registries, we do believe that any registry’s abuse of pricing power should weigh against its right of presumptive renewal. We therefore believe that ICANN should amend all registry contracts to make clear that, at a minimum, a registry operator subject to successful government action for violations of antitrust or competition laws should face competitive rebid of its contract. Such amendment would further discourage all gTLD registries from engaging in abusive and anticompetitive market conduct.
  • While the proposed RA extension is justified by the present intermingling of .Com and Root Zone technical operations, given that the related RZMA between ICANN and Verisign contemplates the possibility of future termination or transition, we would urge ICANN to take steps to assure that the intermingling does not continue to such an extent that would make the exercise of those options technically infeasible or contrary to the security and stability of the DNS.

As ICA anticipated, trademark interests such as the International Trademark Association (INTA) and ICANN’s Intellectual Property Constituency (IPC) opposed approval of the proposed RA extension unless Verisign committed in advance to adopt the rights protection mechanisms (RPMs) created for the new gTLD program. Some new gTLD registry operators took a similar position. The question of whether those RPMs should become applicable to legacy gTLDs like .Com is presently being considered by an ICANN working group reviewing all RPMs in all gTLDs, and it is expected to issue a draft report and recommendations in mid-2017. That GNSO-created policy review group is the proper place for such issues to be transparently studied and decided, rather than in closed door negotiations between ICANN staff and registry operators.

In explaining its decision, the Board noted that some commenters had wanted the Board to specify what additional subjects should be discussed by ICANN and Verisign in potential negotiations between now and 2018, but it refused to do so, explaining:

While the Board acknowledges the suggested changes to the proposed Amendment to specify what provisions will be discussed by the two-year anniversary of the proposed Amendment, the Board notes that the language as drafted in the proposed Amendment balances providing a commitment to engage in negotiations, while providing leeway to consider future topics related to preserving and enhancing the security and stability of the Internet or the TLD in this changing landscape.

The Board also noted the comments that had called for it to impose the new gTLD RPMs as part of this approval, and explained why it had declined to do so:

The Board acknowledges the comments that the .COM Registry Agreement should be brought in line with new safeguards and intellectual property protections found in the New gTLD Registry Agreement. Some of the commenters noted that certain legacy gTLD Registry Operators have adopted the general form of the New gTLD Registry Agreement (e.g .PRO, .CAT, .TRAVEL) including the additional enhancements and safeguards, and .COM should be required to do the same. Some suggested that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition. The Board notes that the proposed Amendment posted for public comment is a simple extension of the current term of the agreement, and moving to the form of the new gTLD Registry Agreement would require longer discussion and community consultation. Proposing a simple Amendment at this time to extend the term of the .COM registry agreement is intended to maintain the stable, secure, and reliable operations of the .COM TLD.

The Board’s explanation also contains this very relevant language:

The Board acknowledges the comments suggesting that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition….When considering the comments and approval of the proposed Amendment, the Board has taken into consideration the relevant core values in order to balance the competing priorities.

The Board further acknowledges comments concerning competitive issues and providing a level playing field. Article II, Section 3 of ICANN’s Bylaws state, “ICANN shall not apply its standards, policies, procedures, or practices inequitably or single out any particular party for disparate treatment unless justified by substantial and reasonable cause, such as the promotion of effective competition.” The Board notes the .COM Registry Agreement contains many different terms that are not present in other registry agreements. These unique terms might be considered either favorable or unfavorable depending on one’s point of view. For example, the price control provision in Section 7.3 of the .COM registry agreement tightly controls the ability of the registry operator to raise prices in a manner that is not present in any other registry agreement.

Summing up, ICA commends the Board for not entangling a simple extension of the .Com RA intended to assure the security and stability of the DNS with policy decisions that are being properly addressed in an ongoing ICANN working group. Although the extension commits both ICANN and Verisign to engage in such additional discussions as are necessary for consistency with any changes to, or the termination or expiration of, the Cooperative Agreement between NTIA and Verisign, any such discussions will likely take place after the RPM Review WG has rendered its consensus on whether any of the new gTLD RPMs should become Consensus Policy and, equally important, whether any of them should be modified going forward.

*****

Text of ICANN Board Resolution and Rationale—

 

.COM Registry Agreement Amendment

Whereas, ICANN and Verisign engaged in discussions on a proposed amendment to the 1 December 2012 .COM Registry Agreement (“Amendment”) and agreed to extend the term of the Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement in order to enhance the security, stability and resiliency of root zone operations.

Whereas, the proposed Amendment also requires Verisign and ICANN to cooperate and negotiate in good faith to: (1) amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; and (2) as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions in the existing Registry Agreement remain unchanged.

Whereas, ICANN commenced a public comment period from 30 June 2016 to 12 August 2016 <https://www.icann.org/public-comments/com-amendment-2016-06-30-en> on the proposed Amendment. Ninety-nine (99) comment submissions were posted by both individuals and organizations/groups.

Whereas, the Board carefully considered the comments and the staff summary and analysis of comments.

Whereas, ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

Resolved (2016.09.15.09), the proposed amendment to the .COM Registry Agreement <https://www.icann.org/sites/default/files/tlds/com/com-amend-1-pdf-30jun16-en.pdf> [PDF, 100 KB] is approved, subject to the RZMA being executed, and the President and CEO, or his designee(s), is authorized to take such actions as appropriate to finalize and execute the Amendment.

Rationale for Resolution 2016.09.15.09

Why the Board is addressing the issue now?

On 1 December 2012, ICANN and Verisign, entered into a Registry Agreement under which Verisign operates the .COM top-level domain. The agreement is set to expire on 30 November 2018. ICANN and Verisign have negotiated a proposed Amendment, which was posted for a 42-day ICANN public comment period between 30 June 2016 and 12 August 2016. At this time, the Board is approving the proposed Amendment for the continued operation of .COM TLD by Verisign.

What is the proposal being considered?

The proposed Amendment: (1) extends the term of the .COM Registry Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement(RZMA) between ICANN and Verisign; (2) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or theTLD; (3) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the terms of the .COM Registry Agreement as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions of the existing Registry Agreement remain unchanged.

Which stakeholders or others were consulted?

ICANN engaged in bilateral negotiations with Verisign to agree to the terms of the proposed Amendment. The proposed Amendment was then published for public comment from 30 June 2016 to 12 August 2016. Following the public comment period, the comments were summarized and analyzed.

What concerns or issues were raised by the community?

There were 99 comment submissions from individuals and groups/organizations during the 42-day public comment period. Some commenters were generally supportive of the proposed Amendment while others raised concerns. A summary and analysis of the comments is provided below and also posted at <https://www.icann.org/en/system/files/files/report-comments-com-amendment-09sep16-en.pdf> [PDF, 200 KB].

What significant materials did the Board review?

As part of its deliberations, the Board reviewed various materials, including, but not limited to, the following materials and documents:

What factors has the Board found to be significant?

The Board carefully considered the public comments received for the proposed Amendment, along with the summary and analysis of those comments.

The Board acknowledges that some commenters were generally supportive of the proposed Amendment, and some expressed general support but also asked ICANN and/or Verisign to clarify the relationship of the Cooperative Agreement and proposed Amendment, particularly around pricing, and the provisions or topics that would be the subject of good faith negotiations by the second anniversary of the effective date of the proposed Amendment.

While the Board acknowledges the suggested changes to the proposed Amendment to specify what provisions will be discussed by the two-year anniversary of the proposed Amendment, the Board notes that the language as drafted in the proposed Amendment balances providing a commitment to engage in negotiations, while providing leeway to consider future topics related to preserving and enhancing the security and stability of the Internet or the TLD in this changing landscape.

With respect to revising the proposed Amendment to account for potential changes to, or cancelation of the Cooperative Agreement between Verisign and the Department of Commerce, the Board notes that the proposed Amendment already takes into account the Cooperative Agreement. The proposed Amendment includes language, requiring ICANN and Verisign to engage in good faith negotiations to make changes to the .COM Registry Agreement as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

The Board also acknowledges that there were several comments submitted relating to prices for .COM domain names. Some commenters suggested that the current price cap in the Registry Agreement must remain in place, while others recommended that prices must be reduced. The Board notes that Section 7.3(d) of the .COM Registry Agreement specifies the maximum price that Verisign can charge for registry services. The proposed Amendment does not change this provision.

The Board also acknowledges the comments submitted opposing the presumptive renewal right provision in the .COM Registry Agreement and suggestions that the presumptive renewal right should be taken away if certain events occur, such as an uncured material breach of the Registry Agreement. Others suggested that instead of extending the .COM Registry Agreement, it should be put out for a competitive public tender to ensure that the registrants are charged lower prices. The Board notes that the presumptive right of renewal in Section 4.2 of the .COM Registry Agreement is a provision that is in all of ICANN’s registry agreements. The provision allows a registry operator the right to renew the agreement at its expiration, provided that the registry operator is in good standing at the time of renewal as set forth under the terms of the presumptive renewal provision. This presumptive renewal provision is in place to ensure stability, security, and reliability in the operation of the TLD, i.e., to encourage long-term investment in robust TLD operations. This has served public interest by encouraging investment in the TLD registry infrastructure and improvements in reliability of the TLD operations. ICANN has previously described the rationale for presumptive renewal for registries: “Absent countervailing reasons, there is little public benefit, and some significant potential for disruption, in regular changes of a registry operator. In addition, a significant chance of losing the right to operate the registry after a short period creates adverse incentives to favor short-term gain over long-term investment. On the other hand, the community, acting through ICANN, must have the ability to replace a registry operator that is not adequately serving the community in the operation of a registry.”

The Board acknowledges the comments that the .COM Registry Agreement should be brought in line with new safeguards and intellectual property protections found in the New gTLD Registry Agreement. Some of the commenters noted that certain legacy gTLD Registry Operators have adopted the general form of the New gTLD Registry Agreement (e.g .PRO, .CAT, .TRAVEL) including the additional enhancements and safeguards, and .COM should be required to do the same. Some suggested that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition. The Board notes that the proposed Amendment posted for public comment is a simple extension of the current term of the agreement, and moving to the form of the new gTLD Registry Agreement would require longer discussion and community consultation. Proposing a simple Amendment at this time to extend the term of the .COM registry agreement is intended to maintain the stable, secure, and reliable operations of the .COM TLD.

The Board also notes that the proposed Amendment provides a provision that commits ICANN and Verisign to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed amendment in order to preserve and enhance the security of the Internet or the TLD. This language was negotiated to provide an opportunity for future discussions that may be needed to discuss potential changes to preserve and enhance the security of the Internet or the .COM TLD.

The Board acknowledges comments asking for confirmation that Verisign will be required to implement future developed consensus policies that may provide for additional safeguards and enhancements. The Board notes that Section 3.1 (b) of the .COM Registry Agreement states that, “At all times during the term of this Agreement and subject to the terms hereof, Registry Operator will fully comply with and implement all Consensus Policies found athttp://www.icann.org/en/general/consensus-policies.htm, as of the Effective Date and as may in the future be developed and adopted in accordance with ICANN’s Bylaws and as set forth below.”

The Board acknowledges the comments that opposed the early renewal of the .COM Registry Agreement and the linkage to the Root Zone Maintainer Agreement (RZMA). These comments noted that the root zone maintainer infrastructure should never have become “inextricably intertwined” with Verisign’s .COM operations. Some questioned how linking the two agreements would enhance the security, stability and resiliency of root operations and argued that the linkage represents a single source of failure. These commenters urged ICANN technical staff to begin exploring how some practical separation between root zone and .COM technical operations might be achieved if that eventuality ever arises, and to assure that such action does not pose a threat to the security and stability of the DNS.

The Board notes that Verisign has been providing “registration services” under its Cooperative Agreement with NTIA for many years, which was broadly defined to include root zone maintainer function and .COM Top Level Domain registry services. Given the unified nature of these two functions under the Cooperative Agreement, much of the infrastructure supporting the root zone maintainer function is “intertwined” with Verisign’s TLD operations for .COM. A key component of ensuring security of the root operations was making sure that those operations continued to benefit from its historic association with the .COM operations. This was achieved by the proposed simple extension of the .COM Registry Agreement to coincide with the term of the new RZMA. While the terms of the agreements are linked together in the sense that they would expire at the same time, the agreements do not contain any provisions linking the performance of the obligations under the .COM Registry Agreement with the obligations under the RZMA. In fact, the Root Zone Maintainer Services Agreement (“RZMA”), approved by theICANN Board on 9 August 2016, includes provisions that provide the community the ability – through a consensus-based, community-driven process – to require ICANN to transition the root zone maintainer function to another service provider three years after the effective date of the agreement.

The Board acknowledges the comments suggesting that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition.

The Board notes that the Bylaws enumerate core values that should guide the decisions and actions of ICANN in performing its mission, and ICANN takes seriously its commitment to those values. As provided in the Bylaws, the “core values are deliberately expressed in very general terms, so that they may provide useful and relevant guidance in the broadest possible range of circumstances. Because they are not narrowly prescriptive, the specific way in which they apply, individually and collectively, to each new situation will necessarily depend on many factors that cannot be fully anticipated or enumerated; and because they are statements of principle rather than practice, situations will inevitably arise in which perfect fidelity to all eleven core values simultaneously is not possible. Any ICANN body making a recommendation or decision shall exercise its judgment to determine which core values are most relevant and how they apply to the specific circumstances of the case at hand, and to determine, if necessary, an appropriate and defensible balance among competing values.” When considering the comments and approval of the proposed Amendment, the Board has taken into consideration the relevant core values in order to balance the competing priorities.

The Board further acknowledges comments concerning competitive issues and providing a level playing field. Article II, Section 3 of ICANN’s Bylaws state, “ICANN shall not apply its standards, policies, procedures, or practices inequitably or single out any particular party for disparate treatment unless justified by substantial and reasonable cause, such as the promotion of effective competition.” The Board notes the .COM Registry Agreement contains many different terms that are not present in other registry agreements. These unique terms might be considered either favorable or unfavorable depending on one’s point of view. For example, the price control provision in Section 7.3 of the .COM registry agreement tightly controls the ability of the registry operator to raise prices in a manner that is not present in any other registry agreement.

Are there positive or negative community impacts?

ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

The Board’s approval of the proposed Amendment is intended to ensure the continued stable, secure, and reliable operations of the .COM TLD.

Are there fiscal impacts or ramifications on ICANN (strategic plan, operating plan, budget); the community; and/or the public?

There is no significant fiscal impact expected if the Board approves the proposed Amendment.

Are there any security, stability or resiliency issues relating to the DNS?

There are no expected security, stability, or resiliency issues related to the DNS if the Board approves the proposed Amendment

 

 

13
Sep

.Com RA Extension on ICANN Board’s 9/15 Agenda

 

The “.COM Registry Agreement Amendment” is on the Main Agenda for this Thursday’s Regular Meeting of the ICANN Board.

The proposed extension of the RA was announced and put out for public comment on June 30th. The public comment period closed on August 12th and ICANN staff’s Report of Public Comments was due on September 15th, coincident with the Board meeting. The original due date for that staff Report was August 26th, but was pushed back to accommodate the large number of comments and the divergent views they expressed. ICANN staff, however, beat the September 15th deadline and filed their Report on September 10th.

The .Com RA is designed to synchronize the start and end dates of that Agreement with the new Root Zone Management Agreement (RZMA) that will be entered into by CANN and Verisign and take effect on the day of the IANA transition, currently scheduled for October 1st. If the transition is delayed by Washington political maneuvering that will of course affect the start dates for both the extended .Com RA and the RZMA.

In its announcement of the proposed extension, ICANN explained:

Verisign has been providing “registration services” under its Cooperative Agreement with NTIA, which was broadly defined to include root zone management functions and Top Level Domain registry services. Given the unified nature of the present Cooperative Agreement, much of the root zone infrastructure itself is inextricably intertwined with Verisign’s TLD operations for .com as discussed in greater detail in the blog.

The extension of the term of the .com registry agreement is intended to maintain stable, secure, and reliable operations of the root zone not only for direct root zone management service customers (Registry Operators, Registrars and Root Server Operators), but also to maintain the security and stability of the Internet’s domain name system.

The referenced blog post was penned by Global Domains Division (GDD) head Akram Atallah and further explained:

Given the unified nature of the present Cooperative Agreement, much of the root zone infrastructure itself is “inextricably intertwined” with Verisign’s TLD operations for .com: the servers that provide root services are hosted at every .com resolution site (over 100 locations). These servers share bandwidth, routing and monitoring with the .com operations, and the servers use the same code base as the .com TLD name servers and are operated and maintained by the same operation and engineering group. On the provisioning side, the root zone’s provisioning system is derived from the .com Shared Registration System (SRS), using the structure, schema, and software used for .com provisioning operations. Verisign builds and signs the root zone today using the same cryptographic facilities used for .com as well as signing software derived from that used for signing .com. Importantly, Verisign’s root zone operations are also within the .com’s Denial of Service attack detection and mitigation framework including independent internal and external monitoring and packet filtering at all layers. A key component of ensuring security of the root operations was making sure that those operations continued to benefit from its historic association with the .com operations.

As noted, the volume of public comments was heavy and the views contradictory.

A great many comments were generated by domain registrants under the wholly mistaken impression that the RA extension would somehow lift the current wholesale price freeze on .Com and allow Verisign to immediately double prices or more (a move that would likely attract the immediate attention of the Department of Justice’s Antitrust Division as well as the Federal Trade Commission for possible abuse of market power). But those comments were based on a false premise, as the .Com price freeze is contained in an entirely separate document, the Cooperative Agreement between Verisign and the National Telecommunications and Information Administration (NTIA). That agreement runs through the end of November 2018 and, as the Department of Justice recently explained in a letter to Sen. Ted Cruz:

As you may know, Verisign may not extend the .com Registry Agreement without obtaining NTIA’s prior written approval. Amendment 30 of the Cooperative Agreement requires such prior approval and provides the standard for NTIA’s review. In pertinent part, Amendment 30 provides: “[t]he Department [of Commerce] shall provide such written approval if it concludes that approval will serve the public interest in (a) the continued security and stability of the Internet domain name system and the operation of the .com registry … , and (b) the provision of Registry Services … offered at reasonable prices, terms, and conditions.” We note that the current extension proposal contemplated by ICANN and Verisign does not change the price cap contained in the 2012 .com Registry Agreement, which will remain in effect through November 30, 2018. Nor does the current extension proposal alter the price cap in Amendment 32 of the Cooperative Agreement. Moreover, if NTIA were to approve an extension of the .com Registry Agreement, it would have the right in its sole discretion to extend the term of the Cooperative Agreement with the current price cap in place until 2024 at any time prior to November 30, 2018, the date on which the Cooperative Agreement is currently scheduled to expire. If this occurs, the $7.85 fee cap would be extended another six years to 2024. (Emphasis added)

The Internet Commerce Association ICA), which represents professional domain investors, took a stance of non-opposition to the proposed RA extension. For one thing, the RA is virtually certain to be extended to 2024 when it comes up for renewal in 2018 under the terms of its presumptive renewal clause, so there’s no real harm in effecting that extension two years earlier.

And for domainers there is a net benefit, as an extension – as opposed to a renewal – would deny any negotiating leverage to GDD staff who have shown a propensity to illicitly inject themselves into the policy process by pushing for the general acceptance of certain contract revisions as legacy gTLD agreements come up for renewal, and specifically for the new gTLD Rights Protection Mechanism (RPM) of Uniform Rapid Suspension (URS), that are not Consensus Policy.

There is currently a GNSO Council-authorized working group, which I Co-Chair, that is specifically tasked under its Charter to review the efficacy of the new gTLD RPMs, recommend any adjustments, and only then consider the question of whether they should become Consensus Policy and thereby be applicable to legacy gTLDs like .Com. That standard GNSO Policy Development Process (PDP) is the proper and established route for deciding the applicability of the new RPMs to legacy gTLDs, which is clearly identified as a policy decision .

Specifically, ICA stated on this point:

“Further, changing the end date of the .Com RA through an extension now rather than a renewal in two years will have the salutary effect of depriving ICANN Global Domain Division (GDD) staff of any opportunity to seek the imposition of Uniform Rapid Suspension (URS) or any other new gTLD Rights protection Mechanisms (RPMs) through contractual imposition as they did in 2105 in regard to the RAs for .Cat, .Pro, and .Travel. While the Board later stated, in approving the amended RAs, that “the Board’s approval of the Renewal Registry Agreement is not a move to make the URS mandatory for any legacy TLDs, and it would be inappropriate to do so”, we have no assurance that GDD staff does not still hold its previously stated position that, “With a view to increase the consistency of registry agreements across all gTLDs, ICANN has proposed that the renewal agreement be based on the approved new gTLD Registry Agreement as updated on 9 January 2014.” Further, notwithstanding Reconsideration Requests filed with the Board Governance Committee (BGC) by ICA, the Business Constituency (BC), and the Non-Commercial Users Constituency (NCUC), the BGC let the imposition of URS by ICANN staff via contract renegotiation stand.

Extending the .Com RA through 2024 through the proposed extension, rather than via a negotiated renewal, will preserve the question of whether the URS and other new gTLD RPMs should become Consensus Policies applicable to legacy gTLDs for decision by the Working Group established to review all RPMs at all gTLDs – which is precisely where this key policy question should be fully and objectively considered and decided by the ICANN community.” (Emphasis in original)

ICA’s comment letter also suggested that the presumptive renewal clauses of all gTLDs should be reviewed and revised to constrain potential future pricing abuses, stating:

While we have no general objection to ICANN’s practice of non-interference with the pricing policies of gTLD registries, we do believe that any registry’s abuse of pricing power should weigh against its right of presumptive renewal. We therefore believe that ICANN should amend all registry contracts to make clear that, at a minimum, a registry operator subject to successful government action for violations of antitrust or competition laws should face competitive rebid of its contract. Such amendment would further discourage all gTLD registries from engaging in abusive and anticompetitive market conduct.

Trademark interests, for their part, saw the proposed extension as a means of bypassing the bottom-up, multistakeholder consensus policy process and imposing the new RPMs by ICANN staff fiat. The comments of the International Trademark Association (INTA) opposed the extension on these grounds:

INTA was hopeful that ICANN and Verisign would fill this gap and level the playing field by bilaterally negotiating the inclusion of the Relevant Terms when the .COM Registry Agreement was to be renewed in 2018.5 Yet in the proposed amendment to the .COM Registry Agreement that is the subject of the current public comment period, ICANN has proposed to mechanically extend that agreement until 2024, without any effort to update Verisign’s terms at all. Instead, the proposed amendment merely requires ICANN and Verisign to cooperate and negotiate in good faith sometime in the next two years to amend the agreement to preserve and enhance the security and stability of the Internet and of the .COM gTLD. That is not enough. ICANN should acknowledge that the Relevant Terms are essential to preserve and enhance the security and stability of the Internet and of the .COM gTLD, such that the requirement that ICANN and Verisign negotiate in good faith to add further amendments within a two-year time period includes a requirement to implement the Relevant Terms at that time. Given the importance of the Relevant Terms, that requirement should be explicit – not implicit.

The comments of ICANN’s Intellectual Property Constituency (IPC) took the same tack:

The proposed 6-year extension should be accompanied by steps to promptly bring the .com registry agreement into closer harmonization with ICANN’s other registry agreements, including those entered into with new gTLDs and many legacy gTLDs since 2013 in accordance with the multi-stakeholder process in furtherance of ICANN’s mission… IPC urges ICANN and Verisign to publicly commit to making these changes within the next two years as part of the “future amendments” provision of the .com registry agreement extension.

Sadly, neither the INTA nor IPC comments even notes the existence of the Working Group to Review all RPMs in all gTLDs, even though both entities and many of their members are actively participating in it (indeed, INTA’s immediate Past President is another of the WG’s Co-Chairs). In 2015, when GDD staff successfully pushed for the incorporation of the URS in the renewal agreements for the legacy registries of .Cat, .Travel and .Pro, both organizations justified that result on the thin grounds that the registries’ acquiescence was “voluntary”. Now even that fictional fig leaf has been abandoned, with both organizations now on record that the .Com extension should be approved only if Verisign involuntarily commits now to take that step within the next two years – regardless of the recommendations of the WG regarding the adoption of the new RPMs as Consensus Policy.

ICANN’s Business Constituency (BC), for its part, also favored application of the new RPMs to .Com, but recognized that this must be accomplished via proper policy channels. The BC comment stated:

The BC believes that .COM should embrace the standardized new gTLD registry agreement at this time, instead of deferring that decision until 2024 when the proposed agreement will expire; or earlier than 2024, if any or all of these aspects of the standard new gTLD registry contract should become Consensus Policy as a result of WG recommendations that are subsequently adopted by ICANN’s Board. The BC acknowledges that there is an open legal question whether any of these aspects can be enforced against .Com registrants unless they become Consensus Policies or are adopted through a further amendment of the .COM registry agreement made subsequent to the one we are addressing in this comment letter. (Note: ICA is a BC member and the author contributed to, but was not the lead drafter of, the BC comment)

New gTLD competitors of .Com also used the comment window as an opportunity to inject that market rivalry into the policy process. Portfolio new gTLD operator Donuts stated:

Donuts is opposed to the extension of ICANN’s agreement with Verisign in its proposed form. By simply renewing the .COM agreement under its current terms, ICANN and Verisign will have missed a significant opportunity to fulfill ICANN’s self-defined mandate to increase competition in the DNS marketplace and preserve the security, stability and resiliency of the DNS by bringing provisions of the .COM agreement more in harmony with the contracts governing new gTLDs and many other legacy gTLDs that recently have been renewed.

Likewise, new gTLD .XYZ took a similar position, adding to it the claim that it could reduce .Com wholesale pricing by more than eighty percent yet still operate the most important gTLD in  a fully reliable, stable, and secure manner:

XYZ is firmly opposed to this early extension. ICANN should not passively go along with Verisign’s selfish goal of extending its unfair monopoly over the internet’s most popular top-level domain name. Instead, ICANN should act in the spirit of its Bylaws and work with the NTIA and United State Department of Commerce to put the rights to operate the .COM top-level domain to a competitive public auction among capable internet registry operators for the benefit of the public… Currently, Verisign is able to charge $7.85 per annual registration of .com domain names.  However, this price is grossly out of line with the actual cost per registration to a registry operator for each incremental registration. If the right to operate .COM were put to a competitive public tender, the market would show that the .COM registration fees to registrars could be below $2.00 per registration. In fact, if XYZ <https://xyz.xyz/> were allowed to take part in such a competitive public tender, XYZ would be prepared to offer registration fees to registrars in the range of $1.00 per registration.  This is in line with the market rate for registry services, which XYZ is very familiar with. XYZ would not only be able to operate .COM charging only $1.00 per registration, but it would be able to do so with a healthy, but reasonable, profit margin and with no impact on the operational stability, reliability, security, and global interoperability of the internet.

The .Com price freeze was imposed by the NTIA in 2012 following a full competition review by DOJ’s Antitrust Division, making it difficult to conceive that government regulators would have allowed a wholesale price at least four times greater than what was required for sound registry operation. (In 2012 ICA urged NTIA to lower .Com wholesale prices to the then lower level in place for .Net, and then index future price increases to the CPI, but NTIA declined to go that far.)

As for putting the RA out for competitive rebid, NTIA approved the then controversial presumptive renewal clause of the .Com RA ten years ago, in 2006, and since then essentially identical language has been incorporated into the standard new gTLD registry agreement. Absent a material and subsequently uncured breach of its registry agreement, both Verisign and every new gTLD operator would have grounds to immediately sue ICANN if it attempted to open their RAs to competitive rebid – and that situation will stand until either the Registry Stakeholder Group volunteers to rewrite that clause (a doubtful proposition), or antitrust regulators find the near-guarantee of perpetual renewal to undermine market competition.

Summing up, if the technical intertwining of the operation of the .Com registry and the management of the root zone functions justify aligning their contractual start and renewal dates then the ICANN Board should approve the RA extension on those merits alone and leave other issues to be settled in their proper forums.

That means that:

  • The imposition of new gTLD RPMs on legacy gTLDs should await the recommendations of the GNSO WG that is currently charged with addressing that issue – a major policy issue that should not be settled by GDD staff via contract negotiations.
  • .Com wholesale pricing should be reviewed by NTIA in consultation with the DOJ as the renewal date for the Cooperative Agreement approaches in November 2018.
  • Competition between .Com and “not com” new gTLDs should take place in the marketplace, where new gTLDs have already achieved millions of collective registrations.
  • Any adjustments of the presumptive renewal clauses in all gTLD agreements, including changes that address anticompetitive pricing behavior, should be addressed by ICANN through an open and transparent process that considers all relevant interests and objectives, and is not just a closed door negotiation between ICANN and registries.

 

 

 

 

 

2
Sep

DOJ to Cruz: .Com Price Freeze can be Extended to 2024

On August 31st the Department of Justice (DOJ) sent a response to the August 12th letter from Senator Ted Cruz and some Congressional colleagues to the head of the Antitrust Division. In that letter Cruz et al asserted that if the pending extension of the .Com registry Agreement (RA) was granted in combination with the consummation of the IANA transition, that DOJ could be prevented from having “meaningful input into the prices that Verisign charges for registering a domain name within the .com domain for an extended period”. Based on that assertion, Cruz and his colleagues requested DOJ “to conduct a thorough competition review of the agreement before any oversight transition is undertaken and any agreement extension is approved”.

DOJ’s response makes clear that it will retain meaningful input into .Com pricing after the occurrence of either the .Com RA extension, IANA transition, or both; and that the National Telecommunications and Information Administration (NTIA), in consultation with DOJ, can extend the .Com wholesale price freeze through 2024 if it chooses to do so.

The operative part of the letter states:

As you may know, Verisign may not extend the .com Registry Agreement without obtaining NTIA’s prior written approval. Amendment 30 of the Cooperative Agreement requires such prior approval and provides the standard for NTIA’s review. In pertinent part, Amendment 30 provides: “[t]he Department [of Commerce] shall provide such written approval if it concludes that approval will serve the public interest in (a) the continued security and stability of the Internet domain name system and the operation of the .com registry … , and (b) the provision of Registry Services … offered at reasonable prices, terms, and conditions.” We note that the current extension proposal contemplated by ICANN and Verisign does not change the price cap contained in the 2012 .com Registry Agreement, which will remain in effect through November 30, 2018. Nor does the current extension proposal alter the price cap in Amendment 32 of the Cooperative Agreement. Moreover, if NTIA were to approve an extension of the .com Registry Agreement, it would have the right in its sole discretion to extend the term of the Cooperative Agreement with the current price cap in place until 2024 at any time prior to November 30, 2018, the date on which the Cooperative Agreement is currently scheduled to expire. If this occurs, the $7.85 fee cap would be extended another six years to 2024. (Emphasis added)

The DOJ response does not commit it and NTIA to take any particular action on .Com pricing prior to the current November 2018 termination of the Cooperative Agreement (CA), but it does make clear that NTIA has the discretionary power to extend the CA and the price freeze that it contains. NTIA could undertake such an extension if the Boards of both ICANN and Verisign approve the RA extension, as the letter makes clear that the extension requires NTIA review and approval before it can take effect. However, NTIA may well decide to leave the decision on whether to extend the CA and retain or adjust the price freeze to the next Administration, and that decision will likely be based upon a full review by the Antitrust Division.

In a related development on the antitrust front, ICANN General Counsel John Jeffrey has just sent a letter to the Wall Street Journal stating:

The Internet Corporation for Assigned Names and Numbers (ICANN) does not enjoy an “antitrust exemption.” ICANN is not, and never has been exempted from antitrust lawsICANN has not been granted an antitrust exemption by any of its contracts with NTIA. No ruling in ICANN’s favor has ever cited an antitrust exemption as the rationale.(Emphasis added)

That belts-and-suspender concession comports with the views of most antitrust experts that ICANN’s claim to an antitrust exemption was tenuous at best even when the U.S. government exercised direct oversight of the organization, was substantially diluted when the relationship loosened under the current Affirmation of Commitments, and would conclusively disappear entirely upon consummation of the IANA transition. However, that position is at complete odds with the one that ICANN took as recently as 2012, in a lawsuit brought by YouPorn owner Manwin Licensing in regard to the then-controversial .XXX gTLD, when it asserted (and when Mr. Jeffrey was likewise General Counsel):

ICANN cannot, as a matter of law, be liable under the antitrust laws with respect to the conduct alleged in the Complaint because ICANN does not engage in “trade or commerce.”…[ICANN] does not sell Internet domain names, it does not register Internet domain names, and it certainly is not an Internet pornographer. ICANN does not make or sell anything, it does not participate in any market, and its Bylaws expressly forbid it from participating in any of the markets referenced in the Complaint.(Emphasis added)

That antitrust immunity was rejected a few months later by the Federal District Court hearing the litigation, when it decisively stated:

The Court finds the transactions between ICANN and ICM described in the First Amended Complaint are commercial transactions.

ICANN established the .XXX TLD. ICANN granted ICM the sole authority to operate the .XXX TLD. In return, ICM agreed to pay ICANN money.

This is “quintessential” commercial activity and it falls within the broad scope of the Sherman Act. Even aside from collecting fees from ICM under the contract, ICANN’s activities would subject it to the antitrust laws. (Emphasis added)

Given that in the intervening four years ICANN has established more than a thousand additional gTLDs for which it collected a third of a billion dollars in application fees and receives continuing fees from, and that the impending IANA transition will sever the final tangential relationship between the U.S. government and ICANN, this week’s antitrust concession may well reflect a decision by ICANN Legal that it no longer made sense to play a losing hand – especially when assertions of weakened DOJ antitrust authority threaten to delay or scuttle the transition.

So the clear weight of these important letters is that the .Com wholesale price freeze will stay in place and can be extended by NTIA through 2024, and that ICANN has abandoned any claim to antitrust immunity.

 

 

2
Aug

Court of Appeals Avoids “Doomsday Effect” in Iran ccTLD Decision

Earlier today the U.S. Court of Appeals for the DC Circuit issued its decision in Weinstein vs. Iran, a case in which families of terror victims sought to have ICANN turn over control of Iran’s .IR ccTLD to plaintiffs. In a unanimous decision the three judge panel stated, “On ICANN’s motion, the district court quashed the writs, finding the data unattachable under District of Columbia (D.C.) law. We affirm the district court but on alternative grounds.”

In reaching its decision, the Court opined (but did not decide) that a top level domain constitutes an attachable property interest. Nonetheless, the Court used its statutory authority to avoid a result  that could have led to a “doomsday effect” for ICANN and all Internet users by creating technical instability in the DNS, as well as undermining confidence in ICANN and possibly leading to an end of voluntary participation in its root zone by many entities, who might then go on to establish an  alternate DNS and thereby “split the root”.

In my view, this result avoids the possibility of a major erosion of confidence and participation in ICANN by ccTLD operators by making clear that a respected Court of Appeals in the U.S. possesses adequate technical understanding of the DNS to avoid a legal decision that could lead to technical and political instability – many nations would not wish to continue in a DNS coordinated by a U.S. non-profit corporation if it could be ordered by a U.S. court to transfer control of any nation’s ccTLD. This decision will also hopefully tamp down calls by some parties for ICANN’s place of incorporation to be moved outside of the U.S. by demonstrating that ICANN’s jurisdiction does not create a threat to other nation’s ccTLDs. Remaining jurisdiction issues will be addressed in work stream 2 of ICANN’s ongoing accountability process.

While the plaintiffs could seek Supreme Court review of the decision, the  Supreme Court would likely  be unwilling to take the case given the rarity of the legal question it presented, and the lack of any split in Circuit Court decisions on it.

The operative portion of the decision states:

We assume without deciding that the ccTLDs the plaintiffs seek constitute “property” under the FSIA and, further, that the defendant sovereigns have some attachable ownership interest in them. Nonetheless, pursuant to the terrorist activity exception, the court has the “authority” to “prevent appropriately the impairment of an interest held by a person who is not liable in the action giving rise to a judgment”—i.e., we are expressly authorized to protect the interests of ICANN and other entities. 28 U.S.C. § 1610(g)(3). Because of the enormous third-party interests at stake—and because there is no way to execute on the plaintiffs’ judgments without impairing those interests—we cannot permit attachment. 

The plaintiffs demand, in effect, that ICANN delegate management of the “.ir” ccTLD28 so that they can “sell or license the operation of the ccTLD[] to a third party.” Appellants’ Reply Br. at 26. As explained, the power to operate a ccTLD includes the power to register (or remove) domain names from that registry. Thus, an entity seeking a “.ir” domain name will have to register through the plaintiffs or their designee—a process in which the ccTLD manager can extract a fee. The plaintiffs’ plan plainly impairs the interests of “person[s] who [are] not liable in the action giving rise to [the] judgment” in myriad ways. 18 U.S.C. § 1610(g). 

First, requiring ICANN to delegate “.ir” to the plaintiffs would bypass ICANN’s process for ccTLD delegation, which includes ensuring that the incoming manager has technical competence and a commitment to serving the Iranian Internet community’s interests. The plaintiffs and, more importantly, their prospective designee may not possess that technical competence or commitment. Granted, the plaintiffs are “aware that the . . . court can—and should—protect the interests of third parties” and they “welcome the opportunity to work together with the district court and ICANN to ensure a smooth transition.” Appellants’ Reply Br. at 26. But even if the plaintiffs are able to show adequate competence and commitment, the act of forced delegation itself impairs ICANN’s interest in “protect[ing] the stability . . . [and] interoperability . . . of the DNS.” Decl. of John O. Jeffrey, App’x 24.2 ¶ 5.

Recall that a change in the root zone file will only affect the routing of a search for “.ir.” But a change in the root zone file does not also transfer the information stored on the ccTLD server. To ensure that any delegation occurs seamlessly, ICANN requires that the incoming manager provide a plan to preserve the stability of the ccTLD, which plan explains how existing registrants will be affected. According to ICANN, the current ccTLD managers in the defendant countries will not voluntarily transfer information regarding their registrants and, because the relevant servers are located abroad, we are powerless to so require them. If ICANN is required to direct an end-user looking for “.ir” web pages to the plaintiffs’ server but the plaintiffs are unable to direct them to the requested SLD, the Internet’s stability and interoperability are undermined. 

The impairment does not end there. As the plaintiffs recognize, ICANN occupies its position only because “the global community allows it to play that role.” Appellants’ Br. at 34 (emphasis added). “[T]he operators of . . . top level domains” can “form a competitor to ICANN and agree to refer all DNS traffic to a new root zone directory.” Id.; see also Br. for United States as Amicus Curiae at 13 (“As a technological matter, nothing prevents an entity outside the United States from publishing its own root zone file and persuading the operators of the Internet’s name servers to treat that version as authoritative instead.”). This result, known as “splitting the root,” is widely viewed as a potentially disastrous development; indeed, some regard it as the beginning of “ultimate collapse of Internet stability”—a “doomsday scenario for the globally accessible” network and, thus, for ICANN. Harold Feld, Structured to Fail: ICANN and the ‘Privatization’ Experiment, in WHO RULES THE NET?: INTERNET GOVERNANCE AND JURISDICTION 351 (Cato Inst. 2003). Whether that description of a split root is accurate need not concern us; ICANN’s interests, as a third party “not liable in the action giving rise to [the] judgment,” 18 U.S.C. § 1610(g)(3), are sufficient for us to protect them pursuant to section 1610(g)(3) of the FSIA. See Appellee’s Br. at 34 (“[F]orced re-delegation of the Subject ccTLDs would . . . wreak havoc on the domain name system.”); see also Br. for United States as Amicus Curiae at 13 (“[T]he result would be devastating for ICANN, for the [current] model of Internet governance, and for the freedom and stability of the Internet as a whole.”). 

But given that the ICANN-administered DNS is the beneficiary of substantial network effects, how could such a doomsday scenario arise? And why would forced delegation hasten its arrival?  In light of the plaintiffs’ recognition that ICANN’s control “stems only from the fact that the global community allows it to play that role,” Appellants’ Br. at 34, and considering that the delegation of the three defendant sovereigns’ ccTLDs could likely antagonize the global community, see Br. for United States as Amicus Curiae at 13 (“It is not difficult to imagine that a court-ordered change to the authoritative root zone file at the behest of private plaintiffs would prompt members of the global Internet community to turn their backs on ICANN for good.”), we believe the doomsday scenario is not beyond imagining. 

For the foregoing reasons, the judgment of the district court is affirmed. (Emphasis added)

1
Aug

TMCH Review Recommends Status Quo

On July 25th ICANN announced the publication of the Draft Report of the Independent Review of the Trademark Clearinghouse (TMCH). This study was coordinated for ICANN by the Analysis Group, in conjunction with researchers from the Center for Internet and Society at Stanford as well the University of Pennsylvania’s Wharton School.

The Report’s Executive Summary provides a background on its origin and purpose:

The Trademark Clearinghouse (“TMCH”) was established in March 2013 and serves as central repository for information to be authenticated, stored, and disseminated, pertaining to the rights of trademark holders in ICANN’s New Generic Top-Level Domain (“new gTLD”) program. Analysis Group was commissioned by ICANN to undertake an independent review of TMCH services based on the Governmental Advisory Committee (“GAC”) recommendation in May 2011 that a comprehensive, post launch review be performed. The purpose of this review is not to make policy recommendations, but to assess the strengths and weaknesses of the TMCH services in conjunction with the specified areas for review proposed by the GAC. Specifically, our review is focused on the TMCH matching criteria, as well as the Claims Service and Sunrise Services. (Emphasis added)

That section makes clear that, while public comments on the draft report will be accepted through September 3rd, this Report was triggered by GAC concerns expressed before the Applicant Guidebook for the new gTLD program was even completed, and is not the work product of a GNSO-created working group and therefore will not directly result in the establishment of any new ICANN policy.

However, this Report will be of use to the Working Group (WG) established to review all Rights Protection Mechanisms (RPMs) in all generic Top Level Domains (gTLDs), of which I am one of three Co-Chairs. A sub-team of the WG is currently engaged in identifying available data to inform its policy discussions focusing on the TMCH and the related Claims Service and Sunrise Registration programs. The full WG will engage in an intensive review of all the available data relating to these subjects, including this Report, and then will reach its own consensus conclusions on policy recommendations.

As summarized by ICANN, the Report made three key findings (which are reproduced below along with relevant quotes from the Report’s Executive Summary) :

  • Expanding Matching Criteria to include non-exact matches may be of limited benefit:The dispute rate of completed registrations that are variations of trademark strings is very low. – “We also find that trademark holders infrequently dispute registrations that are variations of trademark strings. Given the low dispute rates, an expansion of the matching criteria may bring little benefit to trademark holders and only harm non trademark-holder domain registrants, who may be deterred from registering trademark string variations that would otherwise not be considered a trademark infringement by trademark holders or authorities who make such determinations.”
  • Extending the Trademark Claims Service may have diminishing value:Registrations of names matching trademarks decline after the required 90-day Claims service period ends. – “[E]xtending the Claims Service period or expanding the matching criteria used for triggering Claims Service notifications may be of limited benefit to trademark holders and may be associated with costs incurred by other stakeholder groups, such as registries, registrars, and non-trademark-holder domain registrants. Although our data do not permit us to perform a cost-benefit analysis of extending the Claims Service or expanding the matching criteria, the tradeoffs felt by different stakeholder groups should be considered when weighing those policy decisions. The effectiveness of Claims Service notifications depends on how many registration attempts are being made. We find that registration activity declines after the 90-day Claims Service period ends, so any additional months added to the Claims Service period will likely have diminishing value.”
  • Few trademark holders utilize the Sunrise period:Most users of the Trademark Clearinghouse submit proof of use to gain access to the Sunrise period. However, across eligible trademark holders, fewer than 20 percent have used the Sunrise period to date. – “[W]e find that although trademark holders expressed valuing the Sunrise period through questionnaire feedback and many trademark holders apply for Sunrise eligibility by submitting proof of use when recording their marks in the TMCH, many trademark holders do not utilize the period. This could be due to the expense of Sunrise registrations or because other protections of the TMCH services, such as the Claims Service, reduce the need for trademark holders to utilize Sunrise registrations.”

These are valuable findings and observations and will receive due consideration by the RPM Review WG.

In regard to any proposed expansion of the matching criteria, I lean against that option for two separate reasons. First, the TMCH is supposed to be a repository of registered trademarks meeting certain qualitative criteria, and permitting the registration of inexact matches would erode its value as a global trademark database. Second, after all the divisive debate within ICANN over adoption of Trademark-plus-Fifty, which permits trademark owners to register inexact matches of their marks in the TMCH corresponding to typosquat or domain-plus-product/services domains that were recovered in trademark litigation or a UDRP actions, the actual registration of Trademark-plus-Fifty terms in the TMCH has been quite low.

Finally, the Report was unable to quantify the extent to which the transmission of Claims Notices by registrars to individuals attempting to register domains that matched marks in the TMCH was either deterring infringing registrations, or causing non-infringing registrations to be abandoned out of fear of unwarranted resulting legal action. In this regard the Report states:

Although it is possible that the Claims Service and matching criteria may help deter rights-infringing registrations that are exact matches to trademark strings recorded in the TMCH, it is also possible that some good-faith registrations are being deterred by the current Claims Service system, which may be detrimental to the registration activity of non-trademark-holder domain registrants. Limitations of our data do not allow us to definitively conclude whether Claims Service notifications have a deterrent effect on either type of registration activity.

In relation to this inconclusive analysis, the report also documents that:

  • As of April 1, 2016, there were 40,465 records in the TMCH, of which 32,528 were current and have been verified to have accurate and correct information meeting TMCH guidelines.
  • There were 113.2 million unique download requests for TMCH records between October 2013 and February 2016 (note: registrars download a record each time there is an attempted registration of a new gTLD domain — but registrars may also download records when no registration attempt has been made).
  • Roughly 26,405 unique, verified trademarks in the TMCH (81% of all verified trademarks in the TMCH) have been downloaded during the Claims Service period at least once.
  • 93.7% of the 1.8 million registration attempts that received a Claims Service notification were abandoned, and only 6.3% went on to complete the domain registration. Of the nearly 114,000 registrations receiving a notification that were completed, only 0.3% were subject to subsequent domain disputes as of December 2015.

In regard to that very low dispute rate involving completed registrations of domains that triggered generations of a Claims Notice, the Report suggests possible reasons:

There are several possible reasons why the dispute rate on Claims Service notifications is so low. First, bad-faith registrations may be largely abandoned when a Claims Service notification is received, so very few domains are registered that trademark holders would wish to dispute. Second, there may be a lag between the time a domain is registered and discovered by a trademark holder and when a dispute is filed, causing us to see some registrations as non-disputed when they may become disputed in the future (i.e., we do not observe a dispute in the dispute data because it is limited to disputes that occurred before the end of 2015). Third, trademark holders may be generally less concerned by the domain registrations in the Claims Service data, either because the domain names are low-priority for disputes or because exact match registrations made in new gTLDs are less threatening to trademark holders than registrations in legacy TLDs like .com.

To evaluate whether the first explanation explains our results, we would need information on the domain names that were attempted in abandoned registrations. However, the Claims Service data only contain domain names for completed registrations. Therefore, we are unable to evaluate the characteristics of abandoned registration attempts.

I have been concerned since Spring 2015 that receipt of a highly legalistic Claims Notice may have scared off potential new gTLD registrants with no infringing intent but who are not sophisticated about trademark law, writing at that time:

No doubt there have been attempts by intentional cybersquatters to register trademarked names that have been effectively deterred when they received a Claims Notice and realized that the trademark owner would be notified of the domain registration immediately and might well take some form of legal response.

But there also may have been lots of potential registrants for non-infringing uses of short and meaningful generic dictionary words as domain labels who were spooked enough when they received the Claims Notice to abandon the registration. While the Claims Notice does provide a prospective registrant with information regarding the Jurisdiction where the trademark is registered and the class of Goods and Services that the trademark covers, most prospective registrants of non-infringing domains are not well versed in trademark law, don’t want to have to spend money to consult a lawyer to see if their registration will be infringing or not, and don’t want to risk being hit with a cease-and-desist letter, UDRP or URS filing, or a trademark infringement lawsuit. The same could be true even for potential registrants well versed in trademark law who simply don’t wish to expose themselves to a potential legal action, regardless of its merits — especially since continuing on to registration after receipt of the Notice might be alleged to constitute proof of bad faith registration…the TMCH has almost surely been quite effective in deterring infringing domain registrations at new gTLDs. But it appears to also have been a substantial damper on total new gTLD domain registrations. The unanswered question is how big of a headwind it has been.

The RPM Review WG may well try to find a more definitive answer to that question, and one promising area of inquiry is finding out what relevant data may lie outside of the TMCH in any records of attempted and abandoned registrations held by registrars. The WG may also consider making the language of the Claims Notice more understandable and less intimidating for the domain purchasing general public.

Overall, the Report provides much useful data and analysis for the Working Group’s further consideration, as it proceeds to comprehensively review the new gTLD PRMs and considers whether to recommend any modifications of them.