The Technology Policy Institute, a Washington-based “think tank”, has just released a report titled “ICANN At A Crossroads: A Proposal for Better Governance and Performance”. The report is available at http://techpolicyinstitute.org/files/icann%20at%20a%20crossroads1.pdf.
While much of the report is a thoughtful analysis of ICANN’s history, present operations, virtues, and shortcomings, its recommendations are sure to set off teeth-gnashing among domainers and within many other corners of the ICANN “community”. Those recommendations are (emphasis added):
• The JPA should be extended beyond its current expiration date. In the absence of changes in governance along the lines that we recommend, the JPA is particularly important. If our recommended changes are adopted, they should be permitted to become established before allowing the JPA to expire.
• ICANN should remain as a nonprofit organization, but its governance should be restructured, so that it is governed by and directly accountable to its direct users: the registries and the registrars. Seats on ICANN’s board of directors could be rotated among the major operators in a manner that would reflect the diversity of viewpoints among registries and registrars.
• ICANN should have a clear mission of encouraging competition. This implies a minimal role as a regulator with respect to the creation of new gTLDs. Instead, ICANN should adopt a relatively automatic way of introducing gTLDs, whereby any entity that meets a set of minimum technical and financial qualifications for being a registry should be able to be certified to become a registry for any gTLD that is not already taken.
• For this ‘open entry” policy to be workable and beneficial, ICANN must also strengthen the protections for incumbent domain name holders, so that they are not subject to “nuisance” or “ransom” demands from new registries; adopting an IP registry and strengthening ICANN’s “uniform dispute resolution policy” (UDRP) could be part of these improved protections.
That is, TPI believes that “Governance by its direct users—the registries and the registrars—would provide the external accountability that could allow for eventually ending ICANN’s ties with the U.S. Government”, and that the tradeoff for this radical restructuring of ICANN’s own internal governance is “a less costly mechanism for protecting the intellectual property associated with domain names in order to address the problems of defensive registrations and cybersquatting”. TPI asserts that its four recommendations are “complimentary” and should be adopted as a package.
Fortunately, this package is probably DOA on ICANN’s doorstep. For one thing, while the world awaits the Obama Administration’s position on extending the JPA, the informed rumor at the Mexico City meeting was that ICANN will refuse to sign any such extension and will call upon a wide variety of parties opposed to alleged U.S. Internet hegemony to rally to its side if such a public confrontation should develop. Further, the new gTLD proposal, as well as ICANN’s ongoing GNSO “reform” process, has exposed a deep chasm of distrust between the business community generally and trademark interests in particular with ICANN’s contract parties – in fact, the GNSO reform process will institutionalize these differences through a bicameral arrangement that places registries and registrars in one half of the GNSO while segregating the rest of the community within the other. The notion that business interests, as well as the governmental and individual user interests represented in the GAC and ALAC respectively, will sign off on handing permanent control of ICANN to the contract parties in exchange for some enhancements of trademark protection that may or may not work out seems very far-fetched. Additionally, the Report takes issue with the belated antitrust concerns over incumbent registry market power that were expressed by the Bush Administration in December 2008, but such concerns are likely to receive more sympathetic and aggressive attention in the Obama Administration – especially since ICANN is now contemplating lowering the bars that separated registries and registrars, raising the prospect that adoption of this proposal could rather quickly result in ICANN being run by a few dominant and combined registry/registrar entities. (And wouldn’t it be convenient, and profitable, to run the very same ICANN Board that approves the contracts you enter into with ICANN? No conflict of interest there!)
Unfortunately, many of TPI’s trademark enhancement proposals are likely to take on a life of their own, as such ideas have already been openly discussed and promoted by trademark interests in the context of new gTLD introduction. This is what the report recommends–
ICANN’s “uniform dispute resolution policy” (UDRP) is supposed to address these problems; but if there is general agreement that the UDRP is ineffective or too slow and too costly, it can be strengthened in a variety of ways that should have as their goal faster and less costly resolutions (and that, if possible, should reduce ICANN’s “judicial” role overall). For example:
• ICANN could establish an “IP Registry” of sanctioned names that could then be restricted to their “owners”. Brand holders would bear the burden of proof, according to ICANN-defined procedures, of establishing their ownership of a brand name.
• ICANN could establish a “loser pays” policy for the UDRP, where the losing party would pay the litigation costs of the prevailing rights holder. This would provide an incentive for applicants to make sure that they weren’t infringing on a trademark or copyrighted name, or at least quickly to relinquish their claim on a name when the legitimate owner made a complaint.
• ICANN could place the responsibility on the registrars to enforce these property rights and the liability to pay rights holders’ costs associated with infringement. Registrars may be in the best position to perform this policing function.
The ICA has major concerns about such proposals, and believes that any major revamp of rights protections at the second level of the DNS should be considered carefully and on their own merits, and should not be a negotiating chip in the new gTLD rules debate. The Internet is a global medium and there are few truly global brand names, and even then they only cover a specific relevant marketplace. Despite any assurances that some reasonable burden of proof will be placed upon brand holders, an IP Registry is likely to quickly resemble a large multilingual dictionary encompassing brands that are less than global, generic words used as brands, and typographical variations of all of these out to and beyond six degrees of separation. A “loser pays” regime for the UDRP could well exacerbate reverse domain name hijacking cases brought by large multinational firms using law firms billing $600 per hour against domainers who believe they acted in good faith but can barely afford their own legal costs, much less pay the Fortune 500’s. And that is not the only UDRP change sought by TPI – it also advocates “establishing a quick and low-cost way for established trademark holders to protect their intellectual property and prevent cybersquatting and other nuisance registrations on new registries”, but provides no details of what that might be. The UDRP is coming up on its 10th anniversary, and probably deserves a long and thorough review that incorporates the views and legitimate interests of both trademark owners and registrants with the aim of recommending balanced consensus recommendations for reform — and that is entirely separate from the new gTLD uproar.
Also, while registrars may at first find the notion of running ICANN in tandem with registries to be attractive, making them responsible for policing trademark rights, and financially liable to trademark interests, could quickly douse any enthusiasm. Elsewhere, the Report suggests that Google, Yahoo, and other search engines “are likely to feel competitive pressures from users to guide users to a company’s correct website and not a bogus site”, so TPI apparently feels that they should jigger their algorithms to factor in brand owners.
The fundamental analytic flaw in the TPI report and recommendations is its willful blindness regarding the interests of the true users of the DNS — also known as those who pay the fees that are subsequently upstreamed to ICANN via the registrars and registries after they take their cut for services rendered – that is, the registrants, including domainers who invest in and develop domain portfolios. Contrary to the report’s view that registries and registrars are ICANN’s “direct users”, they should more properly be thought of as its authorized agents. The true users of the DNS are registrants of all stripes, as it is their registration fees that find their way to ICANN and constitute more than ninety percent of the organization’s income. The only registrants referred to in this report are “cybersquatters” and others that TPI regards as nuisances. Its plan translates into nothing less than “Taxation Without Representation” for registrants, as well as a dramatic erosion of due process rights in the UDRP.
Reports such as these are an everyday occurrence in Washington, and it’s the generally held view that “he who pays the piper calls the tune”. TPI lists its supporters at http://techpolicyinstitute.org/about/supporters/ and they include Google, VeriSign, Verizon, and Yahoo! Domainers will no doubt see many more studies such as these as decision days for JPA extension and final adoption of the rules for new gTLDs draw closer and the stakes for everyone in the ICANN community grow higher.