Law & Policy

22
Oct

ICA Files ICANN Comment on Proposed .Museum RA Renewal

On October 3, 2017 the ICA filed a comment letter with ICANN regarding the proposed revisions to the renewal Registry Agreement (RA) for the .Museum gTLD.

As with other legacy gTLDs that have renewed over the past two years, the new RA proposes to adopt Uniform Rapid Suspension (URS). ICA once again protests this de facto creation of Consensus Policy through closed door bilateral negotiations rather than through the GNSO’s open and inclusive Policy Development Process (PDP).

The RA would also convert .Museum from a Sponsored  to a Community top level domain, but defines its “community” in a manner that is inconsistent with relevant ICANN policy and that is so loose that it essentially converts .Museum into an open gTLD where anyone may register. This is exactly the type of improper incentive that can induce a registry operator to “voluntarily” adopt the URS.

The letter’s Executive Summary states:

• ICA is concerned that Global Domain Division (GDD) has proposed a renewal agreement that proposes community status which is inconsistent with the present definition of “community” applied to other gTLDs; has engaged in a process that fails to observe the very safeguards it has stated must be followed for the expansion of classes of eligible registrants for a community gTLD; and continues to undermine the GNSO’s authority to recommend the substance of Consensus Policy by imposing adoption of URS through the RA renewal process.
• 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 under its GNSO Council-approved Charter, 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.
• 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.
• In the absence of such GDD self-restraint, the ICANN Board should declare an immediate moratorium on the imposition of new gTLD RPMs on legacy gTLDs through RA renewal negotiations until the above referenced PDP has been concluded, the GNSO Council has acted upon its recommendations, and any implementation and transition issues have been addressed.
• The vastly expanded community of eligible registrants for the .Museum gTLD is inconsistent with the “community” definition adopted for the new gTLD program. Promulgating an inconsistent concept of gTLD community could create conflicts with the ongoing work of the Subsequent Procedures WG.
• The opaque process utilized for the expansion of eligible .Museum registrants is at odds with the transparent process being developed within ICANN, that GDD has stated must be utilized by other community gTLDs seeking to add new classes of eligible registrants. The renewal proposal shows no evidence that members of the existing .Museum sponsored community have been consulted on the proposed class expansion.

The full letter can be viewed at https://www.internetcommerce.org/wp-content/uploads/2017/10/ICA-Museum_RA_revision-comment-Final-100317.pdf

 

22
Oct

ICA Requests that NAFTA Renegotiation Address Protectionist .CA “Presence Requirements”

On September 11, 2017 the ICA sent a letter to U.S. Trade Representative Robert Lighthizer requesting that the ongoing renegotiation of the North America Free Trade Agreement (NAFTA) address protectionist restrictions so that U.S. entities and organizations wishing to register a .CA domain face no greater requirements than their Canadian counterparts face in registering a .US domain.

As noted in the letter:

To-date, Canada has substantially hindered and prevented Americans from obtaining .CA (Canadian) Internet domain names which are integral to fair and successful entry into the Canadian e-commerce market. ICA’s position is that U.S. businesses should have the same opportunity to register Canadian .CA country code top level domain (ccTLD) names, as Canadian businesses have to register United States .US ccTLD domain names, and we urge the USTR to advance that position in ongoing negotiations…any U.S. entity or organization that wants to register a .CA domain name simply can’t, unless they either incorporate in Canada or wait months or years to obtain a Canadian trademark registration. Incorporating in Canada is a substantial expense and also necessarily involves filing of annual Canadian corporate tax returns and annual corporate maintenance, which adds an additional costly layer of expense and red tape for U.S. business that their Canadian counterparts are not subject to. Obtaining a Canadian trademark is also not a viable solution for a U.S. business wanting to immediately enter the Canadian online market, as it forces U.S. businesses to wait months or even years for approval by the Canadian Intellectual Property Office before a trademark registration is granted which would permit the U.S. business to register a .CA domain name. This puts U.S. competitors at a severe disadvantage to Canadians, who can open up their online business with a .CA domain name right away, with no waiting period whatsoever…Countless U.S. businesses that want to reflect their brand in a .CA domain name and do business in Canada have been turned away by CIRA due to these unfair and prejudicial Canadian Presence Requirements. Other U.S. businesses that have been forced to comply with the Canadian Presence Requirements face thousands of dollars of punitive government and professional fees, just for being able to enter the Canadian Internet commerce marketplace in a fully competitive manner…

Pursuant to Article 1204 of NAFTA:
No Party may require a service provider of another Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border provision of a service.
Furthermore, there are no reservations made by Canada pursuant to Annex 1 of NAFTA which appear to purport to reserve any existing or future measures applicable to domain names.
Accordingly, it appears that CIRA’s Canadian Presence Requirements are a direct violation of Canada’s commitments under NAFTA, and should be the subject of compliance procedures and/or renegotiation.
Accordingly, we respectfully request that you take the foregoing into account in your NAFTA renegotiations, with a view to creating a level playing field for U.S. businesses when it comes to doing online business with Canada. We ask that U.S. business be given the same and equal opportunity to register .CA domain names as Canadians have to register .US domain names.

The full text of the letter can be viewed at ICA-Letter to Office of the United States Trade Representative Final Draft VERSION 2 Final

23
Jun

Surge in RDNH cases a legacy of the theory of Retroactive Bad Faith

What do these Uniform Domain-Name Dispute-Resolution Policy (UDRP) filings have in common? —

  • Dreamlines GmbH, a German cruise promoter, files a UDRP dispute on dreamlines.com, a domain registered 10 years before that company was formed. They do not allege any infringing use.
  • Cognate Nutritionals, Inc., a Connecticut beverage company, which sells a coconut oil brain supplement under the brand “Fuel for Thought”, files a UDRP dispute on fuelforthought.com. It alleges that the domain registrant is a cybersquatter even though the domain was registered five years before the launch of the beverage and did not target the complainant.
  • Chooze, a Texan manufacturer of vegan footwear, files a UDRP dispute on chooze.com, alleging that the domain was registered and used in bad faith despite the domain being registered more than ten years before the launch of the brand and inactive.

Read more

21
Jun

UDRP: Better Late than Never – ICA Applauds WIPO for Removing Misguided ‘Retroactive Bad Faith’

The Internet Commerce Association (ICA), a non-profit trade group representing the domain industry, applauds the World Intellectual Property Organization (WIPO) for removing misleading guidance from the newly released updated version 3.0 of its Overview of WIPO Panel Views on Selected UDRP Questions that in the previous version had granted undeserved legitimacy to a misconstruction of the UDRP commonly known as the Retroactive Bad Faith theory. Read more

19
Jun

The Rise and Fall of the UDRP Theory of ‘Retroactive Bad Faith’

Since its establishment in 1999, the Uniform Domain Name Dispute Resolution Policy has required complainants to prove inter alia, “bad faith registration”. In practice, this has meant that where a domain name was registered before a trademark came into existence, that “bad faith registration” would be considered chronologically impossible.

Read more

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.

 

 

16
May

U. S. Government Blasts China’s Draft Domain Regulations

In an unexpected move, the two top U.S. officials charged with the Obama Administration’s Internet policy have issued a joint statement severely criticizing draft Chinese domain policies. On May 16th, the State Department’s  Ambassador Daniel A. Sepulveda and NTIA’s Assistant Secretary for Communications and Information Lawrence E. Strickling issued an official statement titled “China’s Internet Domain Name Measures and the Digital Economy”. In it, they charge that “ the Chinese government’s recent actions run contrary to China’s stated commitments toward global Internet governance processes as well as its stated goals for economic reform”.

The focus of their ire are new proposed rules issued in March by China’s  Ministry of Industry and Information Technology. The officials describe them as:

draft measures that would require all Internet domain names in China to be registered through government-licensed service providers that have established a domestic presence in the country and would impose additional stringent regulations on the provision of domain name services …The most controversial provision of China’s draft domain name measures – article 37 – has attracted considerable international concern, as some have interpreted the article to mean that all websites with domain names registered outside China will be blocked, thereby cutting off Chinese Internet users from the global Internet.  

The statement also throws down the gauntlet in regard to China’s recent efforts to push alternative, government-centric models of Internet governance. In this regard, it states:

China’s approach to DNS management within its borders could still contravene, undermine, and conflict with current policies for managing top level domains that emerge from the Internet Corporation for Assigned Names and Numbers (ICANN), which follows a multistakeholder model in its community-based and consensus-driven policymaking approach.

While probably not affecting the content of the statement, the timing of its issuance may in part be to demonstrate a tough stance toward China’s DNS policy in advance of next Tuesday’s Senate Commerce Committee oversight hearing on the IANA transition and ICANN accountability. Committee member Ted Cruz has been peppering ICANN with questions regarding former ICANN CEO Fadi Chehade’s participation in China’s World Internet Conference (WIC) last December, and his agreement to become Co-Chair of the Advisory Committee to the 2016 WIC meeting. Many speakers at the 2015 WIC meeting defended Internet censorship and heightened government control.

Adding gasoline to the fire, the statement also lashes Chinese Internet censorship, stating in that regard:

The regulations would also appear to formalize an explicit system of online censorship by forbidding the registration of websites containing any one of nine categories of prohibited content, broadly and vaguely defined, and creating a blacklist of “forbidden characters” in the registration of domain names, adding an extra layer of control to China’s Great Firewall… What we do not accept is the exercise of aggressive authority over people’s use of the Internet or the ability of a government to prevent the world from reaching its people.  Sadly, this is exactly what Chinese authorities, through these recent measures, are trying to do. 

While such views have likely been advanced in confidential meetings between Chinese and U.S. officials, it is highly unusual to see such bold charges levied against another nation in an official statement.

China has yet to respond to the U.S. allegations, and it remains to be seen if it will moderate its position regarding the draft rules – or whether it will react to this criticism by digging in and implementing them. It is also unclear what effect implementation might have on burgeoning purchases of domain names by Chinese registrants, who have flooded the secondary domain market over the past year through high-dollar purchase of short letter and number domains, and who reportedly also account for more than half the purchases of domains originating from ICANN’s new gTLD program. The draft rules could make many registries and domain names off-limits for Chinese purchasers.

The full text of the statement follows—   

 

China’s Internet Domain Name Measures and the Digital Economy

May 16, 2016 by Ambassador Daniel A. Sepulveda and Assistant Secretary for Communications and Information Lawrence E. Strickling

Ambassador Daniel A. Sepulveda and Assistant Secretary for Communications and Information Lawrence E. Strickling

May 16, 2016

This post was cross posted to the State Department’s blog: https://blogs.state.gov/stories/2016/05/16/china-s-internet-domain-name-measures-and-digital-economy [1]

China is a force in the global digital economy and an important player in global Internet policy discussions. Today, more than 700 million people have access to the Internet in China, more than any country in the world. Several of the most valuable Internet-based companies call China home.  Global innovators and service providers from around the world, including from the United States, are eager to enter its market.

That’s why it is incredibly important that China use its power and influence in a manner that supports the continued development of the global Internet and the prosperity of its domestic digital economy.

Both of our countries participate actively in a range of international organizations and processes that discuss the global development and deployment of the Internet.  We have both argued that the current processes, which rely on the cooperation of all stakeholders including government, industry, and civil society, are working effectively for the Internet’s future development and management.

However, the Chinese government’s recent actions run contrary to China’s stated commitments toward global Internet governance processes as well as its stated goals for economic reform.

In late March 2016, China’s Ministry of Industry and Information Technology issued draft measures that would require all Internet domain names in China to be registered through government-licensed service providers that have established a domestic presence in the country and would impose additional stringent regulations on the provision of domain name services.

The regulations appear to create a barrier to access and force localization of data and domestic registration of domain names.  Whether driven by a motivation to increase control over Internet content in China or a desire to increase the quantity of Chinese-registered domain names, these regulations would contravene policies that have been established already at the global level by all Internet stakeholders (including Chinese).  If put into effect, these regulations would have potentially large and negative repercussions for everyone.

The regulations have led to expressions of concern in comments formally submitted by governments, including the United States, companies, and other stakeholders around the world that support an open and interoperable Internet.

The most controversial provision of China’s draft domain name measures – article 37 – has attracted considerable international concern, as some have interpreted the article to mean that all websites with domain names registered outside China will be blocked, thereby cutting off Chinese Internet users from the global Internet.  While Chinese authorities have clarified that the intent of the article would be to prohibit access to Chinese-registered domain names that are acquired from registries/registrars that are not in compliance with Chinese regulations, concerns remain that the language in its current form is vague and open to differing interpretations.  Even if applied to Chinese-registered domain names, China’s approach to DNS management within its borders could still contravene, undermine, and conflict with current policies for managing top level domains that emerge from the Internet Corporation for Assigned Names and Numbers (ICANN), which follows a multistakeholder model in its community-based and consensus-driven policymaking approach.

Other concerns with the measures include requirements for forced data localization and real name verification for the registration of Internet addresses.  For instance, the draft measures appear to mandate that all Internet domain name registrars, registries, root server operators, and others, maintain zone files in China, thereby compelling firms to create a system for their China operations, which is entirely separate from their global operations.  This forced localization, though not unprecedented in China, would potentially create new barriers to the free flow of information and commerce across borders and consequently infringe upon internationally recognized commitments on free expression and trade.  The regulations would also appear to formalize an explicit system of online censorship by forbidding the registration of websites containing any one of nine categories of prohibited content, broadly and vaguely defined, and creating a blacklist of “forbidden characters” in the registration of domain names, adding an extra layer of control to China’s Great Firewall.

The United States supports the open global Internet as a platform for free expression and economic and human development worldwide, and we support the growth of China’s digital ecosystem within that context. We welcome the Chinese adoption and creation of Internet-based technologies and services.

What we do not accept is the exercise of aggressive authority over people’s use of the Internet or the ability of a government to prevent the world from reaching its people.  Sadly, this is exactly what Chinese authorities, through these recent measures, are trying to do.  Such efforts will not only create undue burdens and challenges for enterprises, both Chinese and foreign, operating in China, but they will also diminish the view of China as a constructive partner in the development of the global Internet.  Furthermore, they will hinder Chinese technology and services from achieving acceptance outside of China.

We have listened to company concerns, consulted with diplomatic partners, and shared our views directly with the Chinese government, while calling for China to continue dialogue with a broad group of stakeholders as its draft regulations are revised.

The digital economy has become one of the most powerful engines for global economic growth.  If left unchanged, China’s regulations would undermine some of the most fundamental aspects of the Internet – openness, reliability, and interoperability – within China.  By creating its own rules for domain name management, China is threatening to fragment the Internet, which would limit the Internet’s ability to operate as a global platform for human communication, commerce, and creativity.

Lawrence E. Strickling [2] serves as Assistant Secretary of Commerce for Communications and Information and Administrator of the National Telecommunications and Information Administration. Ambassador Daniel A. Sepulveda [3] serves as U.S. Coordinator for International Communications and Information Policy at the U.S. Department of State.

Topics:

National Telecommunications and Information Administration
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Source URL: http://www.ntia.doc.gov/blog/2016/china-s-internet-domain-name-measures-and-digital-economy

Links:
[1] https://blogs.state.gov/stories/2016/05/16/china-s-internet-domain-name-measures-and-digital-economy
[2] http://www.ntia.doc.gov/legacy/about/bio_strickling.html
[3] http://www.state.gov/r/pa/ei/biog/bureau/209063.htm
[4] http://www.ntia.doc.gov/category/domain-name-system

 

1
Feb

Final RPM Report Follows ICA Comment and Sets Stage for UDRP Review

Domain registrants have long voiced their desire for a comprehensive review and subsequent reforms of the Uniform Dispute Resolution Policy (UDRP). That goal is now in sight, and is set to proceed in the manner recommended to ICANN by ICA.

On January 11, 2016 ICANN policy staff submitted to the GNSO Council the “Final Issue Report on a Policy Development Process to Review All Rights Protection Mechanisms in All Generic Top-Level Domains”. That Final Report is culmination of a public comment process that started last October, in which ICA actively participated, considering how a review of the rights protection mechanisms (RPMs) for the new gTLD program should be related to an unprecedented review of the UDRP, the only ICANN Consensus Policy that has never been subjected to scrutiny since its creation. Domain registrants desiring a balanced approach to their rights versus those of trademark owners have a big stake in both reviews. RPMs should recognize and protect the rights of both domains and trademarks.

In its December 1st comment letter, ICA stated its preference for a sequential review process:

ICA prefers a separate and sequential approach for the reviews and subsequent reports and recommendations, with the RPM review preceding and thereby informing the UDRP review.

ICA further explained its practical and policy reasons for that preferred two-part approach:

Both domain registrants and trademark owner complainants deserve, after nearly two decades of unexamined use, a UDRP review and reform process that is accorded adequate time for comprehensive review and development of subsequent recommendations. This review of necessity must be preceded by the RPM review, as it was the intent of the GNSO Council in 2011 that the UDRP review be informed by that of the RPMs and by any changes made to them….We fully expect that there will be substantial interest in completing the RPM review prior to the opening of any second round of new gTLDs, and that consideration provides another reason for structural separation. If the RPM and UDRP reviews were addressed together, substantial pressure could arise to truncate the UDRP portion lest it delay the timing and adoption of final RPM recommendations. As a result this first-ever UDRP review could get short shrift and inadequate attention.

That ICA suggestion was essentially adopted by ICANN staff. In this regard, the Final Report suggests the following procedure:

Following review of community feedback received regarding the three options for a RPM review that were presented in the Preliminary Issue Report for public comment, ICANN staff recommends that the GNSO Council launch a PDP in accordance with what was presented as the third option in the Preliminary Issue Report: namely, to conduct a policy review of all the RPMs in two phases. The initial phase would focus on a review only of the RPMs developed for the New gTLD Program, and the second phase would focus on a review of the UDRP. The second phase may also include any issues identified during the first phase of the PDP that are more appropriately considered during the second phase. Cumulatively, the results of both phases of the PDP would be a full review of all RPMs developed to date for all gTLDs….Staff recommends that the work in the initial phase of the RPM PDP be performed by a standalone PDP Working Group that liaises with the recently launched PDP Working Group on New gTLD Subsequent Procedures as there may be overlapping issues arising during the work of both groups that would warrant careful coordination. Staff does not recommend folding in a review of the RPMs that were developed for the New gTLD Program into the scope of work for the New gTLD Subsequent Procedures PDP due to the likely complexity and size of that PDP….Staff also recommends that, upon completion of Phase One, the PDP Working Group submits a First Initial Report to the GNSO Council that is also published for public comment….The second, subsequent phase of work in the RPM PDP would be a review of the UDRP, ideally carried out by the same PDP Working Group….Staff believes that a benefit of this two-phased approach is a better alignment of the timing of the work on reviewing the New gTLD Program RPMs with the operational reviews of the New gTLD Program17 (including the CCT Review) and the PDP on New gTLD Subsequent Procedures. (Emphasis added)

The GNSO Council has already proceeded in harmony with that suggested approach. During its meeting of January 21st, Council adopted a Charter for The New gTLD Subsequent Procedures PDP Working Group that specifically prohibits it from addressing the RPMs, stating:

Second-Level Rights Protection Mechanisms: Proposing recommendations directly related to RPMs is beyond the remit of this PDP. There is an anticipated PDP on the “current state of all rights protection mechanisms (RPMs) implemented for both existing and new gTLDs, including but not limited to the UDRP and the URS…”. Duplication or conflicting work between the New gTLD Subsequent Procedures PDP and the PDP on RPMs must be avoided. If topics related to RPMs are uncovered and discussed in the deliberations of this PDP, those topics should be relayed to the PDP on RPMs for resolution. To assure effective coordination between the two groups, a community liaison, who is a member of both Groups, is to be appointed jointly by both Groups and confirmed by the GNSO Council. (Emphasis added)

That means that review of all the new gTLD RPMs—the Trademark Clearinghouse (TMCH) and related Sunrise and Trademark Claims service periods; Uniform Rapid Suspension System (URS); and Post-Delegation Dispute Resolution Procedures (PDDRPs) — should be the sole preserve of a new Working Group (WG) on all RPMs in all gTLDs. Following that review, it will proceed to review the UDRP and consider whether it should be reformed.

The GNSO Council will likely take up a Motion to establish that RPM WG, as well as adopt its Charter, at its next meeting scheduled to take place on February 18th.

Once Council takes that next step, ICA intends to fully engage in the review of the new gTLD RPMs and, of course, the UDRP review. ICA will advocate an approach that, while fully respecting the legitimate rights of trademark owners, brings greater balance to the exercise of all the RPMs and that helps to make the application of the UDRP a more consistent and predictable process in the future. We will of course keep our members comprehensively informed as the reviews proceed, and will solicit their feedback and guidance as critical questions emerge.

 

 

14
Dec

Initial Statement of the Internet Commerce Association Regarding the Camilla.Com UDRP Decision

Washington, DC; December 11, 2015 —

The Internet Commerce Association today released the following initial statement in regard to the November 30 decision of the WIPO Administrative Panel in the case of Camilla Australia Pty Ltd v. Domain Admin, Mrs Jello, LLC (Case No. D2015-1593; http://www.wipo.int/amc/en/domains/search/text.jsp?case=D2015-1593):

The egregious three-member panel decision in this Uniform Domain-Name Dispute-Resolution Policy (UDRP) dispute departs substantially from prevailing UDRP practice and relies on criteria inconsistent with those set forth in the UDRP as adopted by ICANN.  This decision demonstrates once again that review and reform of the UDRP by ICANN is an urgent priority.

“The panelists on the Camilla.com dispute disregarded 15 years of UDRP practice, rewrote and distorted the Policy, and set an impossible standard for domain registrants to meet to avoid the loss of their valuable generic domains” said ICA Board member Nat Cohen, President of Telepathy Inc.  “If this decision stands and guides panelists in other future cases, it would undermine the rights of millions of domain owners, undercut much of the domain industry, and would encourage further abuse of the UDRP system”, added Cohen.

The decision states that “the Panel accepts that the Respondent did not and could not reasonably have known of the Complainant’s trademark when it registered the disputed domain name in May 2009”. Based on prevailing and proper UDRP practice, that should have ended the analysis; the Respondent clearly could not have had bad faith intent when it registered the domain. Indeed, in ICA’s view, at that point the Panel would have had clear grounds to cite the Complainant for attempted reverse domain name hijacking. Complainant received its Australian trademark more than two years after the U.S.-based Respondent registered the domain, and only has a pending “intent to use” application for a U.S. trademark.

Instead, the panelists created new and unprecedented duties for registrants, proclaiming that a “registrant of domain names that adopts a PPC revenue model must ensure that after registration the disputed domain name is not used in a deceptive or confusing manner with new or developing trademarks” and a “registrant of domain names from the moment of acquisition must be prepared to take necessary steps to ensure that the PPC links generated by algorithm do not infringe existing trademarks, or any trademarks that may emerge in future”. (Emphasis added.) The panel’s decision would place a burden on domain registrants of generic words to monitor ongoing trademark registrations in every nation in the world. It would also require them to influence the proprietary ad placement algorithms of Yahoo!, Google, and other major online ad providers. Both of these new responsibilities are nowhere to be found in the UDRP rules and are impossible to meet.

The Camilla decision overthrows an important balance between trademark and domain registrant rights and provides a blueprint for any future trademark registrant to steal valuable generic domains without paying market value by simply initiating a UDRP action.

“While ICA respects trademark rights, the UDRP cannot be allowed to become a vehicle for legitimizing domain theft,” said Cohen.

The decision of whether to appeal this UDRP decision lies with the registrant. ICA believes that this decision should be overturned under the U.S. Anticybersquatting Consumer Protection Act (ACPA). If an appeal is filed, ICA will give full consideration to providing support to help persuade the court that the panel’s finding of bad faith registration and use is contrary to U.S. law.

ICA and its Counsel and legal advisory group are continuing to review the decision and may issue a further statement once that review is completed.