URS is MIA in .Net Renewal RA

Philip CorwinUncategorized

The Proposed Renewal of the .Net Registry Agreement (RA) was published for public comment by ICANN on April 20th. The biggest surprise about the proposed contract is how little it differs from the current one between ICANN and Verisign.

Conspicuously absent from the agreement is the new gTLD rights protection mechanism (RPM) of Uniform Rapid Suspension (URS). For the past two years ICA – along with ICANN’s Business Constituency and Non-Commercial Stakeholders Group – has been protesting the appearance of the URS in other legacy gTLD renewal agreements, contending that this is a policy decision specifically assigned under the Charter of the ongoing ICANN working group reviewing all RPMs at all gTLDs (note: ICA Counsel Philip Corwin is a Co-Chair of that WG). Trademark interests have countered that legacy registries were free to “voluntarily” adopt the new RPMs, although the presence of beneficial contract revisions or substantial financial concessions in those other renewal agreements raised questions about whether the URS inclusion was truly voluntary or a quid pro quo concession.

ICA had been concerned that Verisign would seek a reduction of the $0.75 .Net domain fee paid to ICANN to the standard registry fee level of $0.25 – and might acquiesce to URS in exchange for it. That change that would have netted Verisign savings of $7.6 million per year at the current level of 15.2 million .Net domain registrations. But the proposed renewal RA maintains the fee at $0.75, with the extra revenue still earmarked for special restricted funds for developing country Internet communities’ participation in ICANN, and to enhance and facilitate the security and stability of the domain name system (DNS).

While we have no insight as to what actually transpired during the closed door negotiations between ICANN’s Global Domain Division (GDD) and Verisign, we hope that ICA’s repeated protests against imposing URS via contract renewals was a factor in alerting the parties to the heated controversy that would arise from taking such action in regard to the second most populous gTLD. As one prominent industry publication recently noted:

Also likely to cheer up domainers is the fact that there are no new intellectual property protection mechanisms in the proposed contract.

Several post-2000 legacy gTLDs have agreed to incorporate the URS into their new contracts, leading to outrage from domainer organization the Internet Commerce Association.

ICA is worried that URS will one day wind up in .com without a proper ICANN community consensus, opening its members up to more risk of losing valuable domains.

The fact that URS is not being slipped into the .net contract makes it much less likely to be forced on .com too.

The .Com RA was extended last year through 2024, while the decision by the RPM Review WG on the extension of relevant new gTLD RPMs to legacy gTLDs will likely be made within the next year. Trademark interests that extolled the “voluntary” adoption of URS by other registry operators will have to employ pretzel logic if they plan to comment that Verisign should be involuntarily compelled to impose it on .Net registrants.

The proposed renewal RA will also let Verisign continue to increase .Net wholesale prices by up to ten percent each year. Verisign exercised that option in each of the six years of the current .Net RA, raising the wholesale price from $4.65 in 2011 to the current level of $8.20. Verisign will likely continue to do so under the proposed renewal agreement, at least until such price increases demonstrate a marked negative effect on .Net renewals. While carrying costs will thus likely increase for investors holding .Net domains in their portfolios, at least the potential price hikes are capped and predictable.

The proposed renewal RA does contain a number of materially new provisions, many of them drawn from the new gTLD and .Org RAs. One even provides ICANN with new powers in the highly unlikely event of a Verisign bankruptcy. But all are technical in nature, and none appear to raise any significant concerns for the domainer community.

The comment period closes on May 30th, and ICA will have more to say about this proposed RA by that date.