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ICANN smacks new gTLDs for pre-sunrise auctions

Kevin Murphy, June 18, 2014, 21:20:56 (UTC), Domain Registries

Running a premium domain name auction before you’ve finished your new gTLD sunrise period is Officially Not Cool, according to ICANN’s compliance department.

People who won premium new gTLD domains in auctions that took place before sunrise periods now face the possibility of losing their names to trademark owners.

.CLUB Domains, and probably XYZ.com, operators of .club and .xyz, two of the highest-volume new gTLDs to launch so far, appear to be affected by the ICANN decision.

ICANN told .CLUB that its “winter auction“, which took place in late February, may have violated the rules about allocating or “earmarking” domains to registrants before sunrise takes place.

Meanwhile, NameJet has cancelled the auction for deals.xyz, which “sold” for $8,100 late last year, suggesting that .xyz’s pre-sunrise auction is also considered ultra vires.

ICANN told .CLUB that its auction sales “constitute earmarking” in violation of the rule stating that registries “must not allow a domain name to be allocated or registered prior to the Sunrise period”.

.CLUB had told its auction winners that a sunrise period registration would prevent them from getting the domain they wanted and that they would be refunded if a sunrise registrant emerged.

But ICANN evidently told the registry:

Irrespective of whether “[a]llocation was expressly conditioned upon any Sunrise claim,” or whether any Sunrise claim was made, the pre-selection, pre-registration or pre-designation to third parties, in this case via .Club Domains’ “winter auction,” constitutes improper allocation.

I kinda thought this would happen.

Back in November, when XYZ.com ran its first .xyz auction — about six months before its sunrise even started — CEO Daniel Negari told us he believed it was “comfortably within the rules“.

We said the auction “seems to be operating at the edge of what is permissible under the new gTLD program’s rights protection mechanisms, which state that no domains may be allocated prior to Sunrise.”

I’ve not yet been able to definitively confirm that .xyz is affected by this ICANN decision, but .club definitely is.

.CLUB Domains told its auction winners today that the names they won are now subject to a 60-day period during which they could be obtained by trademark owners.

If no trademark owner claims the name, .CLUB said it will give the auction winner a 10% rebate on their purchase price.

The email states:

We are placing the domain on hold for 60 days, during which time a Trademark Clearinghouse (TMCH) holder will have the opportunity to purchase the domain at Sunrise rates. Although, the domain is not currently in the TMCH, if a trademark holder should file in the TMCH over the next 60 days, the domain will be offered to that registrant. However, if the name is not claimed by filing in the TMCH over the next 60 days, your transaction will move forward as planned.

Although we disagree with ICANN compliance’s position on this matter, the actions we are taking are necessary to ensure that we are not offside with ICANN compliance in any way. We understand that you have been caught in the middle of this issue due to no fault of your own. Given these circumstances, we are offering you two options:

1) Should you decide to complete this transaction, we will issue you a payment of 10% of the purchase price after the transaction closes in 60 days, assuming the name is not registered by a TMCH mark holder because of the delay.

2) At any time during the 60 day period you have the option to rescind the auction bid and not purchasing the domain.

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Comments (9)

  1. page howe says:

    might effect .global also?

  2. page howe says:

    couldnt believe .global was doing premium names so far in front of launch….from a marketing perspective, now looks like it it may have to be revamped…

    June 25, 2014 — August 24, 2014
    Trademark Holders Only Phase (Sunrise)

    For trademark holders who are registered in the Trademark Clearinghouse (TCMH). All applications will be accepted, however multiple applicants for the same domain name will be auctioned at the end of this phase.

  3. This is so funny:
    “comfortably within the rules“.
    This made my night!

  4. Acro says:

    To all Registries, for the love of God: quit doing this bullshit. Ban domainers from early bird “premium auctions” and target end users if you want to EVER see traction in your products!

  5. Rubens Kuhl says:

    One curious note: a registry could conduct an auction before sunrise, define prices for each name based on the auction result, but then offer it to trademark holder for registering first.

    Trademark holders won’t like that, and I don’t think it would be good for the new gTLD market, but it follows agreement and policies.

    Setting sunrise prices at 1 billion dollars per domain would also achieve a similar result.

  6. Rolf Larsen says:

    .GLOBAL is using an approved QLP program for the auction. We do not have any insights into how other registries have structured their auctions. But from our discussions with ICANN, using the QLP and Registry 100 is a safe route for an early auction. It is also important to have terms and conditions for the auction to reflect all the registry´s policies, Registry agreement terms and TMCH RPMs.

  7. page howe says:

    Hello Rolf, sounds like your seeking to only use best practice, great job. Have you had to deal with the incredible amount of names that have TMCH matches, i know i run into them quite often, green, cool, smart etc. So the names at namejet dont have TMCH matches?

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