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Verisign steps up anti-gTLD campaign with attack on ICANN’s war chest

Verisign wants ICANN to publish a list of all the reasons it might be sued over the new gTLD program, claiming security and stability risks might be one of them.

In the latest salvo fired in its war against new gTLDs, the company now suggests that the $115 million “risk fund” surplus that ICANN has accumulated is for fending off lawsuits when it breaks the internet.

In a letter (pdf) sent Friday, Verisign asks ICANN to justify the existence of this war chest in light of the fact that it has managed to secure legal indemnities from pretty much everyone involved in the program.

It attempts to link the risk fund to the possible security risks of introducing new gTLDs to the internet, which Verisign has been haranguing ICANN about for the last few months.

“We believe ICANN should be forthcoming about the risks it is shifting and the need for the substantial risk reserve fund, in particular,” the letter, signed by general counsel Richard Goshorn, says.

It’s been well known for a few years that $60,000 of each $185,000 new gTLD application fee was to be allocated to a risk fund created to cover unexpected extra program costs.

The reserve was designed to cover things like underestimating the costs or time needed to evaluate applications, but also, crucially, the lawsuits that ICANN expected but has not yet received.

The cash pile is often to referred to, usually with black humor, as the “legal defense fund”.

Now Verisign seems to be saying that the legal risks are not limited to trademark disputes or the usual antitrust nonsense, but to the security risks ICANN is “transferring” to others.

As we’ve been reporting for the last few months, Verisign has suddenly decided that new gTLDs pose a risk to the internet, largely due to the potential for clashes between newly delegated strings and the unnofficial domains that many organizations already use on their intranets.

For a great discussion on the merits of this argument check out this DI article and comment thread.

With the latest letter, Verisign suggests that ICANN knows it might be sued for messing up corporate intranets, but is keeping that fact quiet.

Referring to a report it issued in March, when its security concerns first emerged, it says:

We believe that ICANN may have established and be maintaining the Risk Reserve in such a high amount in anticipation of significant claims relating to one or more risks identified in the Verisign Report.

If ICANN does get sued on these grounds, the defense cost will effectively have been covered by new gTLD applicants (and therefore their customers, assuming the costs are passed on), Verisign says.

It’s therefore asking for ICANN to disclose the reasons why its risk fund is so big, “in particular, the details regarding what ‘possible litigation’ factored into ICANN’s decisions”.

In other words, Verisign is asking ICANN to publish a list of reasons people might sue it, something I can’t imagine its general counsel agreeing to any time soon.

Is this an effort to shame ICANN into taking its security concerns more seriously, or just more FUD designed to disrupt the new gTLD program and protect its .com dominance?

Opinions, no doubt, will be split.

Are some new gTLD evaluations getting screwed up?

At least two new gTLD applicants reckon ICANN has screwed up their Initial Evaluation, flunking their applications due to missing or mishandled communications.

Following Friday’s batch of IE results, which saw four failures, one angry applicant got in touch with DI to complain about discrepancies in how his bids were scored.

Dot Registry has applied for five “corporate identifier” strings — .inc, .corp, .ltd, .llc and .llp — and has made decent progress convincing the powers that be that they will be operated responsibly.

On Friday, its .inc bid passed its Initial Evaluation with flying colors while .llc and .ltd were marked as “Eligible For Extended Evaluation”, a polite code phrase for #fail.

Both of the unsuccessful bids scored 0 on question 50, “Funding Critical Registry Functions”, which is an automatic failure no matter what the overall score on the financial evaluation.

Applicants are scored on question 50 from 0 to 3 by showing that they have a “Continuing Operations Instrument” to cover three years of operations in the event that their registry fails.

Most applicants have been submitting letters of credit supplied by their bank, which promise to pay ICANN these emergency funds should the need arise.

A zero score indicates basically that no COI was provided.

But CEO Shaul Jolles claims that Dot Registry submitted a single letter of credit to cover all five applications, later amended at ICANN’s request so that each string in the portfolio was broken out individually.

“We then received a note that they now have whatever they needed and it’s resolved,” he said.

He noted that .inc, which passed on Friday with maximum score of 3, is covered by exactly the same LOC as the two applications that scored a 0, which doesn’t make much sense.

A second applicant, which does not currently wish to be named, has told DI that it failed its financial evaluation on a question for which it received no Clarifying Questions.

CQs are the handy method by which ICANN gave applicants a second shot at getting their applications right. Hundreds have been issued, the vast majority related to financial questions.

The common complaint to both failing applicants is that at no point did ICANN inform the applicant that its application was deficient.

We understand both applicants are currently in touch with ICANN management in order to try to get their predicaments resolved.

Four failures and 92 passes in latest new gTLD results

ICANN has just released 96 new Initial Evaluation results, a batch which doubles the number of failures the first phase of the new gTLD program has produced.

The following applications failed to receive passing scores and are now “Eligible for Extended Evaluation”:

  • .locus — a strange and ambitious-sounding single-registrant bid filed by Locus Analytics. The company scored 6 out of the necessary 8 points on its financial evaluation with zero scores on the Financial Statements and Funding Critical Registry Functions questions.
  • .llc — This is the bid filed by Dot Registry, the company that seems to have a degree of governmental support for its portfolio of corporate identifier bids. It scored a 0 on its Funding Critical Registry Functions question.
  • .ltd — Another Dot Registry bid. Failed for the same reason.
  • .life — A values-oriented open gTLD application filed by Canadian company CompassRose.Life. Scored a zero on its Financial Statements.

ICANN said last week that it was changing the way it scored the “Funding Critical Registry Functions” question, due to the problems many applicants have been having with Continuing Operations Instruments.

That change only seemed to hit applications with scores of 1, however, so it does not appear to apply in the cases of today’s failed bids.

Applications for the following strings received passing scores.

.legal .sbi .inc .americanfamily .lacaixa .voting .realestate .rest .pfizer .macys .gift .hangout .clinic .blockbuster .lixil .cbre .blog .new .fund .prudential .tab .anquan .group .sale .gay .art .sandvik .security .now .social .shoes .qpon .sohu .fedex .storage .caseih .blog .online .cricket .gal .vip .app .moe .buzz .show .promo .music .cbn .dhl .attorney .sports .legal .football .acer .direct .open .dds .capetown .app .furniture .telefonica .eus .calvinklein .toys .eat .book .axis .casino .ren .crs .baby .ladbrokes .show .call .tech .solar .sanofi .toyota .ubank .canalplus .lexus .immo .moto .hyundai .green .ismaili .health .trading .marketing .llc .xihuan .gratis

We’re now up to 720 passes and 8 failures in the program, with 1,124 results still to be announced.

Hong Kong telco drops dot-brand gTLD bid

Hong Kong Telecom has withdrawn its application for the new gTLD .香港電訊, the Chinese-script version of its brand.

The proposed single-registrant gTLD was uncontested, with no objections or Governmental Advisory Committee advice. It’s the 76th application to be withdrawn.

It was a defensive application. Under the heading “Goals”, HKT said: “An important goal of the TLD is the safeguard of the intellectual property right of the HKT and the 香港電訊 brand.”

The company hadn’t bothered to take advantage of the IDN bias in the prioritization draw and wasn’t due to have its Initial Evaluation finalized until the last two weeks of the process.

Directi launches pre-reg site for .host gTLD

Directi is to offer preregistration for its uncontested gTLD applications, and it’s starting with .host.

The company will accept expressions of interest from potential registrants from June 17, where it has a booth at the HostingCon show in Austin, Texas, according to business head Sandeep Ramchandani.

Directi’s other two uncontested bids — .press and .space — will also get preregistration pages.

It’s the usual pre-reg deal: free and no-obligation.

While .host has not yet passed its Initial Evaluation, the company’s other applications have has a smooth ride so far so it’s a pretty reasonable assumption that this one will also pass.

The bid also has no objections and no special Governmental Advisory Committee advice.

While preregistration services have proved controversial in the past, they’re becoming increasingly common as new gTLDs start thinking about what a crowded market they’re walking into.