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How to protect your trademark in .xxx

ICM Registry today revealed the details of its policies for trademark holders that want to defensively register or block their .xxx domain names.

The company plans to kick off its sunrise period in early September. It will last 30 days, and will be followed a few weeks later by a 14-day landrush.

The date for general availability has not been set in stone, but is likely to be in early December.

Two sunrise periods will run concurrently. Sunrise A is for the adult entertainment industry, those who want to actually set up porn sites at .xxx domains. Sunrise B is for everyone else.

ICM is trying something new with .xxx, in response to non-porn brands that are worried about cybersquatting and also don’t want to actually own a .xxx domain name.

Under Sunrise B, non-porn trademark owners can pay a one-time fee to have their brand essentially turned off in .xxx.

These domains will all resolve to a standard placeholder page, informing visitors that the domain has been blocked.

Because the domains resolve, they will usually not be picked up by any ISP system whereby non-existent domains show advertisements instead of an error message.

The fees we’ve seen so far from registrars for this service range from $299 to $648, but ICM seems to think $200 to $300 is more realistic.

The blocks are expected to last forever, but because ICM’s registry agreement with ICANN only lasts for 10 years, it can only guarantee the blocks for that amount of time.

So while it looks like a $30 to $65 annual fee, over the lifetime of the TLD it may well steadily approach a negligible sum, if you’re thinking super-long-term.

To qualify for Sunrise B, you need a nationally registered trademark for the exact string you want to block. To use an example, Lego could block lego.xxx, but not legoporn.xxx.

ICM is currently planning a post-launch block service for brands that emerge in future, but it probably won’t have the flat one-time pricing structure, due to the registry’s own annual per-domain fees.

If you’re in the porn business, Sunrise A allows you to claim your brand if you have a trademark that is registered with a national effect.

It will also enable the “grandfathering” of porn sites in other TLDs that do not have a registered trademark. If you own example.com or example.co.uk, you’d qualify for example.xxx.

Lego could, for example, register legoporn.xxx using Sunrise A, because it already owns legoporn.com, but only if it actually intended to publish Lego-based pornography.

If it were to register legoporn.xxx in this way, and use it for non-porn purposes, it would be at risk of losing the domain under ICM’s planned Charter Eligibility Dispute Resolution Policy (CEDRP).

In the event that a Sunrise A applicant and a Sunrise B applicant both apply for the same string, the Sunrise A (porn) applicant will be given the option to withdraw their application.

If they don’t withdraw, they will be able to register the domain, trumping their non-porn rival.

Two Sunrise A applicants gunning for the same .xxx domain will have to fight it out at auction.

It’s probably worth mentioning, because many cybersquatters seem to think it’s a .com-only deal, that the UDRP does of course also apply to .xxx domain names.

If you own, for example, the string “virgin” in another TLD, and use it for a porn site, you will actually be able to use it in Sunrise A to secure virgin.xxx, but you risk losing it to Virgin in a UDRP.

If you’ve “pre-registered” a domain with ICM already, it doesn’t seem that you’ll have any notable advantages during sunrise or landrush.

The registry plans to email these pre-registrants soon with instructions. More info on the new ICM site: XXXempt.com.

The sunrise policies were devised by IPRota.

What happened to ICANN’s .net millions?

Questions have been raised about how ICANN accounts for the millions of dollars it receives in fees from .net domain name registrations.

The current .net registry agreement between ICANN and VeriSign was signed in June 2005. It’s currently up for renewal.

Both the 2005 and 2011 versions of the deal call for VeriSign to pay ICANN $0.75 for every .net registration, renewal and transfer.

Unlike .com and other TLDs, the .net contract specifies three special uses for these fees (with my emphasis):

ICANN intends to apply this fee to purposes including:

(a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders,

(b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and

(c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS.

However, almost six years after the agreement was executed, it seems that these two “special restricted funds” have never actually been created.

ICANN’s senior vice president of stakeholder relations Kurt Pritz said:

To set up distinctive organizations or accounting schemes to track this would have been expensive, complex and would have served no real value. Rather — it was intended that the ICANN budget always include spending on these important areas — which it clearly does.

He said that ICANN has spent money on, for example, its Fellowships Program, which pays to fly in delegates from developing nations to its thrice-yearly policy meetings.

He added that ICANN has also paid out for security-related projects such as “signing the root zone and implementing DNSSEC, participating in cross-industry security exercises, growing the SSR organization, conducting studies for new gTLDs”.

These initiatives combined tally up to an expenditure “in excess of the amounts received” from .net, he said.

It seems that while ICANN has in fact been spending plenty of cash on the projects called for by these “special restricted funds”, the money has not been accounted for in that way.

Interestingly, when the .net contract was signed in 2005, ICANN seemed to anticipate that the developing world fund would not be used to pay for internal ICANN activities.

ICANN’s 2005-2006 budget, which was approved a month after the .net deal, reads, with my emphasis:

A portion of the fees paid by the operator of the .NET registry will become part of a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders. These monies are intended to fund outside entities as opposed to ICANN staff efforts.

That budget allocated $1.1 million to this “Developing Country Internet Community Project”, but the line item had disappeared by time the following year’s budget was prepared.

Phil Corwin from the Internet Commerce Association estimates that the $0.75 fees added up to $6.8 million in 2010 alone, and he’s wondering how the money was spent.

“We believe that ICANN should disclose to the community through a transparent accounting exactly how these restricted funds have actually been utilized in the past several years,” Corwin wrote.

He points out that the contract seems to clearly separate the two special projects from “general operating funds”, which strongly suggests they would be accounted for separately.

Given that .net fees have been lumped in with general working capital for the last six years, it seems strange that the current proposed .net registry agreement still calls for the two special restricted funds.

The oddity has come to the attention of the ICA and others recently because the new proposed .net contract would allow VeriSign for the first time to offer differential pricing to registrars in the developing world.

The agreement allows VeriSign to “provide training, technical support, marketing or incentive programs based on the unique needs of registrars located in such geographies to such registrars”, and specifically waives pricing controls for such programs.

It seems probable that this amendment was made possible due to the .net contract’s existing references to developing world projects.

Corwin said ICA has nothing against such programs, but is wary that existing .net registrants may wind up subsidizing registrants in the developing world.

VeriSign settles CFIT lawsuit for free

VeriSign has settled its five-year-old antitrust lawsuit with the Coalition For ICANN Transparency. What’s more, it’s done so without having to sign a big check.

The company has just released a statement to the markets:

Under the terms of the Agreement, no payment will be made and the parties immediately will file a dismissal with prejudice of all claims in the litigation. Further, the parties executed mutual releases from all claims now and in the future related to the litigation.

CFIT voluntarily agreed to dismiss its claims in their entirety with prejudice in view of recent developments in the case, including the Amended Opinion of the United States Court of Appeals for the Ninth Circuit, the subsequent orders of the United States District Court for the Northern District of California, San Jose Division dismissing the claims regarding .Net and for disgorgement, and VeriSign’s motion for summary judgment.

On the face of it, this looks like a huge win for VeriSign, which has been facing questions about the CFIT suit from analysts on pretty much every earnings call since it was filed.

The original complaint alleged that VeriSign and ICANN broke competition law with their .com and .net registry agreements, which allow the company to raise prices every year.

Had CFIT won, it would have put a serious cramp on VeriSign’s business.

In February, a California judge dismissed the case, saying that CFIT’s membership did not having standing to sue. CFIT was given leave to amend its complaint, however, but that does not seem to have been enough to save its case.

According to a Securities and Exchange Commission filing, CFIT’s members were: iRegistry, Name Administration, Linkz Internet Services, World Association for Domain Name Developers, Targeted Traffic Domains, Bret Fausett, Howard Neu and Frank Schilling.

ICANN gets Boing-Boinged over URS

Boing-Boing editor Cory Doctorow caused a storm in a teacup yesterday, after he urged his legions of readers to complain to ICANN about copyright-based domain name seizures and the abolition of Whois privacy services in .net.

Neither change has actually been proposed.

The vast majority of the comments filed on VeriSign’s .net contract renewal now appear to have been sent by Boing-Boing readers, echoing Doctorow’s concerns.

Doctorow wrote: “Among the IPC’s demands are that .NET domains should be subject to suspension on copyright complaints and that anonymous or privacy-shielded .NET domains should be abolished.”

Neither assertion is accurate.

Nobody has proposed abolishing Whois privacy services. Nobody has proposed allowing VeriSign to seize domain names due to copyright infringement complaints.

What has happened is that ICANN’s Intellectual Property Constituency has asked ICANN to make the Uniform Rapid Suspension policy part of VeriSign’s .net contract.

URS is a variation of the long-standing UDRP cybersquatting complaints procedure.

It was created for the ICANN new gTLD Program and is intended to be cheaper and quicker for trademark holders than UDRP, designed to handle clear-cut cases.

While the URS, unlike UDRP, has a number of safeguards against abusive complaints – including an appeals mechanism and penalties for repeat reverse-hijacking trolls.

But the domainer community is against its introduction in .net because it has not yet been finalized – it could still be changed radically before ICANN approves it – and it is currently completely untested.

The IPC also asked ICANN and VeriSign to transition .net to a “thick” Whois, whereby all Whois data is stored at the registry rather than with individual registrars, and to create mechanisms for anybody to report fake Whois data to registrars.

Not even the IPC wants Whois privacy services abolished – chair Steve Metalitz noted during the Congressional hearing on new gTLDs last week that such services do often have legitimate uses.

ICANN tries to dodge .jobs legal fees

“Please don’t sue us!”

That’s the message some are taking away from the latest round of published correspondence between lawyers representing ICANN and .jobs registry Employ Media.

Employ Media last week said it will take ICANN to the International Chamber of Commerce, after they failed to resolve their dispute over the company’s controversial Universe.jobs venture.

Now ICANN has asked the registry’s executives to return to the negotiating table, apparently to reduce the risk of having to spend millions of dollars on lawyering.

In a letter (pdf) to Employ Media’s attorneys, ICANN outside counsel Eric Enson of Jones Day said that ICANN wishes to avoid “costly legal fees associated with arbitration or litigation”:

I again request a meeting among the business persons involved in this matter to discuss potential resolutions before spending more of ICANN’s funding on unnecessary litigation.

The latest round of published correspondence, like the last one, and the one before that, seems to contain a fair bit of legal posturing, with both sides accusing the other of conducting negotiations in “bad faith” for various reasons.

Filing the arbitration notice with the ICC might turn out to be a smart move by Employ Media, knowing how risk-averse and cash-conscious ICANN is.

ICANN is still smarting from the last time it headed to arbitration, for its Independent Review Panel over ICM Registry’s .xxx top-level domain.

ICANN lost that case in February 2010, and had to cover the panel’s almost $500,000 in costs, as well as its own legal fees. The overall price tag is believed to have comfortably made it into seven figures.

But that may well turn out to be small beer compared to the price of losing arbitration against the .jobs registry.

Unlike the IRP, in which both parties pay their own lawyers no matter who wins, Employ Media’s contract states that the losing party in arbitration must pay the legal fees of the winner.

To go up against .jobs at the ICC and lose could hit ICANN’s coffers harder than the .xxx dispute, in other words. That’s not to say it would lose, but with matters as complex as this there is that risk.

It’s worth noting that Employ Media’s lead attorney has form when it comes to reaching into ICANN’s pockets – Crowell & Moring’s Arif Ali also represented ICM Registry in the .xxx IRP case.

Domain industry blasts Congress TLD hearing

Executives from over a dozen domain name companies have slammed a US Congressional subcommittee for its plan to hold a one-sided hearing on new top-level domains.

A letter, drafted by AusRegistry International’s chief strategy officer, Krista Papac, says the hearing is “not fairly balanced” and “will present a distorted picture of the new gTLD process.”

As I reported earlier this week, the House Subcommittee on Intellectual Property, Competition and the Internet called at least four representatives of the trademark lobby to discuss new TLDs.

Kurt Pritz, ICANN’s senior vice president, is the only person testifying today who could be considered wholly supportive of the new gTLD program. The other witnesses are either advocates of trademark interests or more governmental involvement in ICANN.

Papac wrote:

It is unfortunate that of the six witnesses on the panel, none comes from the perspective of an entity that plans to run a new gTLD and could discuss the innovation, consumer choice, and job growth they will provide. Nor will the committee hear from representatives who might counter some potentially over-reaching views of the intellectual property interests, such as representatives of non-commercial entities, privacy experts, and existing domain name service providers.

The letter goes on to say that IP interests have already been heard, are afforded many protections in the program, and that new TLDs will bring benefits to the US economy.

It was signed by executives from Worldwide Media, eNom, EuroDNS, Right Of The Dot, auDA, Momentous, Othello Technology Systems, Network Solutions, AboutUs.org, Cronon, Domain Dimensions, Tucows, DomainTools, Donuts, Minds + Machines and others.

The hearing begins at 10am in Washington DC today. Coverage later.

.jobs takes ICANN to arbitration

Employ Media, manager of the .jobs top-level domain, has become the first registry operator to take ICANN to arbitration to fight off a shut-down threat.

The company in the last hour said it has filed a Request for Arbitration with the International Chamber of Commerce in Paris, after informal efforts to reach agreement with ICANN broke down.

Employ Media CEO Tom Embrescia said in a statement:

This filing was necessary to ward off ICANN’s unwarranted and unprecedented threat of contract termination. That action created immediate uncertainty about the .JOBS TLD on the Internet and caused significant duress on our business.

ICANN had threatened to terminate the .jobs registry agreement – which I believe is pretty much the only option available to it in the case of a perceived breach – in February.

The filing means .jobs can operate as normal until the situation is resolved.

The dispute is essentially about Universe.jobs, a jobs listing service operated by the DirectEmployers Association using tens of thousands of generic .jobs domain names granted to it by Employ Media.

The .JOBS Charter Compliance Coalition, made up of independent jobs boards, complained to ICANN that Universe.jobs went against the spirit and letter of the original .jobs Charter.

Employ Media says that Universe.jobs was essentially authorized when ICANN approved its Phase Allocation process for handing out generic domains last year.

Employ Media is represented by lawyers from Crowell & Moring, some of the same individuals responsible for ICM Registry’s defeat of ICANN at its Independent Review Panel last year.

The request for arbitration can be read here in PDF format.

Cute infographic shows contents of the root

This ICANN infographic is a nice way to easily visualize all of the currently live and approved top-level domains on the internet.

TLDs graphic

(click to enlarge)

Accurate as of April 19, it breaks down the 307 extant TLDs into categories such as gTLDs, ccTLDs and IDNs, highlighting some metrics you may not be aware of.

Did you know for example that there are seven pre-approved ccTLDs that have not yet been delegated to a registry? Or that three ccTLDs belong to countries that officially no longer exist?

The graphic is culled from ICANN’s rather excellent fiscal 2012 Security, Stability & Resiliency Framework, which was published last night.

The report spells out in fairly accessible terms just what ICANN is responsible for in terms of security — and what it is not — and how the organization is structured.

War of words over .jobs “breach” claims

Employ Media and ICANN have come to blows again over ICANN’s threat to shut down the .jobs registry for allegedly selling domain names in breach of its Charter.

Both parties are currently talking through their outside counsel, and the possibility of litigation has raised its head in public for the first time.

In the latest set of correspondence published by ICANN, Employ Media sharply (and ironically) criticized ICANN’s decision to publish an earlier set of correspondence on its web site.

The earlier email exchange, which I blogged about here, revealed that ICANN had asked the company to amend its Charter.

Two days later, Employ Media’s lawyers wrote to ICANN’s lawyers to express disappointment with the decision to post these emails, questioning ICANN’s commitment to good faith negotiations.

In light of this apparent bad faith action on ICANN’s part, Employ Media is questioning whether any hope remains for a full and fair exchange of ideas regarding a resolution of its dispute with ICANN.

[ICANN has] substantially hindered Employ Media’s ability to engage in productive and honest negotiations: all future communications will necessarily be more guarded and less open, given the expectation that they will be published to a larger audience

ICANN and Employ Media are currently in a “cooperative engagement” process – a less formal way to resolve their dispute than heading to an arbitration forum or court.

ICANN claims the registry is breaking its Charter commitments to the human resources industry by allocating tens of thousands of .jobs domain names to the Universe.jobs project, which is run by a partner, the DirectEmployers Association.

Independent jobs boards, represented by the the .JOBS Charter Compliance Coalition, believe that Universe.jobs is unfair and not compliant with Employ Media’s own policies.

Employ Media’s latest letter (pdf), which it demanded ICANN publish, drops hints about some of the behind-the-scenes talks (with my emphasis):

Had we known that any part of our communication was to be published, we would have certainly memorialized, in writing, your statements to us that ICANN very much wants to avoid an arbitration over this dispute, and that ICANN was therefore willing to agree to a process for approving a Charter amendment in order to do so. We would also have memorialized our positions, including our position that a Charter amendment is neither necessary nor desirable, but that we were considering acceding to ICANN’s request solely in the hopes of avoiding arbitration

ICANN’s lawyers’ response (pdf), sent April 26, says ICANN was merely fulfilling its transparency obligations by informing the community about the extension of the talks deadline.

They also said that the Employ Media should stop pretending to be surprised that ICANN issued the breach notice and is now asking for a Charter amendment.

ICANN further accused the registry’s lawyers of legal “posturing” which was “seemingly geared solely towards use in future litigation”.

Employ Media was due to deliver a proposed amendment to its Charter by yesterday. ICANN has said it will not take any further actions based on its breach notice until May 6.

Rules for registry-registrar mergers proposed

ICANN has revealed how it intends to enable incumbent domain name registries to also become registrars, ending a decade of cross-ownership restrictions.

The industry shake-up could allow companies such as VeriSign, Neustar and Afilias to become accredited registrars in their own top-level domains later this year.

Hypothetically, before long you could be able to go directly to VeriSign for your .com domains, to Afilias and Public Interest Registry for .info and .org, or to Neustar for .biz.

The changes could potentially also kick off a wave of consolidation in the industry, with registry operators buying previously independent registrars.

ICANN’s proposed process is straightforward, requiring just a few amendments to the registries’ existing contracts, but it could also call for governmental competition reviews.

Registries will have to agree to abide by a Code of Conduct substantially the same as the one binding on wannabe registries applying later this year under the new gTLD program.

The Code is designed to stop registries giving their affiliated registrars unfair advantages, such as lower prices or preferential access to data, over other ICANN-accredited registrars.

Registries would also have the option to adopt the registry contract from the new gTLD Applicant Guidebook wholesale, although I expect in practice this is unlikely to happen.

ICANN would be able to refer vertical integration requests to national competition authorities if it determined that cross-ownership could cause “significant competition issues”.

VeriSign would be the most likely to be hit by such a review, but it’s also the only registry that does not appear to have been particularly hamstrung over the years by the forced separation rules.

The proposed process for registries to request the contract changes has been posted to the ICANN web site and is now open for public comment.