Donuts’ attempt to delay tomorrow’s .web gTLD auction is based on a now “discredited” reading of a single email from rival bidder Nu Dot Co, ICANN told a California court yesterday.
Supporting ICANN’s opposition to Donuts’ motion for a temporary restraining order, two top NDC executives also swore under penalty of perjury that the company is not under new ownership or management.
The filings were made in response to Donuts’ lawsuit, filed Friday, which seeks over $10 million damages and a TRO against the .web auction.
Donuts believes that NDC has been taken over by an as-yet unknown third party with a vested interest in keeping the auction proceeds out of the hands of its competitors by forcing an ICANN-run last-resort auction.
Its belief is based on a June 7 email from NDC CFO Jose Rasco that alludes to COO Nicolai Bezsonoff no longer being with the company and makes reference to unspecified “powers that be” that are now in charge of the company.
By not disclosing the alleged change of control to ICANN, NDC broke Application Guidebook rules, Donuts claims.
But according to ICANN and NDC, this is all nonsense. ICANN told the court:
three separate ICANN bodies – ICANN’s staff, ICANN’s Ombudsman, and ICANN’s Board – have already looked into the alleged change in Nu Dotco’s ownership or management. All three found no credible evidence that any such change had occurred within Nu Dotco, and therefore nothing supported a delay of the Auction. Plaintiff’s TRO application, filed nearly three months after the Auction was scheduled and just two business days before bidding is set to officially begin, relies solely on a strained, and now completely discredited, interpretation of the Nu Dotco CFO’s June 7 email. However, the evidence accompanying this opposition – sworn declarations from ICANN and Nu Dotco executives – confirms that Nu Dotco has not made any change in its ownership or management, much less a “disqualifying” change that should derail the Auction processes already under way or the official start of bidding.
Rasco and Nicolai Bezsonoff both swear in accompanying declarations that the managers and members (ie owners) of NDC have not changed since the original 2012 application.
NDC, according to its .web application, is owned by two Delaware shell companies — Domain Marketing Holdings, LLC and NUCO LP, LLC — both of which appear to have been created in order to provide a layer of separation between NDC and its actual investors.
Rasco and Bezsonoff say that these two companies remain the only owners of NDC requiring their identities to be disclosed to ICANN.
There’s no comment in either declaration about whether either of those two companies has undergone a change in control.
What we seem to have here, amusingly, is NDC using exactly the same legal tricks as Donuts to hide the ultimate beneficiaries of its gTLD applications.
Donuts, you may recall, applied for 307 new gTLDs via 307 distinct shell LLCs with randomly generated names. Not only that, but each of those LLCs is owned by one of two other shell companies — 201 belonged to Dozen Donuts LLC, 106 belonged to Covered TLD LLC.
Donuts never formally disclosed in its ICANN applications (or, to my recollection, publicly confirmed) that business partner Rightside had the right to buy any of the Covered TLD strings — including .web, it seems — a right Rightside has exercised many times since.
Rightside basically got the same layer of identity insulation that whoever’s pulling the strings at NDC is getting now.
The applicants for .web are NDC, Radix, Donuts, Schlund, Afilias, Google and Web.com. Vistaprint’s bid for .webs is also in the auction.
Unless Donuts gets its TRO, the auction will begin at 1400 UTC tomorrow and we could find out how much .web sold for later that day.
Donuts has sued ICANN in an attempt to block the auction of the .web gTLD this Wednesday.
The gTLD portfolio registry filed a lawsuit in California on Friday, seeking over $10 million in damages and a temporary restraining order to stop the auction going ahead.
The complaint alleges breach of contract, negligence and unfair competition and seeks a court declaration that the covenant not to sue signed by all new gTLD applicants is unenforceable.
According to Donuts, ICANN breached its duties by not fully investigating the allegation that rival .web applicant Nu Dot Co has undergone a change of control and has a new, wealthier owner.
NDC is the only applicant in the eight-strong .web/.webs contention set that refuses to resolve the contest privately.
A private auction would enrich all losing applicants to the tune of many millions of dollars.
By forcing a “last resort” ICANN auction, NDC has ensured that ICANN will be the only party to benefit from the auction proceeds.
Last-resort auction funds are placed in a separate ICANN account, currently worth over $100 million, which will be spent according to a currently undecided policy created by the ICANN community.
But Donuts’ complaint strongly implies that ICANN is forcing the auction to go ahead because it stands to benefit financially.
Donuts repeats the allegation from its recent joint Request for Reconsideration with Radix that NDC should be forced to disclose to ICANN, via a gTLD application change, the names of its alleged new directors.
It cites again a redacted email from NDC director Jose Ignacio Rasco which talks about fellow listed director Nicolai Bezsonoff no longer being involved with the application but that “several” new directors were.
It adds a quote about Rasco talking about “powers that be”, which Donuts takes to mean he is answering to someone else.
NDC is not listed in the lawsuit, which focuses on ICANN’s obligations under the new gTLD program application contract.
Donuts alleges, for example, that ICANN has a duty to fully investigate whether NDC has indeed changed directors.
ICANN’s Board Governance Committee said last week that ICANN staff had talked to and emailed Rasco about the allegations. Donuts says it should have at least talked to Bezsonoff too.
Donuts also claims that ICANN is not allowed to go ahead with a last-resort auction while there are still outstanding “accountability mechanisms” — including the RfR, which has not yet been formally closed out by the full ICANN board.
The lawsuit also reveals that Donuts simultaneously filed a complaint using ICANN’s less legally formal Independent Review Process, though documentation for that is not yet available.
ICANN’s most recent statement on .web, which just confirms that the .web auction will go ahead this coming Wednesday, was also posted on Friday. It’s not clear if that was posted before or after ICANN became aware of the lawsuit.
All new gTLD applicants had to agree not to sue ICANN when they applied, but Donuts argues that this is unfair and unenforceable.
DotConnectAfrica has had some success with this argument, though Donuts does not cite that case in its own complaint.
There’s been some speculation about the motives of Donuts and others in trying to delay the auction.
The lawsuit will not force NDC into a private auction, but it might buy Donuts and the other applicants more time to consider their strategies.
I’m getting into speculative territory here, but if NDC’s strategy is to win the .web auction as a Trojan horse for its alleged new owner, perhaps revealing the identity of that new owner would make it less likely to insist on a last-resort auction.
If NDC’s alleged new owner has a time-sensitive need for the revenue .web could bring (which could be the case if, for example, the owner was Neustar) perhaps the prospect of a long lawsuit and IRP case could make it more likely to accept a private auction.
If the alleged new owner was revealed to be Verisign — a company more likely than most to acquire .web simply in order to bury it — perhaps that revelation could spur remaining applicants into pooling their resources to defeat it.
It it was a big tech firm from outside the domain industry, perhaps that would strengthen Google’s resolve to win the auction.
That’s all just me talking off the top of my head, of course.
I have no idea whether or not NDC even has new backers, though its behavior in avoiding private auction goes against character and certainly raises eyebrows.
The Donuts complaint, filed as its subsidiary Ruby Glen LLC, can be read here (pdf).
A joint US-Polish law enforcement operation has led to the arrest of the alleged owner of the piracy-focused BitTorrent links site KickAssTorrents.
The US Department of Justice announced yesterday that Ukrainian national Artem Vaulin has been arrested in Poland and that it will seek to extradite him to Chicago to face criminal copyright infringement charges.
The site, which has been banned at the ISP level in countries including the UK, provides links to download and share copyrighted works such as movies and music from other BitTorrent users.
But it’s perhaps best known in the domain name industry for regularly jumping from one TLD to another as its domains are terminated by local authorities.
According to the DoJ, it has been seen on kickasstorrents.com, kat.ph (Philippines), kickass.to (Tonga), kickass.so (Somalia) and kat.cr (Costa Rica).
The department said it has seized seven domain names as part of its operation.
According to my records, there are 20 examples of kickasstorrents.example domains in the Alexa one million, all in new gTLDs (though I’ve no idea whether they’re part of the same operation).
The DoJ reckons KAT makes annual revenue of between $12.5 million to $22.3 million from advertising accompanying its links.
The new gTLD .web seems set to go to auction next week after ICANN rejected an 11th-hour delay attempt by two applicants.
ICANN’s Board Governance Committee said yesterday that there is no evidence that applicant Nu Dot Co has been taken over by a deep-pocketed third party.
The BGC therefore rejected Donuts’ and Radix’s joint attempt to have the July 27 “last resort” auction delayed.
Donuts and Radix had argued in a Request for Reconsideration earlier this week that Nu Dot Co has changed its board of directors since first applying for .web, which would oblige it to change the application.
Its failure to do so meant they auction should be delayed, they said.
They based their beliefs on an email from NDC director Jose Ignacio Rasco, in which he said one originally listed director was no longer involved with the application but that “several others” were.
There’s speculation in the contention set that a legacy gTLD operator such as Verisign or Neustar might now be in control of NDC.
But the BGC said ICANN had already “diligently” investigated these claims:
in response to the Requesters’ allegations, ICANN did diligently investigate the claims regarding potential changes to Nu Dot’s leadership and/or ownership. Indeed, on several occasions, ICANN staff communicated with the primary contact for Nu Dot both through emails and a phone conversation to determine whether there had been any changes to the Nu Dot organization that would require an application change request. On each occasion, Nu Dot confirmed that no such changes had occurred, and ICANN is entitled to rely upon those representations.
ICANN staff had asked Rasco via email and then telephone whether there had been any changes to NDC’s leadership or control, and he said there had not.
He is quoted by he BGC as saying:
[n]either the ownership nor the control of Nu Dotco, LLC has changed since we filed our application. The Managers designated pursuant to the company’s LLC operating agreement (the LLC equivalent of a corporate Board) have not changed. And there have been no changes to the membership of the LLC either.
The RfR has therefore been thrown out.
Unless further legal action is taken, the auction is still scheduled for July 27. The deadline for all eight applicants (seven for .web and one for .webs) to post deposits with ICANN passed on Wednesday.
As it’s a last resort auction, all funds raised will go into an ICANN pot, the purpose of which has yet to be determined. The winning bid will also be publicly disclosed.
Had the contention set been settled privately, all losing applicants would have made millions of dollars of profit from their applications and the price would have remained a secret.
NDC is the only applicant refusing to go to private auction.
The applicants for .web are NDC, Radix, Donuts, Schlund, Afilias, Google and Web.com. Vistaprint’s bid for .webs is also in the auction.
The RfR decision can he read here (pdf).
Nic.at will next month start selling .at domains shorter than three character domains for the first time.
All one-character and two-character domains will be released, the ccTLD registry said, about 5,000 domains in total.
The released domains include those containing any of the 34 non-Latin letters Nic.at supports, it said.
Holders of trademarks valid in Austria before July 1 get the first crack at the names, during a August 29 to September 23 sunrise period.
During this phase, domains will cost €240 ($265) with a €120 ($132) application fee. Contested sunrise names will be auctioned in October.
Everything not grabbed by trademark interests will be put to a public auction from November 7, where the minimum bid will be €72 ($79).
If there’s anything left after that, it will be released into the general available pool for registration at standard .at prices.
Nic.at plans to dump all registered one and two-character domains into the .at zone file, so they can be used, at the same time on December 6.
Austria has no local presence requirements for ccTLD registration.
Given “at” has some semantic value in English, it could be a popular launch.