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Contention questions remain as ICANN reveals “last-resort” auction rules

Kevin Murphy, November 2, 2013, Domain Policy

ICANN has published a first draft of the rules for its “last resort” new gTLD auctions, but they do not yet address the contention created by controversial objection rulings.

The organization has hired Power Auctions to write the rules and manage the auctions.

They’ve agreed upon an “ascending clock” style, where the auctioneer sets upper and lower limits for each round of bidding. Applicants must bid within that range or withdraw — they cannot skip rounds.

A bid at the top of the round’s range is a “continue bid” that sees the applicant through to the next round. Lower, and it’s an “exit bid” that will count as a withdrawal if anyone else submits a higher bid.

When all but one applicants have withdrawn, the remaining applicant gets the gTLD, paying ICANN an amount equal to the highest exit bid submitted by a competitor in that round.

Unlike the private auctions that have been taking place for the last few months, losing applicants walk away empty-handed apart from a small application fee refund from ICANN.

Applicants’ bidding limits will be determined by their deposits. If your deposit is under $2 million, your bid ceiling is 10x your deposit, but if you put down $2 million deposit or more, there would be no upper limit.

It all seems fairly straightforward for direct, single-string contention sets.

Where it starts to get fuzzy is when you start thinking about “indirect” contention and multiple, connected auctions running simultaneously.

It’s a little tricky to explain indirect contention without diagrams, but let’s try an example, using .shop, instead.

There are nine applicants for .shop. These are all in direct contention with each other.

But one .shop applicant, Commercial Connect, won objections against applicants for “similar” strings — Amazon’s .通販 and Donuts’ .shopping.

Assuming ICANN upholds these objection findings, which seems increasingly likely given recent statements from generic domains president Akram Atallah, both .shopping and .通販 will be in direct contention with Commercial Connect’s .shop and in indirect contention with all the other .shop applications.

Complicating matters, while Amazon’s .通販 is uncontested, Donuts’ .shopping is also in direct contention with Uniregistry, which applied for the same string but did not lose an objection.

It will be quite possible for .shop, .shopping and .通販 to all be delegated, but only if Commercial Connect loses the auction for .shop or otherwise withdraws from the race.

The auction materials published by ICANN today are a bit fuzzy on what happens when indirect contention is in play. On the one hand it suggests that multiple applications can win an auction:

When a sufficient number of applications have exited the auction process, so that the remaining application(s) are no longer in contention with one another, and all the relevant string(s) can be delegated as gTLDs, the auction will be deemed concluded.

But the rules also say:

the rules set forth within this document will assume that there is direct contention only, a condition that holds for the substantial majority of Auctions. In the event that an Auction will include a Contention Set that does not satisfy this condition, ICANN or the Auction Manager may issue an Addendum to the Auction Rules to address indirect contention.

While it seems that the auctions for .shop, .shopping and .通販 would have to take place simultaneously due to the indirect contention, some weird edge cases have me confused.

ICANN’s list of indirect contention sets is currently empty.

It’s not at all clear to me yet whether, for example, Donuts’ .shopping application would be placed in the .shop auction or whether two separate auctions would be conducted.

That could be important because deposits — and therefore bidding limits — are specific to each auction.

Would Donuts have to stump up $4 million in deposits, rather than $2 million, just in order to win one string? Would Commercial Connect have to put down $6 million for three auctions for one string?

If the two .shopping applicants are placed in the .shop auction, and Commercial Connect withdraws first, would Donuts have to carry on bidding against the other eight .shop applicants, just to win .shopping?

I’m guessing not, but the rules don’t seem to envisage this scenario yet.

What about Uniregistry, which has an application for .shopping? Will ICANN force it into the .shop auction even though it’s not in direct contention with any .shop applicant?

If .shop and .shopping are two separate auctions, what happens if Commercial Connect withdraws from the .shop auction but not the .shopping auction? It would have little to gain — not being a .shopping applicant — but could it artificially bid up the .shopping set?

And could how these auctions play out have an impact on companies’ objection strategies in future rounds?

If Uniregistry, say, finds itself at a disadvantage because its .shopping competitor Donuts was objected to by Commercial Connect, maybe it would make sense for an entire direct contention set to cooperate to fight off an objection from an applicant for a similar string.

And if Commercial Connect finds itself financially hobbled by having to participate in three auctions rather than one, maybe that will discourage applicants from filing massive amounts of objections in future.

And another thing…

If you’re as confused as I am, ICANN is running a webinar November 7 at 2200 UTC in order to answer (hopefully) these kinds of questions.

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dotShabaka Diary — Day 22, Sunrise has gone live!

Kevin Murphy, November 2, 2013, Domain Registries

In this penultimate entry in the dotShabaka Diary series, dotShabaka general manager Yasmin Omer officially announces the launch of the Sunrise period for شبكة., the first new gTLD to enter this phase.

Saturday 2 November 2013

It’s with great pleasure that I can finally say that we are the first new gTLD Registry Operator to commence its Sunrise Period! I’m truly excited about taking this TLD to the Arabic speaking world and revolutionising their Internet experience. So what’s happened since the last entry?

We received, and responded to, the TLD on-boarding Information Request from ICANN. New gTLD Registry Operators (and their Registry Services Providers) should be prepared to promptly provide ICANN with technical information regarding:

  • The Registry Operator’s provision of the zone file access service;
  • Bulk thin registration data access to ICANN;
  • Data Escrow – Registry Reporting Interface;
  • Implementation of the URS system;
  • EPP extensions for the TLD; and
  • EPP SLA Monitoring.

We requested the registration of our IDN Table on the IANA Repository of IDN Practices.

We obtained approval of our TLD Startup Information from ICANN. It’s certainly clear from our interactions with ICANN that the process of, and the requirements for, obtaining IBM’s acceptance of Sunrise dates and ICANN’s approval of TLD Startup Information, is yet to be defined. As a result, there was a delay in obtaining ICANN’s approval of our TLD Startup Information.

If you’re a new gTLD Registry Operator and you want your TLD Startup Information approved quickly, here are some tips:

  • Once you have a fair idea of when your Sunrise will commence (could be before you’re delegated), reach out to IBM independently and request a number of potential dates. The team at IBM has been very responsive by promptly accepting our Sunrise dates.
  • Include your eligibility policy for general registration with your TLD Startup Information. Yes, ICANN has explicitly stated that this is not a requirement they have imposed but it seems that they need it.
  • Remember that ICANN’s review is a legal review. Ensure that your policies very clearly demonstrate your compliance with the relevant requirements. Use diagrams.
  • Be prepared to respond to ICANN or IBM at any time – they’re both on opposite sides of the world to each other. ICANN thankfully ensure that the process is interactive, so be prepared to interact.

Good luck to everyone. We look forward to being joined by many more New gTLD Registry Operators in Sunrise.

Read previous and future diary entries here.

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Two dot-brands pass Extended Evaluation

Kevin Murphy, November 1, 2013, Domain Registries

ICANN did not have much to report in this week’s batch of new gTLD evaluation results, as that stage of the program gradually winds down.

Two dot-brands — Shaw Cablesystems and TUI — passed Extended Evaluation for their .shaw and .tui applications.

TUI had to secure permission from Burkina Faso for .tui, which matches the protected name of one of its provinces, while Shaw had to provide better financial statements to pass.

Only four applications remain in Initial Evaluation — .pwc, .bbb, .kosher and .search. Eight applications are currently in Extended Evaluation.

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Four more new gTLD contracts signed, including .email

Kevin Murphy, November 1, 2013, Domain Registries

Four new gTLD registries signed their contracts with ICANN yesterday.

Donuts added Registry Agreements for .email and .codes to its portfolio, bringing its total up to 43.

CORE Association signed for بازار., which means “bazaar”. It’s CORE’s third and final RA as an applicant and its only Arabic application. It’s already live with two Cyrillic strings.

Finally, DotBerlin signed its contract for the city TLD .berlin, apparently confirming the rumor that the one it signed on stage alongside .wien at the newdomains.org conference earlier this week was in fact a prop.

According to the DI PRO database, ICANN now has contracts with 80 new gTLDs and 18 legacy gTLDs.

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Famous Four vows to fight .sport objection loss

Kevin Murphy, October 31, 2013, Domain Registries

Famous Four Media has promised to pursue “all available legal avenues” after losing a Community Objection over the .sport gTLD to its Olympic-backed rival.

The portfolio applicant lost out to SportAccord in an October 23 decision by International Chamber of Commerce panelist Guido Santiago Tawil, meaning its .sport application should be rejected by ICANN.

But Famous Four says it’s not over yet. In a statement today, the company said:

Famous Four Media shall pursue rigorously all available legal avenues available to it to have the decision independently reviewed by ICANN and/or others as the case may be, and reversed.

The logical first step of such a threat would be a Reconsideration Request, a relatively cheap way to challenge an ICANN decision with a virtually zero chance of succeeding.

That could be followed by a demand for an Independent Review Panel procedure, which would take much longer and cost significantly more. When ICM Registry won an IRP, the bill ran to millions.

Or Famous Four could try its luck in the courtroom, which could be flustered by the fact that all new gTLD applicants had to sign fairly one-sided legal waivers when they applied.

So what’s the company so worked up about?

It’s lost the chance to run .sport, because the ICC panelist ruled that SportAccord, which is backed by the International Olympic Committee and dozens of official sporting associations, represents the “sport” community and would be harmed if Famous Four were to run the TLD.

Famous Four had argued in its defense that SportAccord can only purport to represent a “subset” of this community — its sporting organization members — rather than everyone who has an interest in sport.

Rather amusingly, in its statement today, FFM linked to the IOC’s own marketing, which bears the slogan “Sport Belongs to All”, to prove its point:

it is Famous Four Media’s unshakable belief that this statement is true and just and that is why Famous Four Media applied for an open TLD – a top level domain that is open to everyone and offered to everyone on a level and equitable basis. Trying to claim ownership and representation of sport is akin to claiming representation for the human race.

An alternative reading would be to state that the IOC’s marketing slogan is, like all marketing slogans, bullshit.

But it actually cuts to the heart of the case itself, which Guido Santiago Tawil found in favor of SportAccord, writing:

The ICANN Guidebook does not require that an “entire” community agree on an objection to an application. In fact, it would be almost impossible for an institution to represent any community as a whole. If such was the requirement, there would be no reason to provide for the possibility of community objections.

It is difficult to imagine which other association may claim representation of the Sport Community besides an institution that represents, as Objector does, more than a hundred well-known sports federations and institutions related to sports.

Another key, and related, factor Community Objection panelists have to consider is whether a community is “clearly delineated”.

It’s here where the arguments that an applicant can use to win a Legal Rights Objection seem to fail under Community Objection scrutiny.

Famous Four said that “sport” is not clearly delineated along the lines defined by SportAccord — ie, members of its federations — because it doesn’t allow, say, hobbyists or the media to get involved.

Similar arguments were made in LROs.

Applicants regularly defended themselves against LROs — where the objector owns a trademark rather than purporting to represent a community — by pointing out all the non-infringing uses of the string.

That defense apparently doesn’t work in Community Objections, with the .sport ICC panelist ruling:

The fact that the media (which may constitute a different community) or viewers are unable to be part of this association is irrelevant to consider Objector as a delineated community. Otherwise, no community could be recognized under the ICANN gTLD proceedings since it would be easy for any Applicant to find secondary or not closed-related members outside of it.

In its response to the ruling today, FFM called this a “non sequitur”, adding:

It is not difficult to conceive of communities which are exclusive, and in all cases these do not consist of generic words like “sport.” One example already given by other commentators might be “.yorkuniversity.”

Another key pivot point in the .sport decision is “detriment”.

Objectors have to prove the “likelihood of material detriment to the rights or legitimate interests of a significant portion of the community to which the string may be explicitly or implicitly targeted.”

The panelist in this case chose to interpret this as “future ‘possible’ damage”, which he said was quite a low bar.

His reasoning, in finding that detriment to SportAccord was likely, seems to hinge quite a bit on the fact that SportAccord has also applied for the same gTLD.

While seemingly discarding “hypothetical” arguments about cybersquatting and such in an open-registration .sport gTLD, he said he “shares Objector’s argument that all domain registrations in a community-based ‘.sport’ gTLD will assure sports acceptable use policies.”

That thinking only works, I think, if you also have a community-based .sport application on the table.

As FFM characterized it today: “What he is in effect saying is that the .SPORT gTLD should be delegated: just not to dot Sport Limited. This was not his decision to make.”

This week at the newdomains.org conference in Munich I spoke to several people who believe some of the highly contested, super-premium new gTLDs will take years to resolve.

It seems that .sport is going to be one of those.

Under the ICANN rules, FFM is supposed to withdrawn its application now. That’s clearly not going to happen.

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