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Rival dot-brand bidders in settlement talks, seek auction delay

Kevin Murphy, November 13, 2019, Domain Registries

Two companies called Merck have managed to delay an ICANN auction for the .merck dot-brand top-level domain.

The two companies applied for .merck in 2012 and have spent the last almost eight years conducting a battle for the string using various ICANN conflict and appeals mechanisms.

Earlier this year, ICANN placed the two applications into a “last resort” auction, the proceeds of which would flow into ICANN’s own coffers.

Scheduled for July, it would have been the first time competing brands had fought for the same gTLD at ICANN auction.

But the two Mercks sought and received multiple extensions to the auction date, telling ICANN that they were in private settlement talks, until ICANN seemingly got bored and denied their last extension request.

The auction was set to go ahead in late October, but the two applicants managed to get another delay anyway by filing a Request for Reconsideration with ICANN, asking that the refusal to extend be overturned.

While the request is likely to be rejected, the mere fact of its filing means both applications continue to be in “On Hold” status while the request is processed, buying the companies at least a month of extra time to come to their own less-expensive resolution.

The two companies are US-based Merck Registry Holdings, Inc. and its former parent, Germany-based Merck KGaA. The German company is over 350 years old and split from its American subsidiary when it was seized by the US government during World War I. They’re both in the chemicals business.

Amazon and Google have been BEATEN by a non-profit in the fight for .kids

Kevin Murphy, August 5, 2019, Domain Registries

One of the longest-fought new gTLD contests has finally been resolved, with a not-for-profit bid beating out Google and Amazon.

Amazon last week withdrew its application for .kids, leaving Hong Kong-based DotKids Foundation the only remaining applicant.

DotKids now has a clear run at the gTLD, with only ICANN contracting and technical testing before .kids goes live in the DNS root. We could be looking at a commercial launch within a year.

It’s a surprising outcome, not only because Amazon has all the money in the world, but also because it actually has a product called the Echo Dot Kids Edition, a candy-striped, parentally-controlled version of its creepy corporate surveillance device.

The fight between the two applicants was settled privately.

While ICANN has scheduled them in for a “last resort” auction more than once, the contention set was “On Hold” due to DotKids’ repeated use of ICANN appeals processes to delay.

My understanding is that it was not an auction. I don’t know whether any money changed hands to settle the dispute. It may just be a case of DotKids beating Amazon in a war of attrition.

DotKids, much like ultimately successful .music applicant DotMusic, pulled every trick in the book to delay .kids going to auction.

It’s filed no fewer than four Requests for Reconsideration with ICANN over the last five years, challenging almost every decision the organization made about the contention set.

Last year, DotKids (which had a reduced application fee under ICANN’s applicant support program) even asked ICANN for money to help it fight Amazon and Google at auction, then filed an RfR when ICANN refused.

The company has been in a Cooperative Engagement Process — a precursor to more formal appeals — with ICANN since February.

DotKids until recently also faced competition from Google, which had applied for the singular .kid but withdrew its application last October.

DotKids Foundation is run by Edmon Chung, perhaps best-known as the founder and CEO of 2003-round gTLD .asia.

I can’t help but feel that he has grasped a poison chalice.

The two examples we have of child-friendly domains to date are .kids.us, which was introduced by point-scoring US politicians under the Bush administration and promptly discarded when (almost literally) nobody used it, and .дети, the Russian equivalent, which usually has fewer than a thousand names in its zone file.

I believe that would-be registrants are broadly wary of signing up to vague content restrictions that could prove PR disasters if inadvertently violated.

In its 2012 application, DotKids said that .kids “will have a core mandate to advocate the production and publishing of more kids friendly content online”.

But what is a “kid”? DotKids said it would adopt the United Nations Convention on the Rights of Child definition as “every human under 18 years old”.

Because the parents of every five-year-old would be happy for their kid to view sites designed for 17-year-olds, right?

It’s going to be challenging to get this one right, I think.

ICANN redacts the secrets of Verisign’s .web deal

Afilias thinks it has found the smoking gun in its fight to wrestle .web out of the hands of rival Verisign, but for now the details are still a closely guarded secret.

The company recently filed an amended complaint in its Independent Review Process case against ICANN, after it managed to get a hold of the deal that Verisign struck with Nu Dot Co, the company that spent $135 million of Verisign’s money to win .web at auction in 2016.

The Domain Acquisition Agreement, which apparently set out the terms under which NDC would bid for .web on Verisign’s behalf, was revealed during disclosure in December.

But in publishing the amended complaint (pdf) (which seems to have happened in the last week or two), ICANN has whited out all references to the contents of this document.

Afilias claims that the DAA proves that NDC broke the rules of the new gTLD program by refusing to disclose to ICANN that it had essentially become a Verisign proxy:

It claims that ICANN should therefore have disqualified NDC from the .web auction.

Based on the terms of the DAA, it is evident that NDC violated the New gTLD Program Rules. ICANN, however, has refused to disqualify NDC from the .WEB contention set, or to disqualify NDC’s bids in the .WEB Auction.

Afilias came second in the 2016 auction, bidding $135 million. NDC/Verisign won with a $142 million bid, committing it to pay the amount Afilias was willing to pay.

While Verisign has said that it plans to market .web, Afilias believes that Verisign’s primary motivation at the auction was to essentially kill off what could have been .com’s biggest competitor. It says in its amended complaint:

ICANN has eviscerated one of the central pillars of the New gTLD Program and one of ICANN’s founding principles: to introduce and promote competition in the Internet namespace in order to break VeriSign’s monopoly

Whether the DAA reveals anything we do not already know is an open question, but Afilias reckons ICANN’s prior failure to disclose its contents represents a failure of its commitment to transparency.

Reading between the lines, it seems Afilias is claiming that ICANN got hold of the DAA some time before it was given to Afilias in discovery last December, but that ICANN “had refused to provide the DAA (or even confirm its existence)”.

By redacting its contents now, ICANN is helplessly playing into the narrative that it’s trying to cover something up.

But ICANN is probably not to blame for the redactions. It was ICANN holding the axe, yes, but it was Verisign that demanded the cuts.

ICANN said in its basis for redactions document (pdf) that it “has an affirmative obligation to redact the information designated as confidential by the third party(ies) unless and until said third party authorizes the public disclosure of such information.”

Afilias has also managed to put George Sadowsky, who for the best part of the last decade until his October departure was one of ICANN’s most independent-minded directors, on the payroll.

In his testimony (pdf), he apparently reveals some details of the ICANN boards private discussions about the .web case.

Guess what? That’s all redacted too, unilaterally this time, by ICANN.

AlpNames could get PAID for abandoning its customers

Kevin Murphy, March 15, 2019, Domain Registrars

So it turns out selling domain names for peanuts to spammers isn’t a viable business model. Who’d have thunk?

As you’ll have no doubt already read elsewhere, ICANN has shut down AlpNames, the deep-discounting registrar with an unenviable reputation for attracting abusive registrants.

But there’s a chance that the company might actually get paid for its customer base, under ICANN rules.

ICANN today terminated AlpNames’ contract, effective immediately, having discovered the “discontinuance of its operations”.

It’s a rare case of ICANN going straight to richly deserved termination, skipping over the breach notice phase.

The former registrar’s web site has been down for the best part of a week, resolving to a Cloudflare error message saying the AlpNames web server is missing its SSL certificate.

But it appears its customers may have been experiencing problems accessing their accounts even earlier.

Judging by ICANN’s termination notice, the organization has had just about as much luck contacting AlpNames management as DI, which is to say: none.

CEO Iain Roache appears to have simply stopped paying attention to the company, for reasons unknown, allowing it to simply fade away.

At least three members of senior staff have left the company over the last several months, with former COO Damon Barnard telling DI he was asked to leave as a cost-cutting measure as Roache attempted to relocate the company from Gibraltar to the UK.

I gather that Roache is also currently tied up in litigation related to the failure of his old registry management business, Famous Four Media, which was removed by gTLD portfolio owner Domain Venture Partners last year.

So what happens now to AlpNames customers?

Fortunately, most of them should suffer only minor inconvenience.

ICANN has initiated its De-Accredited Registrar Transition Procedure, which will see all of AlpNames’ domains forcibly transferred to another registrar.

This often uses the data that registrars are obliged to periodically escrow, but in this case AlpNames uses LogicBoxes as a registrar back-end, so presumably LogicBoxes still has fresh, live data.

AlpNames had 532,941 domain names across all gTLDs on its IANA tag at the last official count, at the end of November. It’s believed to be closer to 700,000 today.

In November, its top two gTLDs were .top and .gdn, which had 280,000 names between them. It had over 19,000 .com names under management

Almost 700,000 names is a big deal, making AlpNames a top 40 registrar, and would make a nice growth spurt for any number of struggling registrars.

The portfolio could be a bit of a poisoned chalice, however, containing as it likely does a great many low-quality and some possibly abusive registrations.

At least one registrar, Epik, has publicly stated its desire to take over these domains, but due to the volume of AlpNames DUM it could be a competitive bidding process between multiple registrars.

Under the ICANN rules (pdf), a “full application process” is generally favored for defunct registrars with over 1,000 domains, when the de-accredited registrar has not named a successor.

The scoring system used to pick a winner has many criteria, but it generally favors larger registrars. They have to show they have the scale to handle the extra technical and customer support load required by the transition, for example.

It also favors registrars with breadth of gTLD coverage. They have to be accredited in all the gTLDs the dead registrar was. AlpNames supported 352 gTLDs and had active domains in 270 of them, according to November’s registry reports.

Language support may be an issue too, in case for example a substantial chunk of AlpNames business came from, say, China.

All applying registrars that score above a certain threshold are considered tied, and the tie-breaker is how much they’re willing to pay for the portfolio.

Unlike gTLD auctions, ICANN does not receive the proceeds of this auction, however. According to the policy (with my emphasis):

This procedure is not intended to create a new form of revenue for ICANN. To the extent payment is received as part of a bulk transfer, ICANN will apply funds against any debt owed by the registrar to ICANN and forward the remaining funds, if any, to the de-accredited registrar.

That’s right, there’s a chance AlpNames might actually get a small windfall, despite essentially abandoning its customers.

Think about it like the government using eminent domain to buy a house it wishes to demolish to make way for a new road. Except the house’s cellar is full of kidnapped children. And it’s on fire.

Of course, this might not happen. ICANN might decide that there’s not enough time to run a full application process without risk to AlpNames’ customers and instead simply award the dead registrar’s portfolio to one of the registrars in its pre-approved pool of gaining registrars.

That choice would be partly based on ICANN judgement and partly on which registrar is next in the round-robin queue of pre-qualified registrars.

Here’s a handy diagram that shows the procedure.

Deaccred

O.com might be a one-off for Verisign

Kevin Murphy, March 14, 2019, Domain Registries

Verisign today was finally given approval to auction off o.com, the first single-character .com domain to hit the market since the early 1990s.

The ICANN board of directors voted to approve a contractual amendment that will lift the ban on single-character .coms in this instance, but it may not necessarily mean more will be sold in future.

The resolution passed in Japan states that the approval is “limited to the unique circumstances of this particular domain name, and the approval of the amendment does not establish a precedent that applies in other circumstances.”

So if Verisign decides it wants to sell off the remaining 22 one-letter .com domains in future, it’s going to have to go through the same lengthy approval process again, with no guarantee that ICANN will give it the nod.

Still, if the o.com proposal is hunky-dory this time around, I fail to see why ICANN would reject an identical proposal to sell a different domain.

As I explained in a blog post a week ago, Verisign will only get $7.85 a year for the domain, regardless of how many millions it raises.

The rest of the money will be distributed to non-profit causes by an independent third party.

While the auction has already cost Verisign far more money than it will make, it’s a nice PR win for the next time its .com price-raising powers are questioned.

Overstock.com, which has been lobbying ICANN and Verisign for the release of o.com for years is a virtually guaranteed bidder.

Former ICANN bigwig Kurt Pritz said recently that Overstock offered to pay ICANN $1 million to $2 million for the domain (somewhat shadily, it has to be said) over a decade ago.

Other O trademark owners that may show up include sporting goods vendor Oakley and future President of the United States Oprah Winfrey.

I hope bidders have to sign a no-suing covenant, as this is the kind of thing that could easily wind up in court.

Donuts loses to ICANN in $135 million .web auction appeal

Kevin Murphy, October 16, 2018, Domain Registries

Donuts has lost a legal appeal against ICANN in its fight to prevent Verisign running the .web gTLD.

A California court ruled yesterday that a lower court was correct when it ruled almost two years ago that Donuts had signed away its right to sue ICANN, like all gTLD applicants.

The judges ruled that the lower District Court had “properly dismissed” Donuts’ complaint, and that the covenant not to sue in the Applicant Guidebook is not “unconscionable”.

Key in their thinking was the fact that ICANN has an Independent Review Process in place that Donuts could use to continue its fight against the .web outcome.

The lawsuit was filed by Donuts subsidiary Ruby Glen in July 2016, shortly before .web was due to go to an ICANN-managed last-resort auction.

Donuts and many others believed at the time that one applicant, Nu Dot Co, was being secretly bankrolled by a player with much deeper pockets, and it wanted the auction postponed and ICANN to reveal the identity of this backer.

Donuts lost its request for a restraining order.

The auction went ahead, and NDC won with a bid of $135 million, which subsequently was confirmed to have been covertly funded by Verisign.

Donuts then quickly amended its complaint to include claims of negligence, breach of contract and other violations, as it sought $22.5 million from ICANN.

That’s roughly how much it would have received as a losing bidder had the .web contention set been settled privately and NDC still submitted a $135 million bid.

As it stands, ICANN has the $135 million.

That complaint was also rejected, with the District Court disagreeing with earlier precedent in the .africa case and saying that the covenant not to sue is enforceable.

The Appeals Court has now agreed, so unless Donuts has other legal appeals open to it, the .web fight will be settled using ICANN mechanisms.

The ruling does not mean ICANN can go ahead and delegate .web to Verisign.

The .web contention set is currently “on-hold” because Afilias, the second-place bidder in the auction, has since June been in a so-called Cooperative Engagement Process with ICANN.

CEP is a semi-formal negotiation-phase precursor to a full-blown IRP filing, which now seems much more likely to go ahead following the court’s ruling.

The appeals court ruling has not yet been published by ICANN, but it can be viewed here (pdf).

The court heard arguments from Donuts and ICANN lawyers on October 9, the same day that DI revealed that ICANN Global Domains Division president Akram Atallah had been hired by Donuts as its new CEO.

A recording of the 32-minute hearing can be viewed on YouTube here or embedded below.

Chutzpah alert! DotKids wants ICANN handout to fight gTLD auction

Kevin Murphy, September 24, 2018, Domain Policy

New gTLD applicant DotKids Foundation has asked ICANN for money to help it fight for .kids in an auction against Amazon and Google.

The not-for-profit was the only new gTLD applicant back in 2012 to meet the criteria for ICANN’s Applicant Support Program, meaning its application fee was reduced by $138,000 to just $47,000.

Now, DotKids reckons ICANN has a duty to carry on financially supporting it through the “later stages of the process” — namely, an auction with two of the world’s top three most-valuable companies.

The organization even suggests that ICANN dip into its original $2 million allocation to support the program to help fund its bids.

Because .kids is slated for a “last resort” auction, an ICANN-funded winning bid would be immediately returned to ICANN, minus auction provider fees.

It’s a ludicrously, hilariously ballsy move by the applicant, which is headed by DotAsia CEO Edmon Chung.

It’s difficult to see it as anything other than a delaying tactic.

DotKids is currently scheduled to go to auction against Google’s .kid and Amazon’s .kids application on October 10.

But after ICANN denied its request for funding last month, DotKids last week filed a Request for Reconsideration (pdf), which may wind up delaying the auction yet again.

According to DotKids, the original intent of the Applicant Support Program was to provide support for worthy applicants not just in terms of application fees, but throughout the application process.

It points to the recommendations of the Joint Applicant Support working group of the GNSO, which came up with the rules for the support program, as evidence of this intent.

It says ICANN needs to address the JAS recommendations it ignored in 2012 — something that could time quite some time — and put the .kids auction on hold until then.

.kids gTLD auction probably back on

Amazon, Google and a small non-profit appear to be headed to auction to fight for ownership of child-friendly new gTLDs.

ICANN last week defrosted the contention set for .kids/.kid; DotKids Foundation’s bid for .kids is no longer classified as “On-Hold”.

This means an ICANN-managed “last resort” auction is probably back on, having been cancelled last December in response to a DotKids request for reconsideration.

The RfR was thrown out by the ICANN board of directors, on the recommendation of its Board Accountability Mechanisms Committee, in May.

.kids and .kid are in the same contention set because DotKids fought and won a String Confusion Objection against Google’s .kid application.

It’s also directly competing with Amazon for .kids.

A last-resort auction would mean that proceeds would be deposited in a special ICANN bank account currently swollen with something like a quarter-billion dollars.

Three-letter .net leads as NamesCon charity auction raises €4,150 for Kenyan school

Kevin Murphy, June 8, 2018, Domain Sales

A domain auction at NamesCon Europe raised €4,150 for charity today.

A total of 22 domains were sold, each of which had been donated by a conference attendee.

The top sale was bbe.net, which went for €650, followed by xvs.net, which fetched €500.

The three-letter jjh.org went for €150, which some said was a bargain.

Also selling were smartphone.global and caring.global for €450 and €400 respectively.

The auction was organized by Shaun Wilkinson, COO of domain broker Nidoma, who wants to raise a total of €6,500 during NamesCon for the Hope Children’s Centre, which is trying to finish building a secondary school in Kenya.

Anyone wishing to help the charity reach its target can donate online here.

Have your say on single-character .com domains

ICANN wants your opinion on its plan to allow Verisign to auction off o.com, with a potential impact on the future release of other single-character .com domain names.

The organization has published a proposed amendment to the .com registry contract and opened it for public comment.

The changes would enable Verisign to sell o.com, while keeping all other currently unallocated single-character names on its reserved list.

The company would not be able to benefit financially from the auction beyond its standard $7.85 reg fee — all funds would be held by an independent third-party entity and distributed to undisclosed non-profit causes.

The arrangement would also see the buyer pay a premium renewal fee of 5% of the initial outlay, doubling the purchase price over the course of 25 years.

They would not be able to resell the domain without selling the registrant company itself.

It’s a pretty convoluted system being proposed, given that there may well end up only being one bidder.

Overstock.com, the online retailer, has been pressuring ICANN and Verisign to release o.com for well over a decade, and the proposed auction seems to be a way to finally shut it up.

The company has a US trademark on O.com, so any other bidder for the name would probably be buying themselves a lawsuit.

The proposed auction system does not address trademark issues — there’s no sunrise period of trademark claims period.

One party already known to be upset about lack of rights protection is First Place Internet, a search engine company that has a US trademark on the number 1.

It told ICANN (pdf) back in January that the o.com deal would “set a dangerous precedent” for future single-character name releases.

The ICANN public comment period, which comes after ICANN received the all-clear from US competition regulators, closes June 20.

As a matter of disclosure, several years ago I briefly acted as a consultant to a third party in support of the Verisign and Overstock positions, but I have no current interest in the situation one way or the other.