Donuts is demanding ICANN pay up the $22.5 million it reckons it is owed from the auction of the .web gTLD, which sold late last month for $135 million.
The company yesterday amended its existing California lawsuit against ICANN to allege that Verisign tried to avoid regulatory scrutiny by secretly bankrolling successful bidder Nu Dot Co.
The updated complaint (pdf) reads:
VeriSign’s apparent acquisition of NDC’s application rights was an attempt to avoid allegations of anti-competitive conduct and antitrust violations in applying to operate the .WEB gTLD, which is widely viewed by industry analysts as the strongest competitor to the .COM and .NET gTLDs.
Donuts wants a minimum of $22.5 million, which is roughly what each of the six losing .web applicants would have received if the contention set had been resolved via private auction.
(I previously reported that number as $18.5 million, because I accidentally counted .webs applicant Vistaprint as losing .webs applicant, when in fact it won .webs, paying $1.)
The company’s claims are still based around the allegation that ICANN breached its duties by failing to root out Verisign as the puppet-master.
The complaint alleges breach of contract, negligence, unfair competition and other claims. It says:
ICANN allowed a third party to make an eleventh-hour end run around the application process to the detriment of Plaintiff, the other legitimate applicants for the .WEB gTLD and the Internet community at large.
ICANN intentionally failed to abide by its obligations to conduct a full and open investigation into NDC’s admission because it was in ICANN’s interest that the .WEB contention set be resolved by way of an ICANN auction.
The irony here is that Ruby Glen LLC, the Donuts company that applied for .web, is subject to an arrangement not dissimilar to NDC’s with Verisign.
Ruby Glen is owned by Covered TLD LLC, in turn a wholly-owned Donuts subsidiary.
It’s well-known that fellow portfolio registry Rightside has rights to acquire Covered TLD’s over 100 applied-for strings, but this is not disclosed in its .web application.
ICANN will no doubt make use of this fact when it files its answer to the complaint.
Verisign itself has not been added as a defendant, but much of the new text in the complaint focuses on its now-confirmed involvement with NDC. The suit reads:
Had VeriSign’s apparent acquisition of NDC’s application rights been fully disclosed to ICANN by NDC… the relationship would have also triggered heightened scrutiny of VeriSign’s Registry Agreements with ICANN for .COM and .NET, as well as its Cooperative Agreement with the Department of Commerce.
The fact that Verisign is allowed to collect over half a billion dollars cash every year as a result of its state-endorsed monopoly is a longstanding cause of embarrassment for the Department of Commerce.
It has taken an interest in regulating Verisign’s .com contract in the past — it’s the only reason Verisign has not been able to raise .com prices in the last few years.
But the US government is not a party to the .web contract (unlike .com, where it has a special relationship with Verisign) and is not involved in the new gTLD program’s management or policies.
The complaint also makes reference to a completely unrelated Independent Review Process declaration from last week, which slammed ICANN for its lack of accountability and transparency.
Donuts faces the additional problem that, like all new gTLD applicants, it signed a covenant not to sue ICANN when it applied for its new gTLDs.
A judge in the DotConnectAfrica v ICANN can has allowed that lawsuit to proceed, regardless, but it may prove a stumbling block for Donuts.
It all looks a bit flimsy to me, but I’ve learned not to second-guess American judges so we’ll just have to see how it plays out.
Uniregistry has emerged as the successful registry-to-be of .shopping from the convoluted .shop/.shopping new gTLD contention set.
Donuts, the only competing applicant for the string, withdrew its application late last week.
As we previously reported, the .shop/.shopping contention sets were joined at the hip due to a bizarre string similarity challenge, making the scheduled auction very complex.
But Donuts and Uniregistry seem to have come to a private arrangement about .shopping, outside of the ICANN auction process, making .shop a straightforward nine-way fight.
Donuts tells me the auction, in which it is participating, is still scheduled for January 27.
The controversial new gTLD .cam has been won at auction by Dutch porn site operator AC Webconnecting, putting an end to over two years of back-and-forth objections.
Rival applicants Rightside and Famous Four Media both withdrew their applications earlier this week.
The contest for .cam was marked by several objections and appeals.
In 2013, Verisign filed and lost String Confusion Objections against AC Webconnecting and Famous Four, but won its near-identical objection against Rightside.
Verisign had claimed that .cam and .com are so similar-looking that confusion among internet users is bound to arise.
Because the SCO panels in the three cases returned differing opinions, Rightside was one of two applicants given the right to appeal by ICANN in October 2014.
I never quite understood why Verisign wasn’t also given the right to appeal.
Rightside won the right to stay in the .cam contention set almost a year later.
Despite all that effort, it did not prevail in the resulting auction.
Separately, back in 2013, AC Webconnecting filed and lost Legal Rights Objections against its two rivals, based on a “.cam” trademark it acquired purely for the purpose of fighting off new gTLD competitors.
I’d be lying if I said I knew a lot about the soon-to-be registry.
Based in Rotterdam, its web site comes across as a wholly safe-for-work web design firm.
However, it seems to be mainly in the business of operating scores, if not hundreds, of webcam-based porn sites.
Its application for .cam states that it will be for everyone with an interest in photography, however.
When it goes live, its most direct competitor is likely to be Famous Four’s .webcam, which already has an 18-month and 70,000-domain head start.
It remains to be seen whether its clear similarity to .com will in fact cause significant confusion.
Booking.com has won the right to operate .hotels after an auction concluded a protracted fight over the gTLD.
In an ICANN-run auction yesterday, Booking.com prevailed with a winning bid of $2.2 million.
Its sole competitors was Travel Reservations (formerly Despegar Online), which had applied for the Portuguese word .hoteis.
In 2012, a String Similarity Review panel concluded that .hotels and .hoteis look too similar to coexist, due to the likelihood of confusion between I and l in sans-serif fonts.
Neither applicant agreed with that decision, knowing that it would result in a expensive auction, and Booking.com filed a Request for Reconsideration and then, in March 2013, an Independent Review Process complaint.
After two years, it lost the IRP. But the panel said it had “legitimate concerns” about the fairness of the SSR process and ordered ICANN to pay half of its costs.
Now, Booking.com has had to fork out another $2.2 million for the string.
That’s not particularly expensive as ICANN-auctioned gTLDs go. Eight of the 13 other strings ICANN has auctioned have sold for more.
ICANN’s auction proceeds to date now stands at $63,489,127, which is being held in a separate bank account for purposes yet to be determined.
Registrar group Web.com is changing its stock market ticker symbol to WEB tomorrow, in another sign that it really, really wants to be identified with the string.
The switch from WWWW may indicate that the NASDAQ-listed company’s six rivals for the new gTLD .web have a fight — and a possible big payday — on their hands when .web finally goes to auction.
Web.com is competing with Nu Dot Co, Radix, Google, Donuts, Afilias and Schlund for the gTLD.
The company has already fiercely defended its “right” to .web, filing successful String Confusion Objections against .webs applicant Vistaprint.
Vistaprint subsequently filed an ICANN Independent Review Process complaint to appeal its SCO loss.
Last month, the IRP was won by ICANN, but the panel left the door open for ICANN to reconsider its decision.
The .web auction is not likely to go ahead until the Vistaprint issue is resolved.
If ICANN decides the two strings can be delegated separately, what I think is the last barrier to the .web auction going ahead disappears.
If not, then Vistaprint finds itself as the seventh contender in the auction, which may give it the impetus to carry on challenging the ruling.
ICANN’s board plans to discuss the issue at its next meeting, December 10.
Which way it leans will give an indication of how long it will be before .web goes to auction.