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For $10,000, Donuts will block hundreds of typos and premiums for your brand

Kevin Murphy, September 28, 2016, Domain Registries

Donuts has announced an expansion of its domain-blocking service that will enable brand owners to cheaply (kinda) block misspellings of their trademarks.

Brand owners whose trademarks match “premium” generic strings will also be able to take matching domains out of circulation using the registry’s new DPML Plus service.

DPML, for Domain Protected Marks List, is Donuts’ way of giving trademark owners a way to bulk-block their marks across Donuts’ entire stable of gTLDs, which currently stands at 197 strings.

With typical sunrise period prices at $200+, registering a single string across almost 200 gTLDs during sunrise could near a $40,000 outlay. In general availability, it would often be about a tenth of that price.

But the original DPML, with a roughly $3,000 retail price for a five-year block, reduced the cost to protect a single string to about $3 per domain per year.

Now, with DPML Plus, Donuts is offering a premium service that adds the ability to block typos and premium names.

Typos and substring-based blocking were near the top of the intellectual property community’s wish-list when the new gTLD program was being developed, but those features were never incorporated into ICANN rights protection mechanisms.

But for $9,999 (suggested retail price), DPML Plus buyers get a 10-year block on the string that matches their trademark and three extra strings that are either typos of the trademark or contain the trademark as a substring, Donuts said.

So Google would for example be able to block android.examples, anrdoid.examples, androidphone.examples and googleandroidphone.examples using a single DPML Plus subscription.

Basically, they get to block up to 788 domains at $9,999 over 10 years, which works out to about $1.26 per domain per year.

It looks nice and cheap on that basis, but companies wishing to block dozens of base trademarks would be looking at six or seven-figure up-front payments.

DPML Plus also lifts the ban on blocking “premium” domains.

Under the old DPML, customers could not block a domain if Donuts had flagged it with a premium price, but under DPML Plus they can.

This opens the door to brand owners who have valuable trademarks on generic dictionary words to get them blocked across the whole Donuts portfolio.

A Donuts spokesperson said the company reserves the right to reject such strings if it suspects gaming.

Another benefit of the DPML Plus is the ability to prevent other companies with identical trademarks later unblocking and snatching blocked domains for themselves.

Currently, third parties with matching brands can “override” DPML blocks, but that feature is turned off for DPML Plus subscribers. They get exclusivity for the life of the block.

Donuts said the Plus offer will only be available to buy between October 1 and December 31.

As an added carrot, from January 1 the price of its vanilla DPML service is going to go up by an amount the company currently does not want to disclose.

Could ICANN reject Verisign’s $135m .web bid?

Kevin Murphy, September 21, 2016, Domain Registries

ICANN is looking into demands for it to throw out Verisign’s covert $135 million winning bid for the highly prized .web gTLD.

ICANN last week told the judge hearing Donuts’ .web-related lawsuit that it is “currently in the process of investigating certain of the issues raised” by Donuts through its “internal accountability mechanisms”.

Donuts is suing for $22.5 million, claiming ICANN should have forced Nu Dot Co to disclose that its .web bid was being secretly bankrolled by Verisign and alleging that the .com heavyweight used NDC as cover to avoid regulatory scrutiny.

ICANN’s latest filing (pdf), made jointly with Donuts, asked for an extension to October 26 of ICANN’s deadline to file a response to Donuts’ complaint.

It was granted, the second time the deadline has been extended, but the judge warned it was also the final time.

The referenced “internal accountability mechanism” would seem to mean the Cooperative Engagement Process — a low-formality bilateral negotiation — that Donuts and fellow .web bidder Radix initiated against ICANN August 2.

The filing states that the “resolution of certain issues in controversy may be aided by allowing [ICANN] to complete its investigation of [Donuts’] allegations prior to the filing of its responsive pleading.”

In other words, Donuts is either hopeful that ICANN may be able to resolve some of its complaints in the next month, or it’s not particularly impatient about the case progressing.

Meanwhile, fellow .web applicant Afilias has demanded for the second time that ICANN hand over .web to it, as the second-highest bidder, throwing out the NDC/Verisign application.

In a September 9 letter, published last night, Afilias told ICANN to “disqualify and reject” NDC’s application, alleging at least three breaches of ICANN rules.

Afilias says that by refusing to disclose Verisign’s support for its bid, NDC broke the rules and should have its application thrown out.

The company also confirmed on the public record for what I believe is the first time that it was the second-highest bidder in the July 27 auction.

Afilias would pay somewhere between $57.5 million and $71.9 million for the gTLD, depending on what the high bid of the third-placed applicant was.

In its new letter, Afilias says NDC broke the rule from the Applicant Guidebook that does not allow applicants to “resell, assign or transfer any of applicant’s rights or obligations in connection with the application”.

It also says that NDC was obliged by the AGB to notify ICANN of “changes in financial position and changes in ownership or control”, which it did not.

It finally says that Verisign used NDC as a front during the auction, in violation of auction rules.

“In these circumstances, we submit that ICANN should disqualify NDC’s bid and offer to accept the application of Afilias, which placed the second highest exit bid,” Afilias general counsel Scott Hemphill wrote (pdf).

Hemphill told ICANN to defer from signing a Registry Agreement with NDC or Verisign, strongly implying that Afilias intends to invoke ICANN accountability mechanisms (presumably meaning the Request for Reconsideration process and/or Independent Review Process).

While Afilias and Donuts are both taking issue with the secretive nature of Verisign’s acquisition of .web, they’re not necessarily fighting the same corner.

Donuts is looking for $22.5 million because that’s roughly what it would have received if the .web contention set had been resolved via private auction and $135 million had been the winning bid.

But Afilias wants the ICANN auction outcome to stand, albeit with NDC’s top bid rejected. That would mean Donuts, Radix, and the other applicants would still receive nothing.

There’s also the question of other new gTLD applications that have prevailed at auction and been immediately transferred to third-party non-applicants.

The most notable example of this was .blog, which was won by shell company Primer Nivel with secretive backing from WordPress maker Automattic.

Donuts itself regularly wins gTLD auctions and immediately transfers its contracts to Rightside under a pre-existing agreement.

In both of those cases, the reassignment deals predated, but were not disclosed in, the respective applications.

There’s the recipe here for a messy, protracted bun fight over .web, which should come as no surprise to anyone.

.hotel losers gang up to threaten ICANN with legal bills

Kevin Murphy, August 30, 2016, Domain Registries

The six losing applicants for the .hotel new gTLD are collectively threatening ICANN with a second Independent Review Process action.

Together, they this week filed a Request for Reconsideration with ICANN, challenging its decision earlier this month to allow the Afilias-owned Hotel Top Level Domain Sarl application to go ahead to contracting.

HTLD won a controversial Community Priority Evaluation in 2014, effectively eliminating all rival applicants, but that decision was challenged in an IRP that ICANN ultimately won.

The other applicants think HTLD basically cobbled together a bogus “community” in order to “game” the CPE process and avoid an expensive auction.

Since the IRP decision, the six other applicants — Travel Reservations, Famous Four Media, Radix, Minds + Machines, Donuts and Fegistry — have been arguing that the HTLD application should be thrown out due to the actions of Dirk Krischenowski, a former key executive.

Krischenowski was found by ICANN to have exploited a misconfiguration in its own applicants’ portal to download documents belonging to its competitors that should have been confidential.

But at its August 9 meeting, the ICANN board noted that the timing of the downloads showed that HTLD could not have benefited from the data exposure, and that in any event Krischenowski is no longer involved in the company, and allowed the bid to proceed.

That meant the six other applicants lost the chance to win .hotel at auction and/or make a bunch of cash by losing the auction. They’re not happy about that.

It doesn’t matter that the data breach could not have aided HTLD’s application or its CPE case, they argue, the information revealed could prove a competitive advantage once .hotel goes on sale:

What matters is that the information was accessed with the obvious intent to obtain an unfair advantage over direct competitors. The future registry operator of the .hotel gTLD will compete with other registry operators. In the unlikely event that HTLD were allowed to operate the .hotel gTLD, HTLD would have an unfair advantage over competing registry operators, because of its access to sensitive business information

They also think that HTLD being given .hotel despite having been found “cheating” goes against the spirit of application rules and ICANN’s bylaws.

The RfR (pdf) also draws heavily on the findings of the IRP panel in the unrelated Dot Registry (.llc, .inc, etc) case, which were accepted by the ICANN board also on August 9.

In that case, the panel suggested that the board should conduct more thorough, meaningful reviews of CPE decisions.

It also found that ICANN staff had been “intimately involved” in the preparation of the Dot Registry CPE decision (though not, it should be noted, in the actual scoring) as drafted by the Economist Intelligence Unit.

The .hotel applicants argue that this decision is incompatible with their own IRP, which they lost in February, where the judges found a greater degree of separation between ICANN and the EIU.

Their own IRP panel was given “incomplete and misleading information” about how closely ICANN and the EIU work together, they argue, bringing the decision into doubt.

The RfR strongly hints that another IRP could be in the offing if ICANN fails to cancel HTLD application.

The applicants also want a hearing so they can argue their case in person, and a “substantive review” of the .hotel CPE.

The HTLD application for .hotel is currently “On Hold” while ICANN sorts through the mess.

Industry lays into Verisign over .com deal renewal

Kevin Murphy, August 15, 2016, Domain Registries

Some of Verisign’s chickens have evidently come home to roost.

A number of companies that the registry giant has pissed off over the last couple of years have slammed the proposed renewal of its .com contract with ICANN.

Rivals including XYZ.com (sued over its .xyz advertising) and Donuts (out-maneuvered on .web) are among those to have filed comments opposing the proposed new Registry Agreement.

They’re joined by business and intellectual property interests, concerned that Verisign is being allowed to carry on without implementing any of the IP-related obligations of other gTLDs, and a dozens of domainers, spurred into action by a newsletter.

Even a child protection advocacy group has weighed in, accusing Verisign of not doing enough to prevent child abuse material being distributed.

ICANN announced last month that it plans to renew the .com contract, which is not due to expire for another two years, until 2024, to bring its term in line with Verisign’s contracts related to root zone management.

There are barely any changes in the proposed new RA — no new rights protection mechanisms, no changes to how pricing is governed, and no new anti-abuse provisions.

The ensuing public comment period, which closed on Friday, has attracted slightly more comments than your typical ICANN comment period.

That’s largely due to outrage from readers of the Domaining.com newsletter, who were urged to send comments in an article headlined “BREAKING: Verisign doubles .COM price overnight!”

That headline, for avoidance of doubt, is not accurate. I think the author was trying to confer the idea that the headline could, in his opinion, be accurate in future.

Still, it prompted a few dozen domainers to submit brief comments demanding “No .com price increases!!!”

The existing RA, which would be renewed, says this about price:

The Maximum Price for Registry Services subject to this Section 7.3 shall be as follows:

(i) from the Effective Date through 30 November 2018, US $7.85;

(ii) Registry Operator shall be entitled to increase the Maximum Price during the term of the Agreement due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS, not to exceed the smaller of the preceding year’s Maximum Price or the highest price charged during the preceding year, multiplied by 1.07.

The proposed amendment (pdf) that would extend the contract through 2024 does not directly address price.

It does, however, contain this paragraph:

Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Effective Date, to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce.

The Cooperative Agreement is the second contract in the three-way relationship between Verisign, ICANN and the US Department of Commerce that allows Verisign to run not only .com but also the DNS root zone.

It’s important because Commerce exercised its powers under the agreement in 2012 to freeze .com prices at $7.85 a year until November 2018, unless Verisign can show it no longer has “market power”, a legal term that plays into monopoly laws.

So what the proposed .com amendments mean is that, if the Cooperative Agreement changes in 2018, ICANN and Verisign are obligated to discuss amending the .com contract at that time to take account of the new terms.

If, for example, Commerce extends the price freeze, Verisign and ICANN are pretty much duty bound to write that extension into the RA too.

There’s no credible danger of prices going up before 2018, in other words, and whether they go up after that will be primarily a matter for the US administration.

The US could decide that Verisign no longer has market power then and drop the price freeze, but would be an indication of a policy change rather than a reflection of reality.

The Internet Commerce Association, which represents high-volume domainers, does not appear particularly concerned about prices going up any time soon.

It said in its comments to ICANN that it believes the new RA “will have no effect whatsoever upon the current .Com wholesale price freeze of $7.85 imposed on Verisign”.

XYZ.com, in its comments, attacked not potential future price increases, but the current price of $7.85, which it characterized as extortionate.

If .com were put out to competitive tender, XYZ would be prepared to reduce the price to $1 per name per year, CEO Daniel Negari wrote, saving .com owners over $850 million a year — more than the GDP of Rwanda.

ICANN should not passively go along with Verisign’s selfish goal of extending its unfair monopoly over the internet’s most popular top-level domain name.

Others in the industry chose to express that the proposed contract does not even attempt to normalize the rules governing .com with the rules almost all other gTLDs must abide by.

Donuts, in its comment, said that the more laissez-faire .com regime actually harms competition, writing:

It is well known that new gTLDs and now many other legacy gTLDs are heavily vested with abuse protections that .COM is not. Thus, smaller, less resource-rich competitors must manage gTLDs laden (appropriately) with additional responsibilities, while Verisign is able to operate its domains unburdened from these safeguards. This incongruence is a precise demonstration of disparate treatment, and one that actually hinders effective competition and ultimately harms consumers.

It points to numerous statistics showing that .com is by far the most-abused TLD in terms of spam, phishing, malware and cybersquatting.

The Business Constituency and Intellectual Property Constituency had similar views about standardizing rules on abuse and such. The IPC comment says:

The continued prevalence of abusive registrations in the world’s largest TLD registry is an ongoing challenge. The terms of the .com registry agreement should reflect that reality, by incorporating the most up-to-date features that will aid in the detection, prevention and remediation of abuses.

The European NGO Alliance for Child Safety Online submitted a comment with a more narrow focus — child abuse material and pornography in general.

Enasco said that 41% of sites containing child abuse material use .com domains and that Verisign should at least have the same regulatory regime as 2012-round gTLDs. It added:

Verisign’s egregious disinterest in or indolence towards tackling these problems hitherto hardly warrants them being rewarded by being allowed to continue the same lamentable
regime.

I couldn’t find any comments that were in unqualified support of the .com contract renewal, but the lack of any comments from large sections of the ICANN community may indicate widespread indifference.

The full collection of comments can be found here.

Donuts rolls the dice with $22.5 million .web lawsuit

Kevin Murphy, August 9, 2016, Domain Registries

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.