Here’s how Donuts wants to resolve its 158 new gTLD contention fights

Donuts is backing a private auction model designed and managed by Cramton Associates as its preferred solution for resolving its 158 new gTLD contention sets.
The proposals, spelled out by auction design expert Peter Cramton during private sessions with new gTLD applicants, caused a bit of a buzz — not all of it positive — at the ICANN meeting in Toronto last week.
But Donuts co-founder Jon Nevett told DI today that Cramton has addressed rivals’ concerns and that Donuts wants to handle as many of its contention sets as possible via private auction.
The idea is that private auctions will be faster and cheaper for applicants than the process set out by ICANN as the “last resort” method for resolving contention sets.
In the ICANN model, all of the proceeds of the auction would go to ICANN, to be distributed to worthy causes at a later date. But with a private auction, the winning bidder pays the losers.
This makes it more attractive to applicants, according to Donuts.
“The cost of losing an ICANN auction is greater than the cost of losing a private auction,” Nevett said. “If you lose an ICANN auction you get nothing, zero, you lose your asset.”
But with private auctions, “it doesn’t hurt as much to lose, so the theory is the second-place guys won’t stretch as much,” he said.
Cramton is a professor of economics at the University of Maryland. A long-time auction specialist, he’s been involved in designing processes for selling off wireless spectrum around the world.
For new gTLDs, Cramton proposes an “ascending clock” auction. At each stage, the price is increased by the auctioneer and the bidders/sellers can either commit to pay that amount or drop out.
The last man standing wins the gTLD, paying the amount that the second-highest bidder was willing to pay.
The money would be divided equally between all the losing applicants. According to Cramton, the advantage over proportional distribution is that it does not encourage applicants to over-bid, keeping costs down.
Cramton’s original plan, which left some applicants scratching their heads last week, was to run the auctions in the first quarter of 2013, before ICANN announces the results of Initial Evaluation.
That would mean that losing bidders would get a 70% refund of their ICANN application fee, which may be an attractive percentage in the case of low-value strings.
But it also means that an applicant could win an auction and later discover its application has been rejected. The other applicants would have withdrawn, so the gTLD would just disappear into the ether.
Judging by a series of videos shot last week and published on Cramton’s YouTube account, many applicants are in favor of running the auctions after IE results have been announced.
Another complaint expressed by Donuts’ competitors last week is Cramton’s “all or nothing” approach, in which Donuts’ rivals would have to commit to use the auctions for their entire portfolio of applications.
According to Nevett, that idea is no longer on the table.
“In the beginning he was discussing that it would have to be all your TLDs or none, and I think a lot of applicants told him that was unacceptable, so he changed his view,” he said.
The idea now is that the auctions would proceed on a TLD-by-TLD basis.
Given that winning bidders are giving money to their competitors, another concern is the ordering of the auctions. You don’t necessarily want to give your rivals a big wedge of cash they can use to out-bid you on the next lot.
The preferred solution here appears to be a simultaneous auction, with all the participating contention sets being resolved at the same time.
There was also a deal of suspicion in Toronto about whether Cramton would be biased towards Donuts, given that Donuts is responsible for finding Peter Cramton and introducing him to the gTLD program.
But Nevett said that Donuts has not contracted with Cramton. Peter Cramton showed up in Toronto on his own dime and has not required an up-front payment from Donuts, Nevett said.
“Every applicant has a veto on whether to participate, and it won’t happen unless every applicant wants to do it,” Nevett said. “Our incentive is to have an auction provider who is attractive to every applicant.”
“Our goal is to get as many applicants to participate in a private auction, so we need the auction to be designed in a way that is simple, fair and inclusive,” he said.
But there’s no denying that Donuts has a greater incentive than most to have a consolidated auction. By its own admission, it’s an eight-person operation without the manpower to negotiate 158 contention sets.
Cramton’s materials from last week’s Toronto sessions can be found at applicantauction.com or here.

Donuts signs up to Architelos anti-abuse service

Architelos has a secured its first major customer win for the NameSentry anti-abuse service that it launched back in August.
Donuts, the highest-volume portfolio gTLD applicant, has signed up for the service, according to the companies.
For Donuts, which is probably the applicant that makes opponents of new gTLDs the most nervous, it’s another chance to show that it’s serious about operating clean zones.
For Architelos, it’s a pretty significant endorsement of its new technology.
The NameSentry service aggregates abuse data from multiple third-party malware, spam and phising lists and presents it in a way that makes it easier for registries shut down bad behavior.

More than half of new gTLD apps have comments

Over half of ICANN’s 1,930 new generic top-level domain applications have received comments, two days after the original deadline for having them considered expired.
There are 6,176 comments right now, according to the ICANN web site, and the DI PRO database tells me that they’ve been filed against 1,043 distinct applications covering 649 unique strings.
It looks like .sex is in the lead, with 275 comments — I’m guessing all negative — followed by its ICM Registry stablemates .porn (245) and .adult (254), due to the Morality in Media campaign.
The controversial dot-brand bid for .patagonia, which matches a region of Latin America, has been objected to 205 times.
Some that you might expect to have created more controversy — such as .gay (86) and .islam (21) — are so far not generating as many comments as you might expect.
Donuts has received the most comments out of the portfolio applicants, as you might expect with its 307 applications, with 685 to date.
Famous Four Media’s applications have attracted 416 and Top Level Domain Holdings 399.
Despite applying for .sexy, Uniregistry has a relatively modest 64 comments. That’s largely due to it managing to avoid being whacked by as many duplicate trademark-related comments as its rivals.
There have been 1,385 unique commenters (trusting everybody is being forthright about their identity) with as many as 486 affiliations (including “self” and variants thereof).

Big hotel chains pick a side in .hotel gTLD fight

Many of the world’s major hotel chains say they plan to object to every .hotel new gTLD application but one.
A coalition of many recognizable hotel brands, led by InterContinental, has filed comments against six of the seven .hotel applications, as well as the applications for .hotels, .hoteis and .hoteles.
They say they want the Independent Objector to object to these applications on community grounds. Failing that, they’ll file their own official Community Objections.
The comments (PRO) were filed by the Hotel Consumer Protection Coalition, which appears to be one of those ad hoc organizations that exists purely to send letters to ICANN.

HCPC encourages the Independent Evaluator to submit a formal Community Objection if necessary. (Guidebook, Sec. 3.2.5.) Failing either of these occurrences, HCPC will seriously consider filing a Community Objection of its own – unless, of course, Applicant voluntarily withdraws its application.

The coalition’s members include the Choice Hotels, InterContinental, Hilton, Hyatt, Marriott, Starwood and Wyndham hotel chains. Together, they say they have over 25,000 hotels in over 100 countries.
The lucky recipient of the coalition’s tacit support is HOTEL Top-Level-Domain, the Luxembourg-based applicant managed by Johannes Lenz-Hawliczek and Katrin Ohlmer, which is using Afilias as its back-end.
It’s one of only two .hotel applicants flagged in the DI PRO database as planning to use a “restricted” business model. Only hotels, hotel chains and hotel associations will be able to register.
The other applicant with planned restrictions is a subsidiary of Directi, though its application suggests that any eligibility requirements would only be enforced post-registration.
HOTEL Top-Level Domain is also the only applicant that appears to be pursuing a single gTLD. All but one of the others are portfolio applicants of various ambitions.
Top Level Domain Holdings, Donuts, Famous Four Media and Fegistry all plan “open” business models for .hotel, while Despegar Online is planning a single-registrant space.
The Hotel Consumer Protection Coalition’s support for HOTEL Top-Level Domain is conditional, however. The company has apparently had to agree to explicitly exclude:

“any entity other than a hotel, hotel chain, or organization or association that is not formed or controlled by individual hotels or hotel chains”

It’s also agreed to “immediately suspend” any “clear violations”, such as cases of cybersquatting, when notified by coalition members, and to include its members’ brands on a Globally Protected Hotel Marks List.
The support has apparently been granted extremely reluctantly. InterContinental explicitly does not support the new gTLD program, and Marriott has previously said it thinks .hotel is pointless.
I can’t imagine a .hotel supported by companies that have no plans to use it being particularly successful.

(Former) Donuts director hit with cybersquatting claim over Disney and Olympic domains

Donuts, the massive new gTLD applicant, has been hit by another set of cybersquatting claims, this time aimed at one of the company’s original directors.
Graham Stirling, who is listed as a Donuts Inc director in the company’s only Securities and Exchange Commission filing, seems to own several domain names containing Disney and Olympics trademarks.
(UPDATE: Donuts has confirmed that Stirling is no longer with the company, and hasn’t been since November 2011. Read the company’s full statement at the bottom of this post.)
The information emerged in a comment filed with ICANN on several Donuts applications by somebody called James Oliver Warner.
These are some of the domains Gibraltar-based Stirling allegedly owns:

2016juegosolimpicos.com
2016olimpicos.com
2020juegosolimpicos.com
2020olimpicos.com
2024olimpicos.com
andaluciadisney.com
costadelsoldisney.com
disneyandalucia.com
disneylandmalaga.com
disneymalaga.com
disneyworldmalaga.com
juegosolimpicos2008.com
juegosolimpicos2016.com
juegosolimpicos2020.com
juegosolimpicos2024.com
juegosolimpicoslondres.com
londresjuegosolimpicos.com
malagadisney.com
malagadisneyland.com
malagadisneyworld.com
olimpicos2016.com
olimpicos2020.com
olimpicos2024.com
soldisney.com
spaindisneyland.com
spaindisneyworld.com
teleubbies.com

You don’t need to be a trademark lawyer to know that these domains would not pass a UDRP challenge.
The domains all seem to have been registered to a Graham Stirling of Gibraltar for some years. Gibraltar’s a pretty small place, suggesting that it’s very probably the same guy.
It’s the second serious cybersquatting claim to hit Donuts in the last couple of weeks.
As we reported last week, a lawyer who apparently doesn’t want his client’s identity to be known has written to ICANN’s Governmental Advisory Committee to warn that Demand Media, Donuts’ back-end partner and its founders’ former employer, has a history of adverse UDRP findings.
That letter fingered Stirling as an employee of Gibraltar-based investment company Veddis Ventures, whose other executives allegedly have ties to online gambling scandals in the US.
Veddis Ventures recently removed Stirling’s full name from its web site. He’s now just listed as “Graham S”, adding to the intrigue.
The latest set of cybersquatting allegations are directed to ICANN’s background screening panel, which is tasked with weeding likely ne’er-do-wells out of the new gTLD program.
The panel looks at not only the corporate history of the applicant, but also at its directors and officers.
Stirling is not named on any of Donuts applications. For that matter, Donuts itself is not named as an official applicant on any of its 307 applications either.
Each of its applications has been filed by a different shell company, most of which are owned by another company, Dozen Donuts LLC, which we assume (but do not know) is in turn owned by Donuts.
The only individual named in the background check part of the applications (at least the portions published by ICANN) is Donuts CEO Paul Stahura.
Stirling is not currently listed as a director on Donuts’ web site.
If Stirling is still involved with Donuts, it might not impact the results of Donuts background screening, if the panel only looks at UDRP or court cases for evidence of cybersquatting.
Stirling does not appear to have ever been named in, never mind lost, a UDRP complaint.
That said, I don’t think ICANN’s background screening process will be over for a while yet…
August 7 Update:
Donuts has provided the following statement:

Graham Stirling is not a member of the Donuts Board of Directors and has not been since November 2011. Our list of board members as documented on our web site at www.donuts.co is current.
It’s disappointing to see Donuts’ contributions to new gTLD expansion attacked by those (including some unwilling to disclose their identities) who attempt to portray the company or those associated with it as bad actors. The company is and will continue to be committed to the legitimate interests of rights holders. As described in our applications, Donuts will implement rights protection mechanisms in its new gTLDs that substantially exceed those mandated by ICANN.
We have engaged the intellectual property community, law enforcement and others in the community about IP protection and believe our intentions and actions are clear and well understood. Infringement of legitimate rights is not tolerated by Donuts, in any capacity. Our collaboration with the community on IP protections will be an ongoing priority as the new gTLD program continues.

Donuts dismisses “meritless” cybersquatting claims

Donuts, the company applying to ICANN for more new gTLDs than any other, has responded to claims that it should be banned from the new gTLD program on cybersquatting grounds.
As reported earlier today, a mysterious demand has emerged for Donuts and its registry back-end, Demand Media, to be banned from running new gTLDs due to Demand’s history of losing cybersquatting cases.
A letter sent to ICANN’s top brass by a Boston law firm claims that Donuts is little more than a front organization for Demand, and should fail ICANN’s background checks accordingly.
But in a statement provided to DI this evening, Donuts said:

The letter — generated by a law firm representing an anonymous client — is rife with factual inaccuracies and meritless allegations. Demand Media is a commercial partner and is neither an investor in nor part of a joint venture with Donuts. We look forward to engaging in the ICANN review process and its thorough background checks, and are confident that we meet all requirements to operate a Top Level Domain registry.

We’re yet to hear from Demand or to receive clarification from McCarter & English, the law firm responsible for the original letter.

Lawyer tries to nuke Donuts and Demand Media’s gTLD bids

A lawyer has called for new gTLD uber-applicants Demand Media and Donuts to be banned from running gTLD registries due to Demand’s history of cybersquatting.
Jeffrey Stoler of Boston law firm McCarter & English has written to ICANN’s leadership, along with the chair of the Governmental Advisory Committee, to allege that Demand Media, Donuts and their key executives:

are, by ICANN’s established eligibility guidelines, unsuited and ineligible to participate in the new gTLD program.

It goes on to state that:

ICANN can and should reject the applications from Donuts and its subsidiaries, Demand Media and its subsidiaries, and their respective affiliated companies.

The two companies have, combined, applied for 333 new gTLDs. Donuts, which was founded by former Demand executives, also plans to use Demand as its back-end registry provider.
Demand Media subsidiaries, however, have a rotten record of losing cybersquatting cases filed under the UDRP, as Stoler’s generally well-researched 24-page letter spells out in some detail.
This, Stoler argues, should cause both companies to fail ICANN’s background checks, which are specified in the Applicant Guidebook.
Companies that have “been involved in a pattern of adverse, final decisions” under the UDRP, defined as more than three losses in the last four years, are supposed to fail the background check.
Demand Media seems to fit that definition, and then some, assuming you include UDRP losses incurred by its subsidiaries.
Donuts, as a brand new company, does not have the same track record, but Stoler reckons there is “strong evidence that Donuts is merely an alter ego of, and working in concert with, Demand Media”.
The letter states:

In June 2009, when ICANN’s rules went into effect and it was widely thought that implementation of the new gTLD program was imminent, the executives of Demand Media Group realized that Demand Media’s sordid history would clearly block its ability to successfully apply for the new gTLDs.
As an initial gambit, Demand Media petitioned ICANN to revise the rules.
When ICANN rejected those revisions, the undersigned believes Demand Media decided it would be necessary to create a new entity to participate in the new gTLD program. As a result, Donuts was formed by Messrs. Stahura and Tindal.
It would make a mockery of ICANN rules, however, if Demand Media Group and its executives could absolve themselves of their record of adverse UDRP decisions merely by forming a new entity.

Donuts founders Paul Stahura and Richard Tindal were both with Demand when it lost a bunch of UDRP cases.
Stoler alleges that they left to form Donuts mainly because they didn’t think Demand would pass ICANN’s background checks.
While Donuts has made no secret of the fact that it’s behind 307 applications — and ICANN’s leadership is certainly already aware of this — each application has been filed by a different shell company.
The trail to Donuts is at least two companies deep in many cases, and it’s not entirely clear how its applications with Demand Media are structured, from a corporate point of view.
Ironically, Stoler’s letter does not disclose his affiliations — which clients he’s working for — either.
The smart money is probably on big trademark interests, but it’s not beyond the bounds of possibility, I suppose, that he could be on the payroll of rival new gTLD applicants.
I’ve reached out to Stoler, Donuts and Demand Media for comment and will provide updates later as appropriate.
Here’s the Stoler letter (pdf)

.radio gTLD applicant joins the GAC

The European Broadcasting Union, which is one of four applicants for the .radio top-level domain, has asked to join ICANN’s Governmental Advisory Committee as an observer.
It is believed that its request is likely to be accepted.
The move, which comes just a couple of weeks after ICANN revealed its list of new gTLD applications, could raise conflict of interest questions.
While several GAC governments and observers are backing new gTLD bids – the UK supports .london, for example – they’re generally geographic in nature and generally not contested.
But .radio has been applied for by Afilias, BRS Media and Donuts in addition to the EBU.
While any organization can file objections against applications, under the rules of the new gTLD program the GAC has the additional right to issue special “GAC Advice on New gTLDs”.
Consensus GAC advice is expected to be enough to kill an application.
Since it’s not entirely clear how the GAC will create its formal Advice, it’s not yet clear whether the EBU will have any input into the process.
According to the GAC’s governing principles, observers do not have voting rights, but they can “participate fully in the GAC and its Committees and Working Groups”.
The EBU’s .radio gTLD would be open to all potential registrants, but it would be subject to post-registration content restrictions: web sites would have to be radio-oriented, according to the application.
It’s also the only Community-designated bid in the contention set, meaning it could attempt a Community Priority Evaluation to resolve the dispute.
The EBU has also applied for .eurovision, the name of its annual singing competition, as an uncontested dot-brand.

Demand Media applies for 26 gTLDs, partners with Donuts on 107 more

Demand Media, owner of eNom, has applied to ICANN for 26 new generic top-level domains, and may acquire rights in 107 more if applications submitted by Donuts are approved.
The company has not yet revealed which strings it’s going for.
Donuts said last week that it’s applying for 307 gTLDs with Demand Media as its back-end provider, but it seems that Demand will not have ownership rights in 200 of those.
The deal with Donuts, which was founded by eNom alum, is a “strategic relationship”, according to a press release.

Schilling applies for “scores” of new gTLDs

Domaining icon Frank Schilling’s new venture, Uniregistry, has applied for “scores” of new generic top-level domains, “most” of which he expects to be contested.
Schilling won’t say exactly how many or which strings Uniregistry is pursuing, but he did reveal that while he is not going for .web, he will be in contention with Google for .lol.
“It’s closer to TLDH than Donuts,” Schilling told DI in an interview this evening, referring to the announcements of Top Level Domain Holdings’ 68 and Donuts’ 307 applications.
I’m guessing it’s around the 40 to 50 mark.
Despite the portfolio and Schilling’s history in domain investing, Uniregistry isn’t what you might call a “domainer” play.
The company doesn’t plan on keeping whole swathes of premium real estate for itself or for auction, Schilling said. Nor does it intend to rip off trademark owners.
“We’ve seen good TLDs fail with bad business plans,” he said, pointing to premium-priced .tv as an example. “You need to allow other people to profit, to evangelize your space.”
“I’m not going to get as rich from this as some of our registrants,” he said.
Uniregistry only plans to hold back a “handful” of premium names, Schilling said. The rest will be available on a first-come, first-served basis.
To avoid creating wastelands of parked domains, the company plans to deploy technical countermeasures to prevent too many domains falling into too few hands.
“The way we’re going stage the landrush it will be very difficult to game it,” he said. “There’ll be significant rate limiting, so you can’t come and take 500 domains in ten milliseconds.”
“What we want to avoid is someone going in and getting 100,000 of the best ones on day one. It’s not fair, and it’s unhealthy for the space.”
Schilling is one of the industry’s most successful domainers. His company, Name Administration, is one of the largest single owners of second-level domain names.
Now Schilling says he’s brought his considerable experience as a domain name registrant Uniregistry’s business model and policies.
The company’s message is that it’s “registrant-centered”.
While that sounds like an easy, glib marketing statement, Schilling is backing it up with some interesting policies.
He’s thinking about a much closer relationship between the registry and the registrant that you’d see in the .com space.
When a second-level domain in a Uniregistry gTLD expires, registrants will get 180 days to claim it back from the registry, possibly even circumventing the registrar.
Uniregistry will even directly alert the registrant that their name is going to expire, a policy that Schilling said has been modeled in part on what Nominet does in the .uk space.
“Registrants have the ability to go to the registry to manage their .co.uk, to transfer the domain, to change certain pieces of information,” he said.
The 180-day policy is designed in part to prevent registrars harvesting their customers most valuable domains when they forget to renew them.
Rogue registrars and registrars competing against their own customers are things that evidently irk Schilling.
“I prefer a system that protects registrants,” he said.
But existing registrars are still the company’s proposed primary channel to market, he said. Uniregistry plans to price its domains in such a way as to give registrars a 50% margin.
“I think there’s enough margin in these strings for registrars to make a great living,” Schilling said.
Schilling hasn’t ruled out an in-house pocket registrar, but said it wouldn’t be created to undercut the regular channel.
The company has hired Internet Systems Consortium, maker of BIND and operator of the F-Root, as its back-end registry provider.
Judging by Uniregistry’s web site, which carries photos of many ISC staff, it’s an unusually close relationship.
I’ll have more on Uniregistry’s plans for Whois and trademark protection in a post later.