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

Kevin Murphy, October 23, 2012, Domain Registries

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

Kevin Murphy, October 10, 2012, Domain Services

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

Kevin Murphy, August 14, 2012, Domain Registries

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

Kevin Murphy, August 11, 2012, Domain Registries

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

Kevin Murphy, August 7, 2012, Domain Policy

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.