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Private gTLD auctions really will be private

The first new gTLD auctions to be held by Innovative Auctions is set to take place on Monday, but we won’t know which applicants took part until after the fact.

Innovative, which is managing the auction process designed by Cramton Associates, told DI it might announce the participants next week, after the auctions are over.

Failing that, we’ll have to infer the winners from which applications are subsequently formally withdrawn from contention with ICANN.

The only companies to publicly announce their participation so far are Donuts and Demand Media — which as partners are obviously not in any contention sets with each other — and .Club Domains.

Donuts has previously announced that it would submit 63 applications to auction, but 17 of those probably won’t go ahead because Uniregistry, which doesn’t like the private auction idea, has declined to take part.

Demand Media’s applicant, United TLD Holdco has committed its bids for .fishing, .green, .mom, .rip and .wow to the auction. Unless Uniregistry has changed its mind, the .mom one won’t be happening.

It also seems unlikely many winning bids will be disclosed.

Under the terms designed by Cramton, if only one applicant in an auction decides it wants to keep the outcome private, the other applicants will be contractually bound to keep schtum.

Private auctions will see money flow to losing applicants, some of which will also face ICANN-managed auctions at a later date. They may not want to reveal their wedge by having their pay-off public knowledge.

Donuts puts 63 new gTLDs to private auction, but at least 17 are dead on arrival

Donuts has committed 63 of its 307 new gTLD applications to a private auction next month, but at least 17 of them are doomed already because rival Uniregistry won’t take part.

Donuts, which does not want to enter into joint ventures with competing gTLD applicants, has decided to use a private auction managed by Cramton Associates instead of an ICANN auction.

The first round of auctions are due to kick off June 3, but Cramton has set a deadline of next week for applicants to commit the strings they want to bid on.

Donuts has put forward these ones (note that they’re different to those reported elsewhere earlier due to a couple of typos in the original press release):

.apartments, .auction, .audio, .baseball, .boats, .cafe, .church, .college, .construction, .direct, .discount, .fish, .football, .forsale, .furniture, .fyi, .global, .gratis, .guide, .juegos, .jewelry, .legal, .living, .luxury, .phone, .photography, .plus, .red, .run, .storage, .theater, .trading, .vote, .beauty, .broadway, .city, .club, .forum, .garden, .help, .hosting, .hot, .marketing, .media, .memorial, .wedding, .chat, .online, .pizza, .sale, .salon, .school, .search, .show, .soccer, .team, .group, .site, .style, .law, .store, .blog, and .art.

Running the list through the DI PRO database, we quickly discover that 33 of these strings are in two-horse races, 13 have three applicants, nine have four and three have five.

The remaining four contention sets have six, seven, nine and 10 applicants respectively.

Uniregistry, the portfolio applicant run by domainer Frank Schilling, is involved in 17 of the contention sets, and Schilling confirmed to DI today that the company does not intend to participate.

As we’ve previously reported, Uniregistry says it has concerns that private auctions may be illegal under US antitrust law, though substantial doubt has been cast over that assertion since.

Because all applicants in a contention set need to commit for the auction to be meaningful, we can assume that at least 17 of Donuts’ proposed auctions will not go ahead, unless Uniregistry changes its mind.

Top Level Domain Holdings has applied for 13 of the strings Donuts wants to take to auction. TLDH has also expressed concern in the past about the private auction concept.

Directi, Famous Four Media and Google are each involved in eight of the contention sets, while Amazon is involved in five.

According to Cramton, each auction will take place in bidding rounds, with the first round having a maximum bid of $50,000 multiplied by the number of applicants and subsequent rounds increasing that by 10% multiplied by the number of bidders.

If any applicant in a given auction requests privacy, then the winning amount will not be disclosed.

Donuts hires the face of the new gTLD program

Portfolio gTLD applicant Donuts has hired Michele Jourdan, who until last week was head of new gTLD communications at ICANN.

Michele JourdanShe has joined the company as director of sales and marketing, according to her LinkedIn profile.

Applicants and others following the program closely will remember her from the regular update videos published by ICANN.

She worked for ICANN for almost five years, but only in the last year or so started to take a visible front seat role in interactions with community members. I understand she left ICANN a week ago.

Jourdan is not the first ICANN alum Donuts has taken on.

Its CFO is former ICANN CFO Kevin Wilson, and we recently learned that former new gTLD program manager Kurt Pritz has been recruited, non-exclusively, as a consultant.

Donuts not pursuing new gTLD joint ventures

Following the news that Uniregistry and Top Level Domain Holdings are to work together on the .country new gTLD, larger portfolio applicant Donuts has said it’s not interested in similar arrangements.

While not entirely ruling out joint ventures along the lines of the .country tie-up, company VP of communications Mason Cole told DI that Donuts’ strategy is to completely own each of the new gTLDs it has applied for.

“We aren’t categorically ruling anything out, but any kind of proposal would have to be very compelling,” he said. “Our strategy from the beginning has been, and still is, to secure the strings we applied for and manage them ourselves.”

While TLDH and Uniregistry seem open to such partnerships, Donuts’ stance appears to reduce the likelihood of three-way joint ventures on the four applications for which the three companies are the only applicants.

Donuts is also in two-horse races on an additional 58 strings.

The company, which is believed to have raised $100 million to $150 million in venture capital funding, is a strong supporter of private auctions to settle contention sets.

It originally brought the auctioneer Cramton Associates, which runs ApplicantAuction.com. into the ICANN process.

Cramton, according to a blog post this week, expects to run a mock auction May 23 and start auctions proper five days later.

ICANN does not expect to finish delivering the results of Initial Evaluation until August, so it seems possible some applicants may participate before they know if they’ve passed.

Lawyer asks: how the hell did Demand Media pass the new gTLD cybersquatting test?

Kevin Murphy, April 18, 2013, Domain Registries

A lawyer apparently representing a rival new gTLD applicant has questioned ICANN’s background screening processes after Demand Media managed to get a pass despite its history of cybersquatting.

Jeffrey Stoler, now with the law firm Holland & Knight, last July said ICANN should ban Demand Media and its partner Donuts from applying for new gTLDs under the rules of the program.

This month, he’s written to ICANN, the GAC and the US government to express “alarm” that both companies have managed to pass their background checks. Stoler wrote:

This alarm arises from the overwhelming evidence, as referenced below, that: (a) Donuts is a “front” for Demand Media, Inc. (“Demand Media”), and (b) Demand Media’s status as precisely the kind of proven cybersquatter that ICANN’s rules were designed to weed-out of the gTLD application process.

How ICANN’s background screening panel could — in the teeth of that evidence — approve the continued participation of Donuts in the new gTLD program (the “Donuts Decision”) requires justification. This letter formally requests that ICANN, pursuant to its obligations of accountability and transparency, provide an explanation of how, and on what basis, the Donuts Decision was made.

Both Donuts and Demand Media responded with anger and disdain.

CEO Paul Stahura told ICANN that Donuts has discovered that Stoler, who has still not disclosed which client he’s representing in this matter, is actually on the payroll of a rival.

Donuts suspected his client was a competing applicant seeking to gain commercial advantage, and we have since confirmed this in fact is the case.

Not only do the letters intentionally misrepresent facts, they are a preposterous, extra-­procedural tactic that is a regrettable waste of time and community resources.

David Panos, director of Demand’s applying subsidiary, United TLD Holdco, was similarly dismissive:

Clearly, Mr. Stoler’s client has a substantial commercial interest in the new gTLD program and is seeking to eliminate its competition by mischaracterizing the relationships of other competing applicants and by restating factually inaccurate statements

What’s notable from both the Stahura and Panos letters is that neither company actually addresses Stoler’s allegations directly, resorting instead to mainly fudging and ad hominem arguments.

Stoler probably is seeking a competitive advantage for his mystery client, and his claims about Donuts being a “front” for Demand do come across as a bit of a stretch even for a lawyer, but that doesn’t mean that all of his arguments are wrong.

ICANN’s Applicant Guidebook for the new gTLD program is pretty clear: if you’ve had more than three adverse UDRP decisions, with at least one in the last four years, you’re “automatically disqualified” from the program.

Demand Media, as Stoler alleges and the public record supports, has lost about three dozen UDRP cases through subsidiaries such as Demand Domains, the most recent of which was in 2011.

So how did Demand pass its ICANN background screening?

The Guidebook does say “exceptional circumstances” are enough to get an applicant off the hook, but it’s hard to see how that would apply to Demand’s over 30 UDRP losses.

And Demand doesn’t want to talk about it.

None of its responses to ICANN that have been published to date even attempt to say why Stoler is wrong, and the company declined to comment when we asked for clarification today.

Donuts, which is using Demand as its back-end registry and has given the company the right to acquire interests in over 100 of its new gTLDs (should they be approved) didn’t want to comment either.

Which, some might say, plays right into Stoler’s hands.

If there’s a simple, straightforward explanation for why the background screening rules apparently didn’t apply to Demand Media, is it unreasonable to ask what that explanation is?