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IRP panel crucifies ICANN for lack of transparency

Kevin Murphy, August 3, 2016, Domain Policy

ICANN has lost another Independent Review Process decision, with the panel stating some potentially alarming opinions about how much power ICANN staff has over its board and “independent” third-party contractors.

This time, the successful IRP complainant was Dot Registry LLC, the Kansas company that applied for the gTLDs .llc, .llp, and .inc as a “Community” applicant.

The company lost its Community Priority Evaluations back in 2014, scoring a miserable 5 of the possible 16 points, missing the 14-point winning line by miles.

The IRP panel has now found — by a two-to-one panelist majority — that these CPE decisions had extensive input by ICANN staff, despite the fact that they’re supposedly prepared by an independent third-party, the Economist Intelligence Unit.

It also found that the ICANN Board Governance Committee rejected Dot Registry’s subsequent Request for Reconsideration appeals without doing its due diligence.

The IRP panel said in essence that the BGC merely rubber-stamped RfR decisions prepared by legal staff:

apart from pro forma corporate minutes of the BGC meeting, no evidence at all exists to support a conclusion that the BGC did more than just accept without critical review the recommendations and draft decisions of ICANN staff.

ICANN had of course denied this interpretation of events, but refused to provide the IRP panel with any of the information the BGC had supposedly used in its decision-making, citing legal privilege.

The panel also had questions related to the relationship between the EIU and ICANN staff, pointing to extensive margin notes left on the draft CPE decisions by ICANN staff.

Remarkably, the EIU appears to have incorporated ICANN suggested text into its decisions, even when the facts may not have supported the text.

For example, the final CPE decision on .inc contained the sentence:

Research showed that firms are typically organized around specific industries, locales, and other criteria not related to the entities structure as an LLC

The panel concluded that this text had originated in ICANN’s margin notes:

Possibly something like… “based on our research we could not find any widespread evidence of LLCs from different sectors acting as a community”.

According to the IRP decision, there was no mention of any pertinent “research” in the record prior to ICANN’s note. It’s possible no such research existed.

It seems the ICANN legal team helps redraft supposedly independent CPE decisions to make them less likely to be thrown out on appeal, then drafts the very decisions that the compliant BGC later uses to throw out those eventual appeals.

The IRP panel by majority therefore found a lack of due diligence and transparency at the BGC, which means the ICANN board failed to act in accordance with its bylaws and articles of incorporation.

One of the three panelists dissented from the the majority view, appending a lengthy opinion to the majority declaration.

The IRP panel went beyond its mandate by improperly extending ICANN’s bylaws commitments beyond its board of directors, he wrote, calling the declaration “a thinly veiled rebuke of actions taken by the EIU and ICANN staff”

Just because ICANN submitted no evidence that the BGC acted independently rather than merely rubber-stamping staff decisions, that does not mean the BGC did not act independently, he wrote.

The dissenting view may carry some weight, given that the majority declaration does not give ICANN any guidance whatsoever on how it should proceed.

Dot Registry has specifically not asked for a rerun of the CPEs, and the panel didn’t give it one. Instead, it had asked the panel to simply declare that its applications should have passed CPE the first time around.

That bold demand was, naturally, declined.

But the panel offers no redress in its place either. ICANN has simply been told that the BGC’s decisions on Dot Registry’s RfRs broke the bylaws. What ICANN does with that information seems to be up to ICANN.

These gTLDs are almost certainly still heading to auction.

The documents for this IRP case can be found here.

First gTLD Extended Evaluation results published

Kevin Murphy, October 5, 2013, Domain Registries

ICANN has delivered the first three results of Extended Evaluation for new gTLD applications, all passes.

Dot Registry, which has applied for five corporate-themed gTLDs, flunked its Initial Evaluation on .ltd and .llc back in June on financial grounds, but complained a few days later that ICANN’s evaluators had screwed up.

The company told DI at the time that the two bids used the same Continuing Operation Instrument as applications that had passed IE, and was baffled as to why they failed their financial evaluation.

Both applications have now passed through Extended Evaluation with passing scores, the COI-related score going up from 0 (no COI) to 3 (a perfect score).

Both .ltd and .lcc and still contested, and both also face the uncertainty of Governmental Advisory Committee advice and “uncalculated risk” scores, so the time impact of EE on other applicants is zero.

Also passing through EE this week was Express LLC’s dot-brand bid for .express.

The company had failed on technical grounds in Initial Evaluation, having scored an unacceptable 0 on “Abuse Prevention and Mitigation”. Under EE, this has increased to 2, a pass.

Express is still in contention with Donuts.

This week we also see eight applications, seven of them dot-brands, finally making it through Initial Evaluation: .boehringer, .deloitte, .abbvie, .lamer, .abc, .rogers, .fido and the generic .bar.

The DI PRO Application Tracker and associated tools have now been updated to take account of Extended Evaluation results.

Are some new gTLD evaluations getting screwed up?

At least two new gTLD applicants reckon ICANN has screwed up their Initial Evaluation, flunking their applications due to missing or mishandled communications.

Following Friday’s batch of IE results, which saw four failures, one angry applicant got in touch with DI to complain about discrepancies in how his bids were scored.

Dot Registry has applied for five “corporate identifier” strings — .inc, .corp, .ltd, .llc and .llp — and has made decent progress convincing the powers that be that they will be operated responsibly.

On Friday, its .inc bid passed its Initial Evaluation with flying colors while .llc and .ltd were marked as “Eligible For Extended Evaluation”, a polite code phrase for #fail.

Both of the unsuccessful bids scored 0 on question 50, “Funding Critical Registry Functions”, which is an automatic failure no matter what the overall score on the financial evaluation.

Applicants are scored on question 50 from 0 to 3 by showing that they have a “Continuing Operations Instrument” to cover three years of operations in the event that their registry fails.

Most applicants have been submitting letters of credit supplied by their bank, which promise to pay ICANN these emergency funds should the need arise.

A zero score indicates basically that no COI was provided.

But CEO Shaul Jolles claims that Dot Registry submitted a single letter of credit to cover all five applications, later amended at ICANN’s request so that each string in the portfolio was broken out individually.

“We then received a note that they now have whatever they needed and it’s resolved,” he said.

He noted that .inc, which passed on Friday with maximum score of 3, is covered by exactly the same LOC as the two applications that scored a 0, which doesn’t make much sense.

A second applicant, which does not currently wish to be named, has told DI that it failed its financial evaluation on a question for which it received no Clarifying Questions.

CQs are the handy method by which ICANN gave applicants a second shot at getting their applications right. Hundreds have been issued, the vast majority related to financial questions.

The common complaint to both failing applicants is that at no point did ICANN inform the applicant that its application was deficient.

We understand both applicants are currently in touch with ICANN management in order to try to get their predicaments resolved.

Dot Registry applying for four US-only gTLDs

Dot Registry LLC, a new company to the domain name industry, has applied to ICANN for four company-themed gTLDs, saying it has the backing of US secretaries of state.

It’s going for .inc, .corp, .llc and .llp.

CEO Shaul Jolles says the plan is for all four to be restricted to US-registered companies, even though some other countries give their companies the same labels.

“While the extensions do exist in other countries, they do not have definitions similar to the entity classifications in the US,” Jolles said in an email.

“We will not offer registrations to companies not registered in the US,” he said. “We chose this option because we are able to easily verify business entity registration in the US.”

Dot Registry, which is using .us contractor Neustar as its registry services provider, says it has support from various US secretaries of state.

As we blogged in April, the president of the National Association of Secretaries of State wrote to ICANN to express reservations about these types of gTLD strings.

But Delaware Secretary of State Jeffrey Bullock indicated in a separate letter that Dot Registry’s propose regime of restrictions, which would manually match domains to company names, might be acceptable.

I’m still somewhat skeptical about the value of these kind of gTLDs. You can pretty much guarantee plenty of pointless defensive registrations, and the benefits seem fuzzy.

“The benefit of these strings is two-fold,” Jolles said. “For consumers it creates a level of reassurance and the ability to quickly ascertain if a company is legitimate or not.”

“From a company perspective it has simple benefits such as guaranteeing that you receive a domain name that matches your registered business name, increased consumer confidence which increases revenue, and a decreased possibility of business identity theft in a cyber setting,” he said.

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