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ICANN brings “loser pays” to domain disputes

Kevin Murphy, April 16, 2011, Domain Registries

ICANN has significantly strengthened brand-owner protections in new top-level domains by proposing, amongst other things, a new “loser pays” model for some cybersquatting disputes.

The Uniform Rapid Suspension process, which is designed to give trademark owners a quick, cheap way to take down obvious examples of cybersquatting, may now occasionally carry a response fee.

According to ICANN’s newly revised Applicant Guidebook, which was published early this morning:

A limited “loser pays” model has been adopted for the URS. Complaints listing twenty-six (26) or more disputed domain names will be subject to an Response Fee which will be refundable to the prevailing party. Under no circumstances shall the Response Fee exceed the fee charged to the Complainant.

In other words, if a somebody registers more than 25 domains that appear to infringe upon the trademarks of a single company, they will have to pay a few hundred dollars, refundable, if they want to defend their case. Judging from UDRP history, this will likely apply to very few people.

The number 25 comes from the May 2009 report of ICANN’s Implementation Recommendation Team, which devised many of the new gTLD program’s rights protection mechanisms.

This change is one of several made in the new Guidebook, addressing concerns raised by the Governmental Advisory Committee, which had consulted closely with the IP lobby.

The GAC didn’t get everything it wanted, however. It had asked for repeat cybersquatters to lose their right to respond under the URS, but ICANN declined, citing the need for due process.

But the Guidebook does now also require new TLD registry operators to offer two types of rights protection mechanism during their launch phase, as the GAC had requested.

Whereas earlier drafts mandated either a Trademark Claims service or a Sunrise period, now registries will have no choice: they have to offer both at a minimum.

The Trademark Claims services notifies registrants if they try to register a domain name that matches a trademark registered in a central Trademark Clearinghouse.

The registrant will have to certify that they’re not infringing any rights before they get the domain. If they do register it, the affected trademark holder will receive a notification that the domain has been registered and can choose to take action such as filing a URS claim.

The idea behind the service is to deter cybersquatters, possibly reducing brand owners’ costs from having to defensively register their names in all new TLDs.

The Sunrise period, which is now also mandatory, is not entirely dissimilar to the sunrise periods we’ve come to expect from new TLD launches over recent years.

The new Guidebook states that the Trademark Claims service must be offered for at least 60 days after a new TLD enters general availability and the Sunrise must be at least 30 days before.

The fact that both services are now mandatory has helped ICANN address the thorny question of what should constitute a valid trademark.

Earlier drafts of the Guidebook required trademarks to have been subject to “substantive review” – a check by a national authority that the trademark is for real and in use.

The worry was that speculators could game the system by picking up large numbers of trademarks in countries that give them away like candy. It’s happened before.

But the review requirement was criticized by the GAC and others as it excluded trademarks in much of the world outside of the US.

In response to these criticisms, ICANN has removed the reference to substantive review. Instead, the yet-to-be-decided manager of the Trademark Clearinghouse will be given the task of validating that each trademark submitted is legit.

Companies need only submit a declaration and a single piece of evidence of use in order to get into the Clearinghouse, thus enabling them to partake of the Sunrise.

No such validation will be required in order to participate in the Trademark Claims service, though brand owners will need to be listed in the Clearinghouse for both mechanisms.

Evidence of use will also be needed to file URS complaints, but that can be done separately at the time of filing, with no need for a Clearinghouse registration.

ICANN chairman Peter Dengate Thrush, himself an IP lawyer, once stated, possibly in jest, that no matter what you do, you can be certain that IP lawyers will demand more protections.

Whether the rights protections mechanisms included in the Guidebook are now sufficient to calm trademark interests’ nerves remains to be seen.

ICANN gives governments powers over new TLDs

Kevin Murphy, April 16, 2011, Domain Registries

ICANN has made some significant concessions to government demands in the newly published revision of its new top-level domains Applicant Guidebook.

After lengthy consultations with its Governmental Advisory Committee over the last few months, ICANN has updated the rulebook to address the vast majority of GAC concerns.

We’ve gone from the “proposed final Applicant Guidebook” published in November to the “April 2011 Discussion Draft” that appeared on the ICANN web site in the wee hours of this morning.

On first perusal, it appears that ICANN has walked the fine lines between GAC advice, hard-fought community consensus and common sense more or less successfully.

While the new Guidebook gives plenty of ground to the GAC, making it a more integral part of the new TLDs approval process, it avoids adopting some of its more problematic requests.

In this post, I’ll look at the powers ICANN has given to governments to object to TLDs.

Early Warning System

While ICANN has sensibly not given individual governments the right to veto TLDs they are not happy with, they do get substantially more input into the approval process than in previous drafts.

The major update to the Guidebook is a new Early Warning system that will allow governments to pre-object to TLDs they don’t like.

An Early Warning, which can only be filed by the GAC chair, is “an indication that the application is seen as potentially problematic by one or more governments.”

Applicants in receipt of such a warning will have 21 days to decide whether to drop out of the process, receiving a $148,000 refund, 80% of their $185,000 application fee.

But they won’t have to. The warning is just a heads-up that the GAC or some of its members may formally object at a later stage. A warning does not represent a GAC consensus position.

The Early Warning process will run for 60 days, at the same time as the public comment period that begins the day the applications are published.

Advice of Doom

Any applicants that decide to ignore such a warning face the possibility of receiving a formal GAC objection, which could come at any point in the first seven months after the applications are published.

This is now being called “GAC Advice on New gTLDs”. It could be quite a powerful tool:

GAC Advice on New gTLDs that includes a consensus statement from the GAC that an application should not proceed as submitted, and that includes a thorough explanation of the public policy basis for such advice, will create a strong presumption for the Board that the application should not be approved.

This is pretty close to a GAC veto, but it crucially requires GAC consensus. The Guidebook explains:

GAC Advice on New gTLDs should identify objecting countries, the public policy basis for the objection, and the process by which consensus was reached.

Even if the GAC reaches consensus, the ICANN board will be able to overrule its objections in accordance with its bylaws, in much the same way it just did with .xxx (in practice, I suspect .xxx may ultimately prove a fairly unique exception to the rule).

The Guidebook indicates that any wishy-washy, non-consensus, politician-speak advice given by the GAC will not be considered grounds for rejecting an application. The objection must be specific, grounded, and it must have support.

Importantly, ICANN has not conceded to the GAC’s request to allow applicants to amend their applications to remedy the GAC’s concerns.

As I noted earlier in the week, this could have led to companies gaming the system, and ICANN has ruled out amendments for precisely that reason.

Freebies

Individual governments will of course be allowed to object to any application using any of the other procedures that the Guidebook allows, such as the Community Objection.

ICANN’s problem is that these processes carry third-party fees, and governments don’t think they should have to pay these fees (for some reason that’s never been adequately explained).

Addressing this concern, the new Guidebook says that ICANN will cover each national government to the tune of $50,000 to fund a single objection.

That’s a total of potentially well over $1 million, funded from ICANN’s reserves. ICANN expects that governments will coordinate their objections to limit its costs.

Overall, it appears that ICANN has addressed pretty much everything the GAC wanted in terms of objections procedures. With a couple of reasonable exceptions, the GAC has received what it asked for.

Members may not be completely happy with ICANN’s decrees on what form GAC advice must take in order to have a useful impact, but in general it seems that this could well now be a closed issue.

In my next post, I’ll look at how intellectual property protection changes in the new Guidebook.

Governments dig in over new TLD objections

Kevin Murphy, April 13, 2011, Domain Registries

World governments have offered to compromise with ICANN on several disagreements relating to the new top-level domains program, but have dug their heels in on others.

ICANN’s Governmental Advisory Committee has finally published its updated “scorecard”, which states its position on the current state of negotiations, some 18 days after it was expected.

The document (pdf) provides the GAC’s response to the ICANN board of directors’ response to the GAC’s original list of objections to the program’s Applicant Guidebook.

Yeah, it’s getting a bit complex.

In the interests of wordcount, I’m going to focus here mainly on the issues where there still appears to be notable conflict.

This is a preliminary analysis.

Controversial TLDs

The GAC doesn’t want any “controversial” strings to be approved as new TLDs. As such, it wants governments to be able to object to any TLD application, for any reason, and without paying to have their objections evaluated by third parties.

ICANN attempted to compromise by saying that it would enable the GAC to provide advice to the board about specific applications within the 45-day comment window after the applications are published.

The GAC doesn’t appear to be satisfied by this, however. While it said it will try to provide advice during that window, it points out that the ICANN bylaws do not put any time limits on GAC advice.

The GAC also wants a separate “early warning system”, whereby the GAC would get at least 60 days, “finishing prior to the Initial Evaluation period”, to submit objections.

The idea is that applicants could withdraw from the process with a substantial refund if they received notice that governments were likely to object to their choice of TLD.

Assuming the GAC expects the warning system to finish before Initial Evaluation begins (rather than ends), this could add two months to the time needed to process applications, currently estimated at eight months for the simplest applications.

Under the current plan in the Applicant Guidebook, after the application window closes, ICANN spends a month privately checking the submissions for completeness. The five-month Initial Evaluation, which encompasses the 45-day open public comment period, immediately follows.

Perhaps aware of the delays its idea could cause, the GAC suggests that “ICANN should pass details of applications to the GAC as soon as they are lodged.”

This seems unworkable.

Most potential applicants have been playing their cards very close to their chests when it comes to the strings they plan to apply for.

The application window is expected to run for 60 to 90 days. If a company’s application were revealed to the GAC towards the beginning of that period, there would be a real risk of that information being leaked to potential competitors in other countries.

If you’re applying for “.baseball” in a selection of foreign languages, do you want competitors in those countries potentially being tipped off about your application while they still have time to prepare a rival bid?

If applicants knew the GAC was to be told about applications and applicants before the window closed, the vast majority of applications would very likely be filed on the very last possible day, defeating the object of early GAC notice.

Another probably unworkable GAC proposition it continues to stand by is the idea that applicants should be allowed to amend their application if they receive notice of a government objection.

This obviously creates a big loophole for gaming, allowing crafty applicants to scope out the competitive landscape before committing to a TLD – you could get dozens of placeholder applications for .porn, to be amended to .puppies or whatever when the inevitable GAC objection arrived.

Trademark Protection

Surprisingly, there’s nothing in the new GAC scorecard that addresses trademark protection concerns. Zip.

Does this mean the GAC and board have settled their differences and reached a consensus? Or does it mean that the most recent discussions have been so lacking in substance that the GAC has nothing to add beyond what it said before San Francisco?

From the new GAC paper, it’s impossible to tell for sure either way, but I will note that it’s refrerred to as a “draft” account of “proposed” responses, which suggests it’s not yet complete.

Registrar-Registry Cross Ownership

ICANN wants to start allowing registries and registrars to “vertically integrate” by executing both functions under the same corporate umbrella.

Concerns about market power and possible anti-competitive behavior would be referred to national competition regulators under some circumstances.

But some GAC members have heard back from their competition ministries, and they’re not buying it:

The Board response is considered insufficient by the colleagues of some GAC members who are responsible for Competition and anti-Trust issues. They have requested that ICANN provide a more reasoned argument as to why they have rejected the GAC’s proposal and why the Board feels that ex-ante measures are less preferable to ex-post measures for minimising problems associated with anti-competitive behavior.

Community TLDs

Currently, the Guidebook allows applicants to voluntarily self-designate as a “community” TLD, which requires community support to be documented.

But it would currently still be possible for a company to, for example, apply for a “.bank” as a regular TLD, showing no support from banks. The onus would be then on banks to object.

The GAC wants to change this, and continues to request that any string purporting to represent a certain set of users should be required to show support for that community:

The GAC’s domestic constituents have a reasonable expectation that applicants for new gTLD strings that clearly suggest they represent specific communities should be required to so indicate in their application and should demonstrate that they have the support of that community or the relevant authorities/entities responsible for that community.

In the absence of such changes, the GAC wants governments to be able to object on behalf of those communities without having to pay for a third-party panel to handle the objection.

The GAC does appear to have given some ground here, responding to ICANN’s concern that introducing a subjective categorization process for TLDs is “inherently problematic”.

The GAC now says that in the absence of special treatment for regulated industries, there should be more stringent vetting for applicants across the board, to prevent crooks getting their hands on a TLD.

Law Enforcement

The GAC wants new TLD registries to be obligated to cooperate with law enforcement agencies, criminal and civil, no matter what the jurisdiction. It wants this text inserted into the Guidebook:

A registry operator must respond in a timely manner to a request concerning any name registered in the TLD from any government agency that is conducting a lawful investigation or official proceeding inquiring into a violation of or failure to comply with any criminal or civil statute or any regulation, rule, or order legally issued pursuant thereto.

The proposal would only require the operator to “respond” to the law enforcement inquiry.

This could imply that, a registry based in the US would have to cooperate with, for example, a German investigation into a domain hosting Nazi memorabilia or a Saudi probe into pornography, and that a Canadian registry would have to cooperate with US authorities investigating sites selling prescription medicine across their mutual border.

Geographic Names

If you’re applying for a TLD representing a geographic region, the GAC would like you to be beholden forever to the governmental entity which backed your bid.

The GAC “insists” that this text be included in new TLD registry contracts:

In the event that the TLD was delegated to Registry Operator pursuant to the consent of a governmental entity to use a geographic name related to the jurisdiction of such governmental entity, the parties agree that, notwithstanding any provision contained in this Agreement, in the event of a dispute between such governmental entity and Registry Operator, ICANN will comply with a legally binding decision in such jurisdiction in favor of such governmental entity related to the TLD.

So if you successfully apply for .alabama, having obtained the support of the Alabama governor, but a subsequent administration wants to hand the TLD to another company for whatever reason, ICANN would have to comply.

If ICANN does not make this a condition of the Guidebook, the GAC expects many governments will not give their consent to any geo-TLD applications under their jurisdiction.

More Delays?

The new GAC advice carries the dateline April 12, which is 18 days later than the ICANN board was expecting it, according to the resolution it passed in San Francisco last month.

If ICANN wishes to strictly stick to the timetable it approved in SF, its staff now have just three days to incorporate the latest advice into the next Guidebook, which is scheduled to be published this Friday.

It’s also pretty clear that the GAC still requires clarification from ICANN on some of the outstanding issues. As well as some areas of agreement, there are several other points of conflict I’ve not explored in this piece.

But this all may not spell doom for the timeline just yet, however. By my reckoning, there’s at least a couple of weeks’ worth of flexibility baked into the schedule.

The Guidebook could, feasibly, still be approved June 20 in Singapore, as ICANN’s leadership hopes.

Why ICANN’s CEO did not vote on .xxx

Kevin Murphy, April 11, 2011, Domain Policy

President and CEO Rod Beckstrom has explained his decision to abstain from voting on ICM Registry’s .xxx top-level domain when it came before the ICANN board last month.

As expected, Beckstrom provided substantially the same explanation for his abstention as he did at the Brussels meeting last June – not on the merits of .xxx, but because he had legal concerns.

Specifically, he abstained because he objected to one of the majority findings of an Independent Review Panel, which forced .xxx back to the table last year after ICANN had tried to reject it.

Beckstrom wrote, in a recently published statement (pdf):

while I accept the contribution to ICANN’s accountability and transparency provided by the existence and the use of the independent panel review process, I nonetheless remain concerned about the determination by two of the three panelists that the ICANN board should not use business judgment in the conduct of its affairs.

This refers to the “business judgment rule”, a piece of California law under which courts give deference to the judgment of company directors, unless their decisions were made in bad faith.

If an IRP panel – the last port of appeal for companies upset with ICANN’s decisions – were required to use this rule, it would substantially raise the bar for a successful complaint.

But the panel in the case of ICM Registry versus ICANN (the only such panel to date) decided, by a 2-1 vote, that ICANN’s actions should be “appraised not deferentially but objectively.”

This allowed ICM to win its case by merely showing ICANN had acted outside its bylaws, and not necessarily in bad faith.

The dissenting IRP panelist, Dickran Tevrizian, wrote: “The rejection of the business judgment rule will open the floodgates to increased collateral attacks on the decisions of the ICANN Board of Directors”.

However, the IRP did not specifically rule that ICANN “should not use business judgment” as Beckstrom’s statement suggests, just that the IRP was not obliged to defer to it.

Beckstrom’s statement also gives a shout-out to the Governmental Advisory Committee:

In addition, I note the concerns of the GAC, which while not expressed as a clear decision, was nonetheless directional.

As I previously blogged, ICANN approved the .xxx contract over the objections of some members of the GAC, using the fact that the GAC’s official advice was vague enough to be worked around without explicitly rejecting it.

Beckstrom, incidentally, did not even sign the .xxx contract with ICM, which I believe is a first for an ICANN registry contract. It was instead signed by general counsel John Jeffrey.

(via InternetNews.me)

New TLDs have a timetable again

Kevin Murphy, March 20, 2011, Domain Registries

ICANN has approved a timeline for the introduction of new top-level domains again. Barring surprises, it looks like this could be the final one.

These are the key dates in the timetable passed by the ICANN board of directors at its meeting here in San Francisco on Friday:

March 25 – Governmental Advisory Committee feedback on the San Francisco consultation due to be provided to ICANN for consideration.

April 15 – ICANN will publish the relevant edited extracts of the final Applicant Guidebook for 30 days of public comment.

May 20 – ICANN’s final consultation with the GAC. This will be held via teleconference and it’s not clear yet if observers will be allowed on the call.

May 30 – ICANN publishes the final Applicant Guidebook.

June 20 – The ICANN board of directors will meet on the first day of the Singapore public meeting to (presumably) approve the Guidebook.

June 22 – Large quantities of free alcohol consumed at the Singapore meeting’s Gala event.

This timetable seems to give plenty of time for the Guidebook’s remaining kinks to be worked out, and there seems to be considerable resolve in ICANN’s leadership to get this thing put to bed by Singapore, which will be Peter Dengate Thrush’s last as ICANN chair.

New TLDs timeline to launch

There are still a couple of questions remaining, however. It’s not yet clear when the first-round application window will open and therefore when the first new TLDs will be available.

ICANN has always said that the 60 to 90-day window would open after ICANN has concluded four months of marketing and global outreach – it wants to be certain that nobody can complain that they lost their brand because didn’t know the new gTLD program existed.

It’s been stated that the plan was to kick the outreach program off shortly after the Guidebook is approved, but there was some speculation in the halls at the San Francisco meeting last week suggesting that it could actually coincide with its publication.

If that happens, that would knock just a few weeks off the wait before applications open, so it’s nothing to get particularly excited about.

It seems we’re looking at the application window opening in early November at the latest, which suggests to me ICANN may opt for a 90-day window, in order to avoid having the deadline for applying falling during or just after the holiday period.

With the least-controversial applications expected to take at least eight months to process, we’re looking at October 2012 before the first new TLDs are delegated to the root.

With sunrise periods, landrush periods, marketing and so on, I doubt any new TLDs will be generally available before the first quarter of 2013. Single-user “.brands” could go into use sooner.

And of course, if somebody takes ICANN to court and successfully enjoins it, this may all wind up looking woefully optimistic.