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Donuts loses to ICANN in $135 million .web auction appeal

Kevin Murphy, October 16, 2018, Domain Registries

Donuts has lost a legal appeal against ICANN in its fight to prevent Verisign running the .web gTLD.

A California court ruled yesterday that a lower court was correct when it ruled almost two years ago that Donuts had signed away its right to sue ICANN, like all gTLD applicants.

The judges ruled that the lower District Court had “properly dismissed” Donuts’ complaint, and that the covenant not to sue in the Applicant Guidebook is not “unconscionable”.

Key in their thinking was the fact that ICANN has an Independent Review Process in place that Donuts could use to continue its fight against the .web outcome.

The lawsuit was filed by Donuts subsidiary Ruby Glen in July 2016, shortly before .web was due to go to an ICANN-managed last-resort auction.

Donuts and many others believed at the time that one applicant, Nu Dot Co, was being secretly bankrolled by a player with much deeper pockets, and it wanted the auction postponed and ICANN to reveal the identity of this backer.

Donuts lost its request for a restraining order.

The auction went ahead, and NDC won with a bid of $135 million, which subsequently was confirmed to have been covertly funded by Verisign.

Donuts then quickly amended its complaint to include claims of negligence, breach of contract and other violations, as it sought $22.5 million from ICANN.

That’s roughly how much it would have received as a losing bidder had the .web contention set been settled privately and NDC still submitted a $135 million bid.

As it stands, ICANN has the $135 million.

That complaint was also rejected, with the District Court disagreeing with earlier precedent in the .africa case and saying that the covenant not to sue is enforceable.

The Appeals Court has now agreed, so unless Donuts has other legal appeals open to it, the .web fight will be settled using ICANN mechanisms.

The ruling does not mean ICANN can go ahead and delegate .web to Verisign.

The .web contention set is currently “on-hold” because Afilias, the second-place bidder in the auction, has since June been in a so-called Cooperative Engagement Process with ICANN.

CEP is a semi-formal negotiation-phase precursor to a full-blown IRP filing, which now seems much more likely to go ahead following the court’s ruling.

The appeals court ruling has not yet been published by ICANN, but it can be viewed here (pdf).

The court heard arguments from Donuts and ICANN lawyers on October 9, the same day that DI revealed that ICANN Global Domains Division president Akram Atallah had been hired by Donuts as its new CEO.

A recording of the 32-minute hearing can be viewed on YouTube here or embedded below.

Chutzpah alert! DotKids wants ICANN handout to fight gTLD auction

Kevin Murphy, September 24, 2018, Domain Policy

New gTLD applicant DotKids Foundation has asked ICANN for money to help it fight for .kids in an auction against Amazon and Google.

The not-for-profit was the only new gTLD applicant back in 2012 to meet the criteria for ICANN’s Applicant Support Program, meaning its application fee was reduced by $138,000 to just $47,000.

Now, DotKids reckons ICANN has a duty to carry on financially supporting it through the “later stages of the process” — namely, an auction with two of the world’s top three most-valuable companies.

The organization even suggests that ICANN dip into its original $2 million allocation to support the program to help fund its bids.

Because .kids is slated for a “last resort” auction, an ICANN-funded winning bid would be immediately returned to ICANN, minus auction provider fees.

It’s a ludicrously, hilariously ballsy move by the applicant, which is headed by DotAsia CEO Edmon Chung.

It’s difficult to see it as anything other than a delaying tactic.

DotKids is currently scheduled to go to auction against Google’s .kid and Amazon’s .kids application on October 10.

But after ICANN denied its request for funding last month, DotKids last week filed a Request for Reconsideration (pdf), which may wind up delaying the auction yet again.

According to DotKids, the original intent of the Applicant Support Program was to provide support for worthy applicants not just in terms of application fees, but throughout the application process.

It points to the recommendations of the Joint Applicant Support working group of the GNSO, which came up with the rules for the support program, as evidence of this intent.

It says ICANN needs to address the JAS recommendations it ignored in 2012 — something that could time quite some time — and put the .kids auction on hold until then.

How ICANN could spend its $240 million war chest

Kevin Murphy, January 2, 2018, Domain Policy

Schools, pHD students and standards groups could be among the beneficiaries of ICANN’s nearly quarter-billion-dollar new gTLD auction war chest.

But new gTLD registries hoping for to dip into the fund for marketing support are probably shit out of luck.

Those are among the preliminary conclusions of a volunteer working group that has been looking at how ICANN should spend its new gTLD program windfall.

Over 17 new gTLD auctions carried out by ICANN under its “last resort” contention resolution system, the total amount raised to date is $240,590,128.

This number could increase substantially, should still-contested strings such as .music and .gay go to last-resort auction rather than being settled privately.

Prices ranged from $1 for .webs to $135 million for .web.

ICANN has always said that the money would be held separate to its regular funding and eventually given to special projects and worthy causes.

Now, the Cross-Community Working Group on New gTLD Auction Proceeds has published its current, close-to-final preliminary thinking about which such causes should be eligible for the money, and which should not.

In a letter to ICANN (pdf), the CCWG lists 18 (currently hypothetical, yet oddly specific) example proposals for the use of auction funds, 17 of which it considers “consistent” with ICANN’s mission.

A 19th example, which would see money used to promote TLD diversity and “smells too much like marketing” according to some CCWG members, is still open for debate.

While the list of projects that could be approved for funding under the proposed regime is too long to republish here, it would for example include giving scholarships to pHD students researching internet infrastructure, funding internet security education in developing-world primary schools and internet-related disaster-recovery efforts in risk-prone regions.

The only area the CCWG appears to be reluctant to endorse funding is the case of commercial enterprises run by women and under-represented communities.

The full list can be downloaded here (pdf).

The CCWG hopes to publish its initial report for public comment not too long after ICANN 61 in March. Comment would then need to be incorporated into a final report and then ICANN would have to approve its recommendations and implement a process for actually distributing the funds.

Don’t expect any money to change hands in 2018, in other words.

.kids auction is off

Kevin Murphy, December 12, 2017, Domain Registries

ICANN has postponed the planned auction of the .kid(s) gTLDs after an appeal from one of the applicants.

The last-resort auction had been penciled in for January 25, and there was a December 8 deadline for the three participants to submit their info to the auctioneer.

But DotKids Foundation, the shallowest-pocketed of the three, filed a Request for Reconsideration last Wednesday, asking ICANN to put the contention set back on hold.

The cancellation of the January auction appears to be to give ICANN’s board of directors time to consider the RfR under its usual process — it has not yet ruled on it.

DotKids and Amazon have applied for .kids and Google has applied for .kid. A String Confusion Objection won by Google put the two strings in the same contention set, meaning only one will eventually go live.

DotKids comprehensively lost a Community Priority Evaluation, which would negate an auction altogether, but it thinks the CPE got it wrong and wants to be treated the same way as other gTLD applicants whose CPE results are currently under review.

Reconsideration requests take between 30 and 90 days to process, and they rarely go the way of the requester, so the delay to the auction will likely not be too long.

DotKids doesn’t want .kids auction to go ahead

Kevin Murphy, December 7, 2017, Domain Registries

One of the applicants for the .kids gTLD has asked ICANN to stop the planned last-resort auction.

DotKids Foundation is competing with Amazon for .kids and, because the two strings were ruled confusingly similar, with Google’s application for the singular .kid.

ICANN last month set a January 25 date for the three contenders to go to auction, having unfrozen DotKids’ application back in October.

DotKids’ bid had been put on hold due to it losing a Community Priority Evaluation — which found overwhelmingly that the organization did not represent a proper community — and its subsequent appeals of that ruling.

But the foundation now says that its application should be treated the same as .music, .gay, and a few others, which are currently on hold while ICANN waits for the results of a third-party review of the CPE process.

DotKids filed a Request for Reconsideration (pdf) with ICANN yesterday, immediately after being told that there were no plans to put the contention set back on hold.

Tomorrow is the deadline for the three applicants to submit their information to ICANN to participate in next month’s auction.

An ICANN last-resort auction sees the winning bid being placed in a fund for a yet-to-be-determined purpose, as opposed to private auctions where the losing bidders share the loot.