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Donuts loses $22.5m .web lawsuit as judge rules gTLD applicants cannot sue

Kevin Murphy, November 30, 2016, Domain Registries

The promise not to sue ICANN that all new gTLD applicants made when they applied is legally enforceable, a California judge has ruled.

Judge Percy Anderson on Monday threw out Donuts’ lawsuit against ICANN over the controversial $135 million .web auction, saying the “covenant not to sue bars Plaintiff’s entire action”.

He wrote that he “does not find persuasive” an earlier and contrary ruling in the case of DotConnectAfrica v ICANN, a case that is still ongoing.

Donuts sued ICANN at first to prevent the .web auction going ahead.

The registry, and other .web applicants, were concerned that ultimately successful bidder Nu Dot Co was being covertly bankrolled by Verisign, which turned out to be completely correct.

Donuts argued that ICANN failed to adequately vet NDC to uncover its secret sugar daddy. It wanted $22.5 million from ICANN — roughly what it would have received if the auction had been privately managed, rather than run by ICANN.

But the judge ruled that Donuts’ covenant not to sue is enforceable. Because of that, he made no judgement on the merits of Donuts’ arguments.

Under the relevant law, Donuts had to show that the applicant contract was “unconscionable” both “procedurally” and “substantively”.

Basically, the question for the judge was: was the contract unfairly one-sided?

The judge ruled (pdf) that it was not substantively unconscionable and “only minimally procedurally unconscionable”. In other words: a bit crap, but not illegal.

He put a lot of weight on the fact that the new gTLD program was designed largely by the ICANN community and on Donuts’ business “sophistication”. He wrote:

Without the covenant not to sue, any frustrated applicant could, through the filing of a lawsuit, derail the entire system developed by ICANN to process applications for gTLDs. ICANN and frustrated applicants do not bear this potential harm equally. This alone establishes the reasonableness of the covenant not to sue.

Donuts VP Jon Nevett said in a statement yesterday that the fight over .web is not over:

Donuts disagrees with the Court’s decision that ICANN’s required covenant not to sue, while being unconscionable, was not sufficiently unconscionable to be struck down as a matter of law. It is unfortunate that the auction process for .WEB was mired in a lack of transparency and anti-competitive behavior. ICANN, in its haste to proceed to auction, performed only a slapdash investigation and deprived the applicants of the right to fairly compete for .WEB in accordance with the very procedures ICANN demanded of applicants. Donuts will continue to utilize the tools at its disposal to address this procedural failure.

It looks rather like we could be looking at an Independent Review Process filing, possibly the first to be filed under ICANN’s new post-transition rules.

Donuts and ICANN are already in the Cooperative Engagement Process — the mediation phase that usually precedes an IRP — with regards .web.

Second-placed bidder Afilias is also putting pressure on ICANN to overturn the results of the auction, resulting in a bit of a public bunfight with Verisign.

TL;DR — don’t expect to be able to buy .web domains for quite a while to come.

Amazon backtracks after pricing free Alexa list at over $900,000

Kevin Murphy, November 23, 2016, Domain Services

Amazon has reversed, at least temporarily, its decision to yank its free list of the world’s most popular domains, after an outcry from researchers.

The daily Alexa list, which contains the company’s estimate of the world’s top 1 million domains by traffic, suddenly disappeared late last week.

The list was popular with researchers in fields such as internet security. Because it was free, it was widely used.

DI PRO uses the list every day to estimate the relative popularity of top-level domains.

After deleting the list, Amazon directed users to its Amazon Web Services portal, which had started offering the same data priced at $0.0025 per URL.

That’s not cheap. The cost of obtaining same data suddenly leaped from nothing to $912,500 per year, or $2,500 per day.

That’s beyond the wallets, I suspect, of almost every Alexa user, especially the many domain name tools providers (including yours truly) that relied on the data to estimate domain popularity.

Even scaling back usage to the top 100,000 URLs would be prohibitively expensive for most researchers.

While Amazon is of course free to price its data at whatever it thinks it is worth, no notice was given that the file was to be deleted, scuppering without warning goodness knows how many ongoing projects.

Some users spoke out on Twitter.

I spent most of yesterday figuring out how to quickly rejigger DI PRO to cope with the new regime, but it seems I may have been wasting my time.

After an outcry from fellow researchers, Amazon has restored the free list. It said on Twitter:

It seems clear that the key word here is “temporarily”, and that the the restoration of the file may primarily be designed to give researchers more time to seek alternatives or wrap up their research.

Famous Four exec moves to CentralNic

Kevin Murphy, November 21, 2016, Domain Registries

Famous Four Media has lost its chief marketing officer to CentralNic.

Andy Churley joined the London-based registry services provider as group marketing manager this month, according to press release.

He’s been with FFM for the first few years of its entry into the gTLD game, overseeing the launches of cheap TLDs such as .science, .download and .bid.

Previously, he was with the registrar Group NBT.

CentralNic now of course is also in the registrar business, having acquired Internet.bs and Instra over the last few years.

.food goes live, and it’s a closed generic

Kevin Murphy, November 15, 2016, Domain Registries

The new gTLD .food went live in the DNS on Friday, but nobody except the registry will be able to register domains there.

In what I would argue is one of the new gTLD program’s biggest failures, .food will be a dot-brand, closed to all except the “brand” owner.

The registry is Lifestyle Domain Holdings, a subsidiary of US media company Scripps Networks.

Scripps runs the Food Network TV station in the States and the site Food.com. It has a trademark on the word “Food”.

Its registry agreement for .food, signed back in April, includes Specification 13, which allows registries to restrict all the second-level domains to themselves and their affiliates.

So food producers, restaurants, chefs and the like will never be able to use .food for their web sites.

ICANN signed the contract with Scripps despite objections from several entities including the Australian government, which warned “restricting common generic strings, such as .food, for the exclusive use of a single entity could have a negative impact on competition”.

Under ICANN rules hastily cobbled together after outrage over so-called “closed generics”, a registry cannot run as a dot-brand a gTLD that is:

a string consisting of a word or term that denominates or describes a general class of goods, services, groups, organizations or things, as opposed to distinguishing a specific brand of goods, services, groups, organizations or things from those of others.

Almost all applications flagged as closed generics were subsequently amended to make them restricted but not brand-exclusive. Scripps was the major hold-out.

The loophole that allowed .food to stay in exclusive hands appears to be that Scripps’ trademark on “Food” covers television, rather than food.

If .food winds up publishing content about food, such as recipes and healthy eating advice, I’d argue that it would go against the spirit of the rules on closed generics.

It would be a bit like Apple getting .apple as a Spec 13 dot-brand and then using the gTLD to publish content about the fruit rather than computers.

No sites are currently live in .food.

GMO offers free SSL with .shop domains

Kevin Murphy, November 14, 2016, Domain Registries

GMO Registry is to offer .shop domain registrants a free one-year SSL certificate with every purchase.

The company said yesterday that the deal, made via sister certificate company GMO GlobalSign, should be in place by the end of the month.

The certs on offer appear to be the of low-end “Domain Validation” variety.

Nevertheless, GlobalSign usually sells them for over $150 per year, many times more expensive than .shop domains themselves.

Popular registrars are currently selling .shop names from $10 to $25.

There are about 90,000 domains in .shop’s zone file today.

That’s a goodish volume by new gTLD standards, but probably not good enough to help GMO recoup the $41.5 million it paid for .shop at auction any time soon.

Upsell opportunities such as the SSL offer, assuming they get any uptake, may help accelerate its path to breakeven.