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?
Rules proposed for the new Trademark Clearinghouse threaten to cut off some of new gTLD registries major sources of early revenue, according to registry providers.
Premium domain sales and founders programs are among the now industry-standard practices that would be essentially banned under the current draft of the TMCH rules, they say.
The potential problems emerged in a draft TMCH Requirements document circulated to registries 10 days ago and vigorously discussed during a session at the ICANN meeting in Beijing last week.
The document lists all of the things that new gTLD registries must and must not, and may and may not, do during the mandatory Sunrise and Trademark Claims rights protection launch periods.
One of the bits that has left registries confused is this:
2.2.4 Registry Operator MUST NOT allow a domain name to be reserved or registered to a registrant who is not a Sunrise-Eligible Rights Holder prior to the conclusion of the Sunrise Period.
What this means is that trademark owners get first dibs on pretty much every possible string in every gTLD.
“Trademark owners trump everything,” Neustar business affairs veep Jeff Neuman said during the Beijing meeting. “Trademark owners trump every possible use of every possible name.”
It would mean, for example, that if a new gTLD wanted to allocate some names to high-profile anchor tenants during a “founders program”, it would not be able to do so until after the Sunrise was over.
Let’s say the successful applicant for .shop wants to reserve the names of hundreds of shop types (book.shop, food.shop, etc) as premium names, to allocate during its founders program or auction later.
Because the .shop Sunrise would have to happen first, the companies that the own rights to, for example, “wallpaper” or “butcher” (both real US trademarks) would have first rights to wallpaper.shop and butcher.shop, even if they only planned to defensively park the domains.
Because there’s likely to be some degree of gaming (there’s a proof-of-use requirement, but the passing threshold is pretty low), registries’ premium lists could be decimated during Sunrise periods.
If ICANN keeps its TMCH Requirements as they are currently written, new gTLD registries stand to lose a lot of early revenue, not to mention control over launch marketing initiatives.
However, if ICANN were to remove this rule, it might give unscrupulous registries the ability to circumvent the mandatory Sunrise period entirely by placing millions of strings on their premium lists.
“Registries should have discretion to schedule their start-up phases according to their business plans so long as rights protection processes are honored, so that’s the balancing we’ve tried to do,” ICANN operations & policy research director Karen Lenz said during Beijing.
“It’s trying to allow registries to create requirements that suit their purposes, without being able to hollow out the rights protection intention,” she said.
The requirements document is still just a draft, and discussions are ongoing, she added.
“It’s certainly not our intention to restrict business models,” Lenz said.
Registries will get some flexibility to restrict Sunrise to certain registrants. For example, they’ll be able to disqualify those without an affiliation to the industry to which the gTLD is targeted.
What they won’t be able to do is create arbitrary rules unrelated to the purpose of the TLD, or apply one set of rules during Sunrise and another during the first 90 days of general availability.
The standard Registry Agreement that ICANN expects all new gTLDs to sign up to does enable registries to reserve or block as many names as they want, but only if those names are not registered or used.
It seemed to be designed to do things like blocing ‘sensitive’ strings, rather like when ICM Registry reserved thousands of names of celebrities and cultural terms in .xxx.
The Requirements document, on the other hand, seems to allow these names being released at a later date. If they were released, the document states, they’d have to be subject to Trademark Claims notices, but not Sunrise rules.
While that may be a workaround to the premium domains problem, it doesn’t appear to help registries that want to get founders programs done before general availability.
It seems that there are still many outstanding issues surrounding the Trademark Clearinghouse — many more than discussed in this post — that will need to be settled before new gTLDs are going to feel comfortable launching.
ICANN has decided to call off its big New York City new gTLD launch “party”, DI has learned.
The high-profile media event, scheduled for April 23, was set to feature an appearance from mayor Michael Bloomberg and was expected to be a coming-out party for new gTLDs.
The original plan was for ICANN to sign the first registry agreements with new gTLD applicants during the event, but that notion was later scrapped due to ongoing contract talks.
However, during the public forum at the ICANN Beijing meeting last week, CEO Fadi Chehade said that the event was still going ahead.
That, according to an ICANN email sent to registries and registrars today, appears to be no longer the case. The email cited “current timelines” as the reason for delaying the event.
The Registry Agreement and Registrar Accreditation Agreement still under discussion between ICANN and contracted parties, and there are other factors in play such as the Governmental Advisory Committee’s wide-ranging advice from Beijing and continued uncertainties about the Trademark Clearinghouse.
With so much up in the air, a public awareness-raising event for the program may have been seen as premature.
A second, private set of meetings between ICANN and domain name companies, also scheduled for April 23 in New York, is still going ahead, according to the ICANN email.
Following on from discussions held over the last few months, the New York talks will focus on improving the image and professionalism of the domain name industry, one of Chehade’s pet projects.
Talks will cover items such as: forming a DNS industry trade association, a possible trust-mark scheme, conferences and media/analyst outreach.
Governments may want new gTLD registries to become the internet’s police force, but ICANN doesn’t have to take it lying down.
ICANN is set to open up the shock Beijing communique to public comments, CEO Fadi Chehade said Friday, while chair Steve Crocker has already raised the possibility of not following the GAC’s advice.
“Advice from governments carries quite a bit of weight and equally it is not the end of the story,” Crocker said in a post-meeting interview with ICANN PR Brad White.
“We have a carefully constructed multi-stakeholder process,” he said. “We want very much to listen to governments, and we also want to make sure there’s a balance.”
The ICANN bylaws, he reminded us, give ICANN “a preference towards following advice from the GAC, but not an absolute requirement.”
That’s a reference the the part of the bylaws that enables ICANN’s board to overrule GAC advice, as long as it carries out consultation and provides sound reasoning.
It was invoked once before, when ICANN tried to get a handle on the GAC’s concerns about .xxx in 2011.
In this case, I’d be very surprised indeed if the GAC’s advice out of Beijing does not wind up in this bylaws process, if only because the document appears to be internally contradictory in parts.
It’s also vague and broad enough in parts that ICANN is going to need much more detail if it hopes to even begin to implement it.
It looks like at least 517 new gTLD applications will be affected by the GAC’s advice, but in the vast majority of cases it’s not clear what applicants are expected to do about it.
The first part of dissecting the Beijing communique will be a public comment period, Chehade said during the interview Friday. He said:
The community wishes to participate in the discussion about the GAC communique. So, alongside the staff analysis that is starting right now on the GAC communique we have decided to put the GAC communique out for public comment, soliciting the entire community to give us their input to ensure that the GAC communique is taken seriously but also encompasses our response, encompasses the views of the whole community.
Watch the full video below.
The launch window for new gTLDs may have just got pushed back another month or two, following the announcement of a new 42-day comment period on registry and registrar contracts.
But ICANN CEO Fadi Chehade said he’s looking at ways to streamline the process to offset the delays.
During the public forum in Beijing yesterday, ICANN CEO Fadi Chehade said that he’d cancelled a scheduled April 20 meeting of its board of directors, during which the new agreements were targeted for approval.
Instead, new versions of the 2013 Registrar Accreditation Agreement and new gTLDs base Registry Agreement will be posted for public comment next week.
As these are expected to be the final versions of both documents, they’re also expected to have full comment periods of 42 days — 21 for comments and 21 for replies.
“I believe that putting the last version of RAA for 2013 out for full public comment process is actually strengthening that agreement,” Chedhade said today. “It makes it an agreement of the community.”
For the Registry Agreement, Chehade said talks with registries are going well and that he hopes to have a version ready for public comment agreed with negotiators in less than a week.
Assuming an April 19 start, that puts the earliest possible date for ICANN board approval at May 31, assuming the board waits for the comment period to end before giving it the rubber stamp.
Before the contracts are approved, they can’t be signed by registries and registrars, and before they are signed new gTLD applicants cannot progress to the final pre-launch stages of the delegation process.
But Chehade is weighing an idea put forward during the public forum by Donuts’ Jon Nevett: why not allow applicants to complete pre-delegation technical testing before contract signing?
“We could potentially do something about advancing this step ahead of contracting, finding a way to start pre-delegation testing before contracting is done,” Chehade said.