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Businesses call on regulators to stop .sucks “extortion”

ICANN’s Business Constituency wants US and Canadian regulators to intervene to prevent Vox Populi Registry, which runs .sucks, “extorting” businesses with its high sunrise fees.

The BC wrote to ICANN, the US Federal Trade Commission and the Canadian Office for Consumer Affairs on Friday, saying .sucks has employed “exploitive [sic] pricing and unfair marketing practices”.

The constituency adds its voice to Intellectual Property Constituency, which complained last month, causing ICANN to refer the matter to US and Canadian regulators.

Now, the BC has told the OCA and FTC:

We do not believe that exploitative and unfair business practices are conducive either to promoting end-user confidence in the Internet or to fair competition in the domain name space. On the contrary, the pricing structure adopted by Vox Populi for .sucks domain names is predicated purely on expecting the businesses and brands that drive global growth to pay extortionate fees for no consumer or market benefit.

Vox Populi’s tactics exploit businesses that neither want nor need these domain name registrations but feel unfairly pressured to register purely for defensive purposes.

The BC’s letter chooses to focus on saying sunrise names cost “$2,499 and up” (original emphasis). That’s based on the MSRP Vox Pop publishes on its web site.

In reality, Vox Pop is charging a registry fee of $1,999 per year for .sucks sunrise registrations.

Retail registrars can add hundreds of dollars in mark-up fees, but the leading corporate registrars that are selling the most .sucks sunrise names — MarkMonitor, CSC and Com Laude among them — have said that as a matter of principle they are only charging a nominal $20 to $25 processing fee.

It’s not the highest sunrise fee I’ve come across. The Chinese registry behind .top asked for $3,500 during its sunrise.

But the semantics of the .sucks TLD makes brand owners nervous and makes many of them feel that a defensive registration is a must-have.

The BC now write to regulators to “urge the FTC and OCA to expeditiously determine whether these practices constitute unfair trade practices”.

The letter points to US and Canadian regulations covering consumer protection for examples of where Vox Pop’s practices may fall short of the law.

The free speech opportunities afforded by .sucks do not outweigh the harms, the BC says.

It’s also interesting to note that while the BC appears to be running to regulators for assistance, it notes that it still fully supports the ICANN model.

There may be a degree of cognitive dissonance within the BC.

In a separate letter to ICANN, also signed by BC chair Elisa Cooper and sent yesterday, the BC seems to take issue with the fact that ICANN felt the need to report .sucks to regulators in the first place, writing:

We would like to understand the rationale for doing so. ICANN has ample authority, a clear obligation and the resources available to stop rogue practices through its contractual agreements with registries, its Compliance Department, and its broad duty to protect the public interest and the security and stability of the Internet, particularly for issues with global reach. Like all other gTLDs launched under ICANN’s program, .sucks has a global reach. It is not clear why ICANN feels it should seek clarification from these two North American agencies.

It’s worth noting that Vox Pop CEO Berard is a member of the BC via his PR agency, Credible Context. He was Cooper’s immediate predecessor as BC chair, leaving the post last year.

Correction: Thanks to the many readers who pointed out that Berard was actually the BC’s representative to the GNSO, not its chair. Apologies for the error.

The letter tells Global Domains Division president Akram Atallah that “viewed in its entirety, Vox Populi’s pricing scheme is a violation of the Rights Protection Mechanisms (RPMs)” developed for the new gTLD program, alleging it discourages use of the RPMs and encourages cybersquatting.

It claims that if Vox Pop populated its Sunrise Premium list (now known as Market Premium, it seems) with data from the Trademark Clearinghouse it could be in violation of its Registry Agreement with ICANN.

My sense has been that the names on that list were actually culled from zone files. Vox Pop has said it was compiled from lists of names that have previously been defensively registered. Most of the names in the TMCH have not been defensively registered.

The BC asks for ICANN “to take strong action”, but does not specify what, exactly, it wants.

The letter to the OCA and FTC can be read here. The letter to ICANN is here. Both are PDF files.

Has .sucks abandoned its Sunrise Premium program?

Vox Populi Registry has done away with the “Sunrise Premium” part of its .sucks launch strategy, if only in name.

The pricing page of the company’s web site no longer makes any reference to Sunrise Premium, the controversial, trademark-heavy list of .sucks domains that would cost over $2,000 a year to register and renew.

Instead, there are two new categories of names: Registry Premium and Market Premium.

Registry Premium appears to be what it was previously just calling “Premium” — individually priced high-value domains such as divorce.sucks and life.sucks. That’s in tune with standard registry practice.

The new Market Premium category appears to be the replacement for Sunrise Premium. The web site describes it like this:

In General Availability, dotSucks has created a list of domains called Market Premium names. These are names that the market over time have designated as having a high value.

Previously, Vox Pop CEO John Berard told DI and other reporters that the Sunrise Premium list had been compiled from names registered or blocked in previous sunrise periods in other TLDs.

It was characterized as an additional protection against cybersquatting, but intellectual property interests saw it as a shakedown.

It’s not obvious from the updated Vox Pop web site whether Market Premium is a ground-up rethink of the Sunrise Premium concept, or is merely an empty re-branding.

The name “Sunrise Premium” was confusing, given that such domains are not actually available during the formal sunrise period. Also, the name inextricably suggested that it was a list of trademarks.

Market Premium names are priced exactly the same as Sunrise Premium — that is, $1,999 at the registry level, with a suggested retail price of $2,499.

Market Premium names will also not be eligible for the discounted “Block” service but will “likely” be eligible for the Consumer Subsidy program. That’s no change from the policies governing the Sunrise Premium incarnation.

The registry web site now also states that purchasers of the Block service, which carries a $149 registry fee, will be able to unblock their domains if they wish to actively use them, but doing so will convert the domain into a $1,999 Market Premium name.

Defensive blocking could therefore have the eventual effect of stuffing the Market Premium list with trademarks anyway (assuming any trademark holders with blocks wish to activate their .sucks names, which seems unlikely).

I’ve put in a request for clarification about Market Premium with the registry and will provide updates when I get them.

Other updates on the .sucks price list include a removal of the $9.95 suggested retail price for Consumer Subsidy names.

Consumer Subsidy names are supposedly going to be run by a third party consumer advocacy group from Everything.sucks, but that group has not been identified by Vox Pop yet.

The fact that the registry seemingly had no deal in place but already knew the price suggested to many that Everything.sucks would just be another shell company managed by Vox Pop owner Momentous. Berard reportedly denied this publicly at the INTA 2015 conference last week.

The Vox Pop web site now states “dotSucks is hopeful that this will bring the individual consumer price below 10 dollars.”

Dot-brand gTLD guilty of domain name hijacking

Kevin Murphy, May 6, 2015, Domain Policy

Fashion retailer Mango, which owns its own dot-brand gTLD, has been found guilty of Reverse Domain Name Hijacking after allegedly doctoring evidence in a .uk cybersquatting case.

The company, which runs .mango, lost a Nominet Dispute Resolution Service complaint against New Zealand-based domain investor Garth Piesse over mango.co.uk and mango.uk.

It’s only the sixth RDNH finding in 13 years of DRS history.

Mango tried to buy the domain using a pseudonym and, when Piesse asked for “six figures”, filed the DRS instead.

Piesse claimed in what appears to have been a well-argued defense that the person attempting to buy the domain on Mango’s behalf did not identify Mango as the would-be buyer.

Further, he claimed that Mango deliberately tried to hide this fact from the DRS panel by scrubbing its negotiator’s email address from evidence it submitted.

While DRS panelist Tim Brown did not agree that this omission alone was enough to find RNDH, he agreed that Mango did not have “entirely clean hands”. He ruled:

The sequence of events in the present case appears to show that the Complainant attempted to buy from the Respondent. When these negotiations failed the Complainant started proceedings under the DRS. As I have noted, the Complainant has relied on bare assertion and has provided a paucity of evidence to support its arguments.

Even a cursory reading of the Policy, Procedure and extensive guidance on Nominet’s website would quickly show that a matter concerning a clearly generic, dictionary term would require a higher standard of argument and evidence than is perhaps common. That the Complainant has failed to come anywhere close to providing sufficient argument or evidence is, in my view, strongly indicative that the Complainant pursued this dispute in frustration at the Respondent’s unwillingness to sell for a price it was willing to pay, rather than because of the merits of its position in terms of the Policy’s requirements.

I conclude that the Complainant brought a speculative complaint in bad faith in an attempt to deprive the Respondent of the Domain Names. I therefore determine that the Complainant has engaged in Reverse Domain Name Hijacking.

Spain-based Mango has owned its trademarks for well over a decade, and Piesse only got his hands on the domains in question in 2013 and 2014.

Piesse, who owns about 18,000 domains, was able to show that Mango the brand is unheard of in New Zealand and that he has a track record of buying fruit-based .uk domain names.

ICANN in “fact-finding” mode over potential .sucks breach

Kevin Murphy, April 13, 2015, Domain Registries

ICANN is playing its cards close to its chest when pressed on what it thinks Vox Populi may have done wrong with its .sucks launch pricing and policies.

The organization told DI in a statement that it is currently “fact-finding”, and will not speculate on what parts of the Registry Agreement may have been breached.

ICANN on Thursday reported Vox Pop to the US and Canadian trade regulators, asking them to judge whether the registry’s $2,000 sunrise fee broke any laws.

Its Intellectual Property Constituency reckons the launch, which also places thousands of trademarks on permanent, high-priced “Sunrise Premium” list amounts to nothing more than a “shakedown” of brand owners.

Vox Pop CEO John Berard told DI last week that the referral to the US Federal Trade Commission, despite that fact that the company and its owners are Canadian, amounted to “appeasement” of the IPC.

In response, ICANN told DI in a statement:

The registry is offering domain name registrations to registrants located in jurisdictions around the world. It¹s possible that a registry’s activities could violate the law in the registry’s own jurisdiction; it is also possible that a registry’s activities could violate the law in the jurisdiction of a registrar or registrant where the registry offers domain name registrations. In this case, the IPC letter was signed by an attorney based in New York City, and ICANN thought it appropriate to ask both U.S. and Canadian authorities to consider the IPC allegations.

ICANN seems to be saying on the one hand that registries are beholden to the laws of wherever their registrants are based and on the other hand that the jurisdiction of the IPC’s current president, Greg Shatan, somehow has a bearing on what laws gTLD registries are obliged to obey.

I await correction from more knowledgeable readers, but I don’t think either of those statements is accurate.

If the latter is true, then perhaps the IPC should in future elect its leaders from only the countries with the most trademark-friendly regimes.

In ICANN’s letters to the FTC and IPC, the organization said it was “evaluating other remedies”. From the context, it seems that ICANN is thinking it could initiate some kind of compliance action against .sucks regardless of the what governmental regulators say.

Asked to explain this, ICANN told DI:

We¹re currently doing some fact-finding and analysis to assess whether there has been any breach by the registry of its obligations, and, based on the results of that analysis, we will try to determine what remedies, if any, may be available. Obviously, it will depend on all the facts and circumstances. Beyond that, since we haven¹t finished that evaluation process it would be inappropriate to speculate about possible remedies.

That’s not saying much, but it leaves the door open for ICANN Compliance to do something even if the FTC and Office of Consumer Affairs deem that no laws have been broken.

One possible “breach” that has been floated relates to the differential pricing created by the Sunrise Premium list. However, my take on this is that, under the new gTLD contracts, it’s not massively different to other kinds of premium pricing program.

Differential pricing protections only apply to renewal fees. If the registrant is told at the point of sale that their renewal fees will be high, that enables registries to put different fees on different domains.

There have also been theories put forward about ICANN’s motivation for referring .sucks to regulators.

The idea that ICANN can defer to the FTC and others on legal matter is not entirely new. In cases where registries intend to merge, ICANN is allowed under its contracts to refer the deals to regulators before approving them.

But this is the first time ICANN has referred new gTLD pricing to competition authorities.

Is it a case of ICANN ass-covering?

ICANN is taking unique fees worth up to $1 million extra from Vox Populi and, as I wrote two weeks ago, the optics of this are bad for ICANN, which could look like it is profiteering from .sucks.

ICANN has explained that the extra fees related to entities that were owned by Vox Pop parent Momentous, the Canadian registrar that had many subsidiaries go out of business owing ICANN a tonne of cash.

By punting the IPC’s complaint to regulators, ICANN could deflect criticism that it is not doing enough to protect rights holders and registrants while avoiding having to make a tricky decision itself.

Regardless, the FTC referral and the fact that ICANN is charging Vox Pop special fees sends a strong message that ICANN does not trust the registry one bit.

ICANN reports .sucks to the FTC over “predatory” pricing

ICANN has referred .sucks registry Vox Populi to the US Federal Trade Commission over concerns from intellectual property owners that its pricing is “predatory”.

The organization has asked the FTC and the Canadian Office of Consumer Affairs to determine whether Vox Pop is breaking any laws.

It asks both agencies to “consider assessing and determining whether Vox Populi is violating any laws or regulations enforced by your respective offices”.

If it is determined that laws are being broken, ICANN said it would be able to “enforce remedies” in the .sucks registry agreement.

ICANN goes on to say that it is “evaluating other remedies” in the registry’s contract.

The shock news comes two weeks after the Intellectual Property Constituency of ICANN complained that Vox Pop’s $2,000 sunrise fee is just a “shakedown scheme”.

The IPC said March 27 it was:

formally asking ICANN to halt the rollout of the .SUCKS new gTLD operated by Vox Populi Registry Inc. (“Vox Populi”), so that the community can examine the validity of Vox Populi’s recently announced plans to: (1) to categorize TMCH-registered marks as “premium names,” (2) charge exorbitant sums to brand owners who seek to secure a registration in .SUCKS, and (3) conspire with an (alleged) third party to “subsidize” a complaint site should brand owners fail to cooperate in Vox Populi’s shakedown scheme.

The IPC is also pissed off that there’s a Sunrise Premium fee that applies to the most famous brands, regardless of when they register.

Vox Pop CEO John Berard told DI tonight that the company’s pricing and policies are “well within the rules”, meaning both ICANN’s rules and North American laws.

He asked why ICANN has referred the matter to the FTC, given that Vox Populi is a Canadian company.

He said that a senior ICANN executive had told him it was because many IPC members are US-based. He described this as “appeasement” of the IPC interests.

Greg Shatan, president of the IPC, whose letter sparked ICANN’s outreach to the FTC and OCA, said that the word “justice” is more appropriate than “appeasement”. He told DI tonight:

We’re looking forward to the FTC and OCA taking a look at Vox Populi’s behavior. And there’s lots to look at. The punitive TMCH Sunrise, where a “rights protection mechanism” intended to protect trademark owners has been turned into a scheme to extort $2,500 and up… The eternal Sunrise Premium of the far-from-spotless .SUCKS registry. The mysterious “everybody.sucks” — purportedly a third party, purportedly providing a “subsidy” to registrant — would anyone be surprised if that was a sham?

With reference to the FTC referral, Shatan also told DI tonight:

I don’t think ICANN wants to waste the FTC’s time. It’s far more rational to think that ICANN informed the FTC because Vox Populi’s activities are within the jurisdiction of the FTC. Mr. Berard’s remarks seem to indicate that he believes that Vox Populi operates beyond the reach of US laws.

With a tech contact in Bermuda and an admin contact in the Caymans, that may have been Vox Pop’s intention. Vox Pop may be operating outside US laws, but I doubt they are operating beyond their reach.

Vox Populi is incorporated in Canada, hence ICANN’s outreach to the Canadian regulator. According to its gTLD application, its only 15%+ owner is Momentous, another Canadian company.

But its IANA record lists an address in Bermuda for its technical contact and Uniregistry’s office in Grand Cayman as its administrative address.

There’s been rumors for months that Uniregistry or CEO Frank Schilling helped bankroll Vox Populi’s participation in the .sucks auction, which saw it splash out over $3 million.

ICANN is asking the US and Canadian agencies to respond to its letter with “urgency”, as .sucks is currently in sunrise and is due to go to general availability May 29.

Trademark owners and celebrities are already registering their names in the .sucks sunrise period.

ICANN confirmed in a separate letter today to IPC chair Greg Shatan that Vox Pop has paid ICANN a unique $100,000 start-up fee, and has promised to pay an extra $1 per transaction, due to now-defunct Momentous subsidiaries defaulting on “substantial payments”.

As DI reported last week, ICANN says that the fee is “not related to the nature” of .sucks, but it could give the appearance that ICANN is a beneficiary of the .sucks business model.

This article was published quite quickly after the news broke. It was updated several times on April 9, 2015. It was updated with background material. It was then updated with comments from Vox Pop. It was then updated with comments from the IPC. Later commenters had the benefit of reading earlier versions of this post before they submitted their comments.