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ICANN smacks new gTLDs for pre-sunrise auctions

Running a premium domain name auction before you’ve finished your new gTLD sunrise period is Officially Not Cool, according to ICANN’s compliance department.

People who won premium new gTLD domains in auctions that took place before sunrise periods now face the possibility of losing their names to trademark owners.

.CLUB Domains, and probably XYZ.com, operators of .club and .xyz, two of the highest-volume new gTLDs to launch so far, appear to be affected by the ICANN decision.

ICANN told .CLUB that its “winter auction“, which took place in late February, may have violated the rules about allocating or “earmarking” domains to registrants before sunrise takes place.

Meanwhile, NameJet has cancelled the auction for deals.xyz, which “sold” for $8,100 late last year, suggesting that .xyz’s pre-sunrise auction is also considered ultra vires.

ICANN told .CLUB that its auction sales “constitute earmarking” in violation of the rule stating that registries “must not allow a domain name to be allocated or registered prior to the Sunrise period”.

.CLUB had told its auction winners that a sunrise period registration would prevent them from getting the domain they wanted and that they would be refunded if a sunrise registrant emerged.

But ICANN evidently told the registry:

Irrespective of whether “[a]llocation was expressly conditioned upon any Sunrise claim,” or whether any Sunrise claim was made, the pre-selection, pre-registration or pre-designation to third parties, in this case via .Club Domains’ “winter auction,” constitutes improper allocation.

I kinda thought this would happen.

Back in November, when XYZ.com ran its first .xyz auction — about six months before its sunrise even started — CEO Daniel Negari told us he believed it was “comfortably within the rules“.

We said the auction “seems to be operating at the edge of what is permissible under the new gTLD program’s rights protection mechanisms, which state that no domains may be allocated prior to Sunrise.”

I’ve not yet been able to definitively confirm that .xyz is affected by this ICANN decision, but .club definitely is.

.CLUB Domains told its auction winners today that the names they won are now subject to a 60-day period during which they could be obtained by trademark owners.

If no trademark owner claims the name, .CLUB said it will give the auction winner a 10% rebate on their purchase price.

The email states:

We are placing the domain on hold for 60 days, during which time a Trademark Clearinghouse (TMCH) holder will have the opportunity to purchase the domain at Sunrise rates. Although, the domain is not currently in the TMCH, if a trademark holder should file in the TMCH over the next 60 days, the domain will be offered to that registrant. However, if the name is not claimed by filing in the TMCH over the next 60 days, your transaction will move forward as planned.

Although we disagree with ICANN compliance’s position on this matter, the actions we are taking are necessary to ensure that we are not offside with ICANN compliance in any way. We understand that you have been caught in the middle of this issue due to no fault of your own. Given these circumstances, we are offering you two options:

1) Should you decide to complete this transaction, we will issue you a payment of 10% of the purchase price after the transaction closes in 60 days, assuming the name is not registered by a TMCH mark holder because of the delay.

2) At any time during the 60 day period you have the option to rescind the auction bid and not purchasing the domain.

XYZ says auctions “comfortably within the rules”

Kevin Murphy, November 10, 2013, Domain Registries

New gTLD registry XYZ.com has responded to criticisms of its plan to auction .xyz and .college names with NameJet before they even have signed contracts with ICANN.

CEO Daniel Negari told DI that the plan to auction 40 names between now and the end of February, is “comfortably within the rules”.

The company seems to be operating at the edge of what is permissible under the new gTLD program’s rights protection mechanisms, which state that no domains may be allocated prior to Sunrise.

But Negari said in an email interview that nothing will be “allocated” before its Sunrise periods are done:

the buyers at auction are not buying the domain names as in a normal auction. They are buying an option to force us to allocate them the domain after the Sunrise Period for the auction price assuming various contingencies are met — such as us being able to allocate the name in the future, the name being available after sunrise, the name not being blocked-out because of name collisions and so on.

He went on to say that the 40 names being put to auction are being drawn from the 100 names the recently redrafted Registry Agreement says registries are allowed to allocate to themselves “necessary for the operation or the promotion of the TLD”.

There’s also the potential problem that neither TLD has yet received its list of name collisions, which are likely to contain thousands of strings that the registry must block at launch.

As we’ve seen with the gTLDs that already have their lists, many desirable second-level strings are likely to be blocked, which could clash with names XYZ is planning to auction.

But XYZ seems to have access to the Day In The Life Of The Internet data from which these lists are compiled, and Negari said that the names it is auctioning off do not appear.

“We think these auctions are a great way to both promote our TLD as anticipated by ICANN in the RA and to bring increased innovation to the space in line with ICANN’s stated goals for the new gTLD program,” Negari said.

NameJet to auction new gTLD domains before they launch

Kevin Murphy, November 8, 2013, Domain Sales

Many registrars are already offering new gTLD pre-registrations, now NameJet has taken the idea one step further: it’s going to auction premium names months before the gTLDs even go live.

It’s just announced a deal with XYZ.com, which is on track to run the .xyz and .college registries, to sell 40 “premium” domain names this month. In fact, according to its press relase, the first auction started on Wednesday.

These two new gTLDs are uncontested but do not yet have Registry Agreements with ICANN, and have not passed pre-delegation testing or any of the other pre-launch prerequisites.

The companies said they due to go live next year.

Some of the domains to be auctioned include: loans.college, scholarships.college, vacations.xyz, insurancequotes.xyz, students.college, jobs.college, auctions.xyz and health.xyz.

NameJet said it expects the auctions to be wrapped up by the end of February.

Next new gTLD auction set for August 13

Innovative Auctions today announced that its second new gTLD auction is scheduled for August 13 and that several companies have already signed up to participate.

The news follows the settlement of the first round of auctions, which saw $9.01 million shared between losing applicants and Innovative for the rights to six new gTLD strings.

“[A]ll of the participants from this auction who have additional strings in contention have signed on to use the process to resolve their remaining contentions,” Innovative said.

That would mean Afilias, Merchant Law Group and XYZ.com, which took part in this month’s auctions, are all likely to attempt to settle their outstanding contention sets with Innovative.

That’s another roughly 40 strings on top of Donuts’ already-committed monster portfolio.

Of course, the auctions will only be able to go ahead if all of the other applicants in each contention set also agree to participate, which in some cases will be a non-starter.

The money from the first auctions has already been distributed to the losing applicants, according to Innovative.