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Verisign steps up anti-gTLD campaign with attack on ICANN’s war chest

Kevin Murphy, June 17, 2013, 13:29:05 (UTC), Domain Registries

Verisign wants ICANN to publish a list of all the reasons it might be sued over the new gTLD program, claiming security and stability risks might be one of them.
In the latest salvo fired in its war against new gTLDs, the company now suggests that the $115 million “risk fund” surplus that ICANN has accumulated is for fending off lawsuits when it breaks the internet.
In a letter (pdf) sent Friday, Verisign asks ICANN to justify the existence of this war chest in light of the fact that it has managed to secure legal indemnities from pretty much everyone involved in the program.
It attempts to link the risk fund to the possible security risks of introducing new gTLDs to the internet, which Verisign has been haranguing ICANN about for the last few months.
“We believe ICANN should be forthcoming about the risks it is shifting and the need for the substantial risk reserve fund, in particular,” the letter, signed by general counsel Richard Goshorn, says.
It’s been well known for a few years that $60,000 of each $185,000 new gTLD application fee was to be allocated to a risk fund created to cover unexpected extra program costs.
The reserve was designed to cover things like underestimating the costs or time needed to evaluate applications, but also, crucially, the lawsuits that ICANN expected but has not yet received.
The cash pile is often to referred to, usually with black humor, as the “legal defense fund”.
Now Verisign seems to be saying that the legal risks are not limited to trademark disputes or the usual antitrust nonsense, but to the security risks ICANN is “transferring” to others.
As we’ve been reporting for the last few months, Verisign has suddenly decided that new gTLDs pose a risk to the internet, largely due to the potential for clashes between newly delegated strings and the unnofficial domains that many organizations already use on their intranets.
For a great discussion on the merits of this argument check out this DI article and comment thread.
With the latest letter, Verisign suggests that ICANN knows it might be sued for messing up corporate intranets, but is keeping that fact quiet.
Referring to a report it issued in March, when its security concerns first emerged, it says:

We believe that ICANN may have established and be maintaining the Risk Reserve in such a high amount in anticipation of significant claims relating to one or more risks identified in the Verisign Report.

If ICANN does get sued on these grounds, the defense cost will effectively have been covered by new gTLD applicants (and therefore their customers, assuming the costs are passed on), Verisign says.
It’s therefore asking for ICANN to disclose the reasons why its risk fund is so big, “in particular, the details regarding what ‘possible litigation’ factored into ICANN’s decisions”.
In other words, Verisign is asking ICANN to publish a list of reasons people might sue it, something I can’t imagine its general counsel agreeing to any time soon.
Is this an effort to shame ICANN into taking its security concerns more seriously, or just more FUD designed to disrupt the new gTLD program and protect its .com dominance?
Opinions, no doubt, will be split.

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Comments (5)

  1. ICANN should voluntarily pay back the unused funds to the applicants in case the risks these funds are intended to cover do not materialize after a certain time.
    If the risks do not materialize for the first 3-5 years after the initial round has closed, there is no justification for holding on to this “risk fund” and it should be dissolved with the accrued interest.

  2. Adekunle Hassan says:

    It’s worth noting the ALAC is also raising concerns. They suggest ICANN is ignoring the SSAC for “vested interests,” risking security and stability, ICANN is abusing the public comment process; and is suggesting that ICANN needs to slow down and address the security and stability issues raised. It’s a pretty strongly worded piece.

  3. Page Howe says:

    Since very little consideration was ever given to dissenting opinions about the entire concept of new tlds (the months and months was only about who would get them and how) the “release the hounds” solution was pushed thru (remember the rational- we arent kingmakers so lets let everyone in), all this after 4 attempts at a rational introduction, Test Bed, sponsored, Pay to Play II, XXX reconsideration work around, showed there isnt a need for new tlds; there’s no doubt unintended latent dysfunction could exist.Shop may be a winner…..
    see how even this last sentence ( when i drop the space after the period becomes a possible domain name………mobile phones will now have to parse text for urls, and who knows what exists in old code… so could we have a Y2K like rewriting of code to accomadate not just 1800 new tlds, but the possiblility that any string could exist in the future.
    were giving up a structure that has allowed growth without risk and failure, except for the contempt those in ICANN have seemingly always held for those few that benefitted from owning prime domains, and TM holders, and those in the community who wanted a lottery ticket to make money like a registry.
    So their distaste for a market based system, only led them to create a market based system to raise the $300 million.
    And now in 2014, at a time when sanity has finally come to the domain name market in com net and org, ie – reasonable prices for average names, more available names than ever before, and rightfully so high prices for the best names, were going to add a bunch of stuff that no doubt will have unintended consequences…and ICANN’s answer is “we have the money to paper over what might occur”.
    Seems like it will be a Showdown when the Dept of Commerce has to add to the root, thats the lawsuit point, the Congressional Action point.
    Til then its all hypothetical.
    my prediction, the IDN’s get thru, everything else delayed til 2015.
    just MHO
    page howe

    • Ray Marshall says:

      Page, with all due respect, I thought you would be an advocate for new gTLDs, especially city TLDs given your investment in .LA.

  4. page howe says:

    i think .LA as a cctld marketed worldwide is a reasonable investment, and its available now. I will probably make money on new tlds, and even applied for .kids in the 2000 round, and will be a reseller for those if it gets out. Heck ill probably sell for some dough, but i dont think good policy is being made in this process, do a test bed, dont improve the internet. go ahead and increase the program 1000 times…………..doesnt seem beneficial.

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