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Is ICANN too scared of lawsuits?

Kevin Murphy, November 17, 2010, 14:23:40 (UTC), Domain Registries

Arguments about the new top-level domain Applicant Guidebook kicked off with a jolt this week, when ICANN was accused of abdicating its responsibilities and being too risk-averse.
In what I think was the first case of a top ICANN staff member publicly discussing the AGB, senior veep Kurt Pritz fielded questions about “morality and public order objections” on a packed and occasionally passionate conference call (mp3).
On the call, Robin Gross of IPJustice accused ICANN’s of shirking its duties by proposing to “fob off” decisions on whether to reject controversial TLDs onto third-party experts.
She said:

I’m concerned that there’s a new policy goal – a new primary policy goal – which is the risk mitigation strategy for ICANN. I don’t remember us ever deciding that that was going to be a policy goal. But it seems that now what is in the best interest for the Internet is irrelevant. The policy goal that rules is what is in the best interest for ICANN the corporation

A cross-constituency working group (CWG) had said that controversial TLDs should be rejected only after a final nod from the ICANN board, rather than leaving the decision entirely in the hands of outside dispute resolution providers.
There was a concern that third parties would be less accountable than the ICANN board, and possibly more open to abuse or capture.
But ICANN rejected that recommendation, and others, on “risk mitigation” grounds. Explanatory notes accompanying the new AGB (pdf) say:

Independent dispute resolution is a cornerstone of the risk mitigation strategy. Without outside dispute resolution, ICANN would have to re-evaluate risks and program costs overall.

Almost a third of every new TLD application fee – $60,000 of every $185,000 – will go into a pool set aside for ICANN’s “risk costs”.
These costs were based on an estimate that there will be 500 applications, and that ICANN will need $30 million to cover risks.
These are often thought to be primarily risks relating to litigation.
There’s a fear, I suspect, that ICANN could become embroiled in more interminable .xxx-style disputes if it allows the board to make subjective calls on TLD applications, rather than hiring independent experts to make decisions based on uniform criteria.
On Monday’s conference call, Gross said that ICANN’s treatment of the CWG’s recommendations was a “really big shock”. She added:

clearly here this is just a fobbing off of that responsibility, trying to again avoid litigation, avoid responsibility rather than take responsibility and take accountability

But ICANN says that the risk mitigation strategy benefits TLD applicants by removing uncertainty from the program, as well making ICANN more credible.
Pritz said on the call:

the risk to the program is in creating a process or procedure that isn’t transparent and predictable for applicants. By what standard can a TLD be kicked out? It’s got to be: here’s the standards, here’s the decision maker and here’s the process.
When I talk about risk, it’s risk to this process.
If this process attracts a lot of litigation, and ICANN published the process and then did not follow it, or that the process wasn’t clear so that the applicant had no way of predicting what was going to happen to its application, the risk is then litigation would halt the process and undermine the ICANN model.
So it doesn’t really have anything to do with the people that are the directors or the people that are the staff; it has to do with the credibility of ICANN as a model for Internet governance.

In other words, if TLD applicants pay their fees and go into the process knowing what the rules are, and knowing that there’s little chance of being jerked around by the ICANN board, there’s less chance of the program as whole being disrupted by lawsuits.
Seems fair enough, no?

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Comments (9)

  1. jon says:

    Sure…bear in mind though that it’s likely that ICANN will trouser hundreds of millions of dollars from applications and auctions from the new TLD program. That funds a whole lot of top shelf lawyers…

  2. My counter-proposal for “Ascended TLDs” has a much clearer process, that isn’t subject to all the gaming in the current ICANN proposal:
    In particular, one would need “easements” from the existing registrant of the relevant .com/net/org. So, if you wanted to ascend to .example, you could either (1) already own each of or (2) get the permission (an “easement”) from the one’s you don’t own.
    Much, much simpler, and less subject to gaming by ICANN insiders. That’s why ICANN and the insiders won’t consider it, because they can’t “tax” such a proposal, getting their palms greased by such an elegant system that is also market-based.

  3. Jacob says:

    This is clearly a complex issue and I won’t venture a recommendation, however it is worth noting that in general applicants bear a significant amount of risk prior to, during, and after the process. Efforts to mitigate that are welcome.

  4. This topic also leads into a discussion of “Moral Hazard”, and I’ve posted a longer comment at:
    ICANN and its insiders want to private the profits, but socialize the losses associated with new TLDs.

  5. ratboy says:

    give it back to the commerce department and be rid of icaan. the government is incompetent but still at least they’re not legally allowed to take bribes.

  6. CouchPotatoGal says:

    @ratboy, sure, no illegal bribes, just lobbiests. Actually, we might as well just hand everything over to a consortium of Google, Microsoft, Verizon, etc. and get it over with.

  7. […] thing ICANN is setting aside 1/3 of application fees to fight legal […]

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