.hotel battle lands ICANN in court over accountability dodges

ICANN’s accountability mechanisms, or lack thereof, have landed the Org in court.

Three applicants for the .hotel new gTLD have sued in California’s Superior Court in LA, claiming ICANN has consistently failed to provide true accountability, refusing for over seven years to implement fundamental mechanisms required by its bylaws.

They want the court to force ICANN to stick to its bylaws and to also temporarily freeze an Independent Review Process case related to .hotel.

The registries in question are Fegistry, Domain Venture Partners and Radix. They filed their complaint at the end of October, but ICANN did not publish it until the end of January, after its terse reply, and an administrative ruling, had also been filed with the court.

While the endgame is presumably to get the .hotel contention set pushed to auction, the lawsuit barely mentions the gTLD at all. Rather, it’s a broad-ranging challenge to ICANN’s reluctance to submit to any kind of accountability at all.

The main beef is that ICANN has not created a so-called “Standing Panel” of judges to preside over IRP cases, something that its bylaws have required since 2013.

The Standing Panel is meant to comprise seven legal experts, trained up in all things ICANN, from which the three panelists presiding over each IRP would be selected.

It would also operate as a final appeals court for IRP rulings, with all seven panelists involved in such “en banc” challenges.

The idea is to have knowledgeable panelists on a retainer to expedite IRPs and ensure some degree of consistency in decision-making, something that has often been lacking in IRP decisions to date.

Despite this requirement being in the bylaws since 2013, ICANN has consistently dragged its feet on implementation and today there still is no Standing Panel.

The .hotel plaintiffs reckon ICANN has dodged $2.7 million in fees by refusing to pick a panel, all the while offloading certain fees onto complainants.

It didn’t get the ball rolling until January 2018, but the originally anticipated, rather streamlined, selection process quickly devolved into the usual mess of ICANN bureaucracy, red tape and circular community consultation.

The latest development was in November 2020, when ICANN announced that it was looking for volunteers for a cross-community “IRP Community Representatives Group”, a team similar to the Nominating Committee. which would be responsible for picking the Standing Panel members.

The deadline to apply was December 4, and we’ve not heard anything else about the process since.

The .hotel litigants also have beef with the “sham” Request for Reconsideration process, which is notorious for enabling the board to merely reinforce its original position, which was drafted by ICANN staff lawyers, based on advice provided by those same ICANN staff lawyers.

They also take aim at the fact that ICANN’s independent Ombudsman has recused himself from any involvement in Reconsideration related to the new gTLD program, for unclear reasons.

The lawsuit (pdf) reads:

ICANN promised to implement these Accountability Mechanisms as a condition of the United States government terminating its formal oversight of ICANN in 2016 — yet still has wholly failed to do so.

Unless this Court forces ICANN to comply with its bylaws in these critical respects, ICANN will continue to force Plaintiffs and any other complaining party into the current, sham “Reconsideration” and Independent Review processes that fall far short of the Accountability Mechanisms required in its bylaws.

The plaintiffs say that ICANN reckons it will take another six to 12 months to get the Standing Panel up and running. The plaintiffs say they’re prepared to wait, but that ICANN is refusing and forcing the IRP to continue in its absence.

They also claim that ICANN was last year preparing to delegate .hotel to HTLD, the successful applicant now owned by Donuts, which forced them to pay out for an emergency IRP panelist to get the equivalent of an injunction, which cost $18,000.

That panelist declined to force ICANN to immediately appoint a Standing Panel or independent Ombudsman, however.

The .hotel plaintiffs allege breach of contract, fraud, deceit, negligence and such among the eight counts listed in the complaint, and demand an injunction forcing ICANN to implement the accountability mechanisms enshrined in the bylaws.

They also want an unspecified amount of money in punitive damages.

ICANN’s response to the complaint (pdf) relies a lot on the fact that all new gTLD applicants, including the plaintiffs in this case, signed a covenant not to sue as part of their applications. ICANN says this means they lack standing, but courts have differed of whether the covenant is fully enforceable.

ICANN also claims that the .hotel applicants have failed to state a factual case for any of their eight counts.

It further says that the complaint is just an effort to relitigate what the plaintiffs failed to win in their emergency hearing in their IRP last year.

It wants the complaint dismissed.

The court said (pdf) at the end of January that it will hold a hearing on this motion on DECEMBER 9 this year.

Whether this ludicrous delay is related to the facts of the case or the coronavirus pandemic is unclear, but it certainly gives ICANN and the .hotel applicants plenty of time for their IRP to play out to conclusion, presumably without a Standing Panel in place.

So, a win-by-default for ICANN?

Conspiracy nut ordered to pay thousands to “kingpins” as “cartel” lawsuit chucked out

Domain industry conspiracy theorist Graham Schreiber has been ordered to pay CAD 6,000 ($4,750) in legal fees to many of the scores of industry figures he sued as a “cartel” of “kingpins” last August.

A Canadian Federal Court judge last month threw out his rambling, incoherent complaint in its entirety, saying among other things that it was “frivolous and vexatious”, containing no allegations the defendants were capable of responding to.

Judge Angela Furlanetto summarized the case like this:

It can best be described as a wide-spread attempt by the Plaintiff to express his displeasure and frustration with his experience in his prior lawsuit in the U.S. and with the domain name system.

And:

In this case, the Plaintiff baldly asserts conspiracy, racketeering, trafficking, extortion, passing off and perjury. The Plaintiff raises these issues broadly, does not plead material facts to support the constituent elements of these causes of action, and has not identified with any clarity which defendants are asserted to have committed each of these acts and how. The who, when, where, how and what are not pleaded

In throwing out the case, she ordered that Schreiber must pay CAD 1,500 ($1,189) to each of the four sets of defendants who had responded to his complaint, to cover their legal fees.

Schreiber actually got lucky — the defendants had asked for a total closer to CAD 25,000 ($20,000), but the judge took pity on him because he was representing himself in the case.

The beneficiaries of these four payouts, should they ever be made, are GoDaddy VP James Bladel, a group comprising Jeff Ifrah, Keith Drazek, Timothy Hyland, Phil Corwin and David Deitch, Greenberg Traurig lawyers Marc Trachtenberg, David Barger, Amanda Katzenstein, Paul McGrady and Ian Ballon, and Facebook Canada.

But the suit had named dozens of other industry figures of greater or lesser prominence, in a crazy blanket rant that appears to be rooted in an old beef Schreiber has with CentralNic and Nominet related to the domain names landcruise.uk.com and landcruise.co.uk.

One of his rather bold legal gambits was to inform the court that he’d been trolling the defendants on social media for years, and that the fact he had not yet been sued for libel was evidence of a conspiracy.

Will a six grand legal bill be sufficient to get him to sit down and shut up? I guess time will tell.

Hat tip to erstwhile defendant John Berryhill for posting the ruling (pdf).

Three ICANN directors voted against Marby’s pay rise

In what may or may not have been an accidental moment of transparency, ICANN has revealed that three of its directors recently voted against giving CEO Göran Marby a pay rise.

Notes on the February 8 board meeting, which granted Marby a 5% salary increase from July, contain this tally:

Eleven Directors voted in favor of Resolution 2021.02.08.05. Three Directors voted against the Resolution. Two Directors including Göran Marby, the subject of the Resolution, were unavailable to vote. The Resolution carried.

It appears to be the first time, at least in recent years, that an ICANN board vote breakdown has been published on a matter of executive compensation.

Assuming this was a deliberate decision to increase transparency, rather than an admin screw-up, kudos to ICANN for the baby-step.

Any resolution carried by the ICANN board related to personnel matters such as pay is usually during a confidential “executive session” which is not properly minuted and doesn’t usually have a vote breakdown published.

The report does not name the dissenting directors or their arguments against the pay raise. That kind of thing would usually come in the formally approved minutes, which might not come for months and might not elaborate further.

However, when Marby sought and was granted a contract extension last year, and the vote was not unanimous, ICANN did eventually publish some information about dissenting directors’ rationales.

One director had voted against the extension partly due to issues with “the CEO’s communication style” that he believed needed to be addressed. Another abstained because she felt there should have been a formal performance review first.

Coronavirus has made ICANN $11 million richer than predicted so far this year

ICANN made a lot more money and spent a lot less money in the second half of 2020, compared to the predictions made in its current budget.

Funding for the six months from July 1 to December 31 (the first half of ICANN’s fiscal 2021) came in $6 million higher than expected, at $69 million, according to data released by ICANN tonight.

Over the same period, its outgoings came in at $55 million, which was $5 million less than its approved budget had anticipated, leading to a net gain of $11 million.

The reason for the variance appear to be mostly related to the unanticipated positive impacts of the coronavirus pandemic.

Last April, when the FY21 budget was being drafted, ICANN thought the economic impact of the disease would prove a serious blow to the industry that funds it.

But the opposite turned out to be true. ICANN failed to predict that the government-enforced lockdown of large parts of the high street in many countries would see a rush by small bricks-and-mortar businesses to the interwebs.

This boosted domain growth for many companies and led to an increase in ICANN transaction taxes fees, which are paid whenever a domain is registered, renewed or transferred.

ICANN’s revenue was up across all three main segments in H1 FY21, when compared to its budget expectations.

Registry transaction fees were $2 million over budget at $27 million, and registrar transaction fees were also over by $2 million at $18 million. Registry and registrar fixed fees were also up by $1 million each, suggesting fewer companies terminated their contracts than expected.

“Funding higher than Budget driven by higher than planned transaction fees”, an ICANN slide deck (pdf) states.

On the expenses side, ICANN of course spent less cash on its meetings because it wasn’t subsidizing international flights and expensive hotels for 500-odd staff and community members.

“Lower Travel & Meetings due to travel restrictions from the COVID-19 pandemic”, the slide deck states.

Travel expenses, rounded, accounted for 0% or $0 of its H1 expenditure.

When the budget was passed in June last year, ICANN still thought it was possible that the October meeting would go ahead in-person in Hamburg, so it put aside $4.2 million to pay for it.

As it turned out, the Org ended up spending $100,000 on Zoom and other audiovisual services and another $400,000 on translation and interpretation services. And that was all.

The $2.2 million it expected to pay sending staff and community members to Hamburg came in at $0.

ICANN’s adopted budget for FY21 also anticipated the March 2021 meeting would go ahead in Cancun, Mexico, but that’s already been rescheduled for Zoom, which will save it a few million more bucks this year.

The Org hasn’t yet officially relocated its planned June 2021 in-person meeting from The Hague to Zoom, but I’m fairly confident it’s going to have to.

Its $12.2 million travel budget for FY21 is probably going to come in much closer to $2 million.

Public comments open on new Whois policies

It’s your last chance to comment on ICANN’s proposed revisions to Whois policy.

ICANN has opened up public comments on what it opaquely calls EPDP Phase 2 Policy Recommendations for Board Consideration.

Why it just can’t use the term “Whois access”, or announce its public comment periods in layman’s terms is beyond me. Doesn’t it want public comments? Still, translating this nonsense into English keeps me in work, so I guess I won’t complain too hard.

The main feature of the proposed policy is a multi-tiered, somewhat centralized system for requesting access to Whois data about private registrants that has been redacted since the EU’s General Data Protection Regulation came into effect in May 2018.

It’s called SSAD, for System for Standardized Access and Disclosure, which was pieced together by a working group of community volunteers over a year.

Domain companies are generally okay with the compromise it represents, but intellectual property interests and others who would actually use the system think it’s a useless waste of money.

It’s expected to cost $9 million to build and $9 million a year to run.

There’s so much uncertainty about the system that in parallel with the public comments ICANN is also consulting with the GNSO Council, which approved the proposals in September, to figure out whether it’s even workable, and with the European Commission to figure out if it’s even legal.

After the public comment period closes on March 30, the comments will be compiled by ICANN staff and burned on a big fire sent to the ICANN board for final approval.

ICANN CEO gets 5% pay rise

ICANN’s board of directors has awarded CEO Göran Marby a 5% pay rise after a review found that he’s being paid less than half of his peers at other companies.

Based on Marby’s last-reported base salary of $673,461, the increase amounts to a bump of $33,673.

He’s also still eligible for a 30% annual bonus, which he usually gets a piece of.

The board justified the move by stating that a third-party review found Marby’s salary was below 50% of CEOs at other non-profits, general industry and high-tech companies. Using for-profit companies in the mix sometimes proves controversial.

The board said that he’s only received one pay raise before in the five years he’s been on the job — a 3% increase in 2019.

His new pay comes into effect in July.

ICANN says its “compensation philosophy is to pay base salaries within a range of the 50th to 75th percentile of the market for a particular position.”

It says that even with the new raise, Marby’s pay still comes in outside of the lower end of that window.

Marby’s contract was recently extended by two years to 2024, over the objections of two directors.

New rules could stop registries ripping off big brands

New gTLD registries could be banned from unfairly reaching into the deep pockets of famous brands, under proposed rules soon to be considered by ICANN.

A recommendation approved by the GNSO Council last Thursday targets practices such as using reserved and premium lists to block trademark owners from registering their brands during sunrise periods, or charging them exorbitant fees.

It’s believed to target new TLDs that hope to copy controversial practices deployed by the likes of .sucks, .feedback and .top in the 2012 gTLD round.

The recommendations came in the final report of Review of All Rights Protection Mechanisms (RPMs) in All gTLDs working group, which suggests over 30 tweaks to policies such as Sunrise, Trademark Claims, Trademark Clearinghouse and Uniform Rapid Suspension.

While the recommendations almost all received full consensus of the working group, that’s largely because the group could not agree to any of the major changes that had been demanded by the intellectual property lobby.

The aforementioned RPMs will therefore not change a great deal for the next batch of new gTLD applicants.

Even the recommendation about not ripping off big brands is fairly weak, and may well be watered down to homeopathic levels by the forthcoming Implementation Review Team, which will be tasked with turning policy into practice.

This is the recommendation:

Sunrise Final Recommendation #1

The Working Group recommends that the Registry Agreement for future new gTLDs include a provision stating that a Registry Operator shall not operate its TLD in such a way as to have the effect of intentionally circumventing the mandatory RPMs imposed by ICANN or restricting brand owners’ reasonable use of the Sunrise RPM.

Implementation Guidance:

The Working Group agrees that this recommendation and its implementation are not intended to preclude or restrict a Registry Operator’s legitimate business practices that are otherwise compliant with ICANN policies and procedures.

The idea is that ICANN Compliance could come down on registries deploying unfair rules designed to rip off trademark owners.

Practices that have come in for criticism in the past, and are cited in the report, include:

.top’s attempt to charge Facebook $30,000 for facebook.top

.feedback registering thousands of brand-match domains to itself

.sucks placing brand-match domains in an expensive premium pricing tier

Famous Four Media doing the same thing

The working group could not agree on whether any of these should be banned, and it looks like the IRT will have a lot of wriggle room when it comes to interpret the recommendation.

Now that the GNSO Council has approved the RPM working group’s final report (pdf), it will be passed to the ICANN board of directors for consideration before the nitty-gritty work of translating words into reality begins.

Crackdown looms for new gTLD auction gaming

ICANN will be urged to consider taking a stronger position against companies who apply for new gTLDs simply to lose them at auction or immediately flip them to others.

A community working group, known as SubPro and tasked with developing rules for the next new gTLD round, delivered its final Final Report this week, and the one area that failed to gain a designation of “consensus” or stronger was private auctions.

In the 2012 application round, several companies applied for large portfolios of strings that look — in hindsight at least — like efforts to game the system by forcing rivals to auctions they planned to deliberately use.

Companies such as MMX made millions losing auctions during the round, some of which was reinvested in winning auctions for other TLDs.

Applicant Nu Dot Co was notable for losing every private auction it participated in, then quickly flipping its successful .web application when Verisign stepped up with a $135 million bankroll.

While it’s difficult to know the extent to which this was all planned in advance, it proved the business model — filing spurious applications for new gTLDs you have no intention of launching — could be lucrative in future rounds.

But SubPro has put forward a slew of recommendations that, should they pass the remaining hurdles of the policy development track, could bring in substantial sanctions for those applicants and registries found to be gaming the system.

The SubPro recommendations are heavily buttressed with square parentheses, indicating disputed text, and supplemented by some minority statements from members of the working group who think that private auctions should be banned outright in future application rounds.

But the headline recommendation, numbered 35.3, is this:

Applications must be submitted with a bona fide (“good faith”) intention to operate the gTLD. Applicants must affirmatively attest to a bona fide intention to operate the gTLD clause for all applications that they submit.

Far from merely providing a check-box assertion that they’re legit, which would itself be easily gamed, applicants would also find their applications scrutinized by ICANN and its external evaluators to check for signs of a lack of bona fides.

Factors used to determine shadiness could include how many applications for contested strings are applied for, how many private auctions are lost, whether the successful applicant has not launched its gTLD within two years, and whether contracts are flipped within the first year.

SubPro discussed penalties for gaming could include the loss of registry contracts, a ban from future rounds or straight-up monetary fines. But the group did not put forward any recommendations.

SubPro couldn’t seem to come to agreement on most of this. The recommendations were determined to have “strong support but significant opposition” during the group’s recent consensus call.

One strong objection came from a somewhat diverse group of SubPro participants comprising Alan Greenberg (At-Large), Christopher Wilkinson (At-Large), Elaine Pruis (Verisign), George Sadowsky (Afilias/ISOC), Jessica Hooper (Verisign), Jim Prendergast (consultant), Jorge Cancio (Swiss government, but signed in a personal capacity) and Kathryn Kleiman (non-commercial users). They said:

The recommendations in the final report are a mix of overly complex disclosures and attestations that needlessly complicate the program to allow for private auctions. And they will not work. The only way to prevent a repeat of the activity from the 2012 round is to ban private auctions

They also claimed that allowing private auctions would putter smaller, niche and community applicants at a disadvantage, and that ICANN’s reputation would be harmed if it was seen to be overseeing gaming.

The At-Large Advisory Committee also issued a strong objection to private auctions along the same lines:

We remain concerned about attempts to “game” the application process through use of private auction and share the ICANN Board’s concerns on the consequences of shuffling of funds between private auctions. The ability for a loser to apply proceeds from one private auction to fund their other private auctions only really benefits incumbent registry operators or multiple-string applicants and clearly disadvantages single-TLD/niche applicants. We believe there should be a ban on private auctions, and that by mandating ICANN only auctions, the proceeds of ICANN auction can be directed for uses in public interest

The assumption there of course is that an ICANN “last resort” auction, in which the winning bid is funneled into ICANN’s cash pile, would be spent on stuff genuinely in the public interest, rather than frittered away on secretly settling employee lawsuits or indulging in more expensive, self-important navel-gazing.

Perhaps unsurprisingly, the ICANN board of directors has indicated that it prefers the idea of last resort auctions to private auctions.

But SubPro has also made some recommendations that could potentially keep the price of last-resort bids down, completely redesigning the auction process compared to the 2012 round.

If the recommendations are implemented, applicants would have to submit bids towards the start of the application process, when they don’t even know who they’re bidding against.

After all the applications have been submitted, ICANN evaluators would group them all according to whether they’re identical or confusingly similar to each other, then inform each applicant in a contention set how many bidders — but not their identities — they’re up against.

Applicants would then have to submit a sealed bid stating the maximum price they’d be willing to pay for the gTLD in question. It would be only after “reveal day”, when ICANN publishes the applications themselves, that everyone would learn who they’re bidding against.

They’d then be able to engage in private resolutions (auctions could come into play at this point), but it would only be after contention resolution phases such as objections and Community Priority Evaluations were complete that applicants would find out who’d submitted the highest bid.

The winning bidder would pay the amount of the second-highest bid to ICANN.

The 400-page final report (pdf), along with the minority statements, will now be sent to the GNSO Council for approval, before it makes its way to the ICANN board.

Given how much work remains to be done on private auctions and other issues that I’ll get to in later coverage, it seems that a lot of the mechanics of how contention resolution will work will have to be devised by ICANN and the community during the Implementation Review Team and Operation Design Phase phases, along with at least one round of commentary on at least one edition of the next Applicant Guidebook.

The next round of new gTLDs has moved a step closer, but it’s still going to be well over a decade after the last application window before we see the next one.

Would-be new country wants to share another country’s ccTLD

What do you do if you’re the government of a country without a ccTLD, because the rest of the world does not recognize you as a country?

Perhaps the strangest solution to this predicament is to ask another country with a semantically meaningful ccTLD of its own if you can share that national resource.

And that’s reportedly what the government of Somaliland has done, reaching out to Sierra Leone for permission to use its .sl TLD.

According to the Somaliland Chronicle, its IT minister has written to his counterpart in Sierra Leone to propose “a commercial partnership with your esteemed office regarding the internet Top Level Domain”.

The east African country, which has its own government and a small degree of international recognition, is not currently acknowledged by the United Nations — it’s considered part of neighboring Somalia — and as such does not qualify for a ccTLD under International Standards Organization (and therefore ICANN) policies.

The minister has reportedly forbidden the use of Somalia’s .so domain, and the government itself uses a .org.

Sierra Leone, on the other side of the continent, uses .sl, which would also be the perfect choice for Somaliland if it were not already taken.

It’s not clear to what extent Somaliland wishes to share the ccTLD, but if it were to go as far as full joint ownership that would be unusual indeed.

Of course, the quickest way into the DNS root in its own right could be to apply for a memorable, relevant gTLD in ICANN’s next application round, which is probably not too many years away right now.

In 2012, there were several applications for geo-gTLDs representing regions that want, to a greater or lesser extent, independence.

This trail was over course blazed almost in 2003 by Catalonia’s .cat and now includes the likes of .scot (Scottish), .eus (Basques) and .krd (Kurds).

New gTLD consultants, start your engines.

ICANN axes Cancun again. Apparently there’s a pandemic

ICANN has formally confirmed that its seventieth public meeting will be online-only, disappointing restaurateurs and sex workers in Cancun, Mexico for the second year running.

The meeting will also be mercifully shorter, with two days cut from its running time. The new dates are March 22 to March 25. Thankfully, ICANN actually announced the date change this time around.

ICANN top brass had indicated as far back as October that Cancun was very unlikely to go ahead as an in-person meeting.

It will be the fourth consecutive meeting to be held via Zoom since the coronavirus pandemic began a year ago. My guess is it won’t be the last.

The next meeting this year is slated to take place in The Hague in late June, but I think only an strident optimist or denialist could imagine that actually happening.