Donuts backs away from .spa fight

Donuts has finally admitted defeat in its long-running fight to run the .spa gTLD, withdrawing its application and leaving rival Asia Spa and Wellness Promotion Council the victor.
ASWPC, run from Hong Kong by .asia’s Edmon Chung, has now entered into contracting with ICANN.
The company had won a Community Priority Evaluation back in 2015, with a passing score of 14 out of 16, which Donuts has been challenging ever since.
Donuts and ICANN were in a so-called Cooperative Engagement Process, a form of informal arbitration designed to stave off a more expensive Independent Review Process fight, from January 2016 until this month.
This meant ASWPC has been sitting twiddling its thumbs, unable to sign its contract or launch its TLD, for the better part of three years.
It’s not clear why Donuts decided not to go to a full-blown IRP. The company declined to comment for this article.
As a community applicant, the company had the backing of hundreds of spas worldwide.
It also had the backing of the Belgian government, which was important because spas are (little-known fact alert!) named after the tiny Belgian town of Spa.
It is believed that ASWPC promised up to 25% of its profits to Spa in order to gain this backing, but only from domains registered by Belgian, Dutch, Luxembourgish, French or German registrants.

ICANN snubs Belgium, gives Donuts the all-clear for .spa

ICANN has rejected demands by the Belgian government by giving Donuts the go-ahead to proceed with its application for .spa, which Belgium says infringes on a geographic name.
Noting that the Governmental Advisory Committee had submitted no consensus advice that Donuts .spa bid should be rejected, the ICANN board’s New gTLD Program Committee said last week “the applications will proceed through the normal process.”
That means the two-way contention set is presumably going to auction.
The English dictionary word “spa” derives from Spa, a small Belgian town with some springs.
The other applicant is Asia Spa and Wellness Promotion Council, which has made a deal with Spa to donate some of its profits to local projects and give the city some control over the registry.
Donuts refused to sign a similar deal, leading to Belgium last month asking ICANN to delegate the gTLD to ASWPC and not Donuts.
The GAC’s last word on .spa was this, from the recent Singapore meeting:

Regarding the applications for .spa, the GAC understands that the relevant parties in these discussions are the city of Spa and the applicants. The GAC has finalised its consideration of the .spa string and welcomes the report that an agreement has been reached between the city of Spa and one of the applicants.

There’s no ICANN fudging here; if the GAC wanted to issue a consensus objection it could have.
The question is: why didn’t it?
Why does the string “amazon”, which does not exactly match the name of a place in its local languages, qualify for a GAC objection, while “spa”, which exactly matches the name of a city, does not?

Donuts plays the genericide card in showdown with Belgian government over .spa

Donuts has asked ICANN to approved its .spa new gTLD application over the objections of the Belgian government, saying the town of Spa no longer has exclusive rights to the string.
As we reported at the weekend, Spa is asking Donuts and rival applicant Asia Spa and Wellness Promotion Council for an up to 25% cut of profits from .spa, as well as the right to help manage the TLD at the registry’s expense.
ASWPC has agreed to these terms, but Donuts has not. It says it offered Spa extra protections for sensitive names, but does not want to hand over any managerial control or profit.
Yesterday, Donuts wrote to ICANN (pdf) to say that “spa” is now so generic that no interest would be served by ICANN enforcing the city’s demands. Here’s the meat of it:

While the City of Spa maintains a historical link to the word “spa”, that word long ago evolved as a globally recognized generic term by people who have never even heard of the city of its origin. The public interest served by making that term available to a global community of spa users far outweighs any risk of confusion with the city of the same name. And for those names that may cause confusion, Donuts has provided a rigorous series of additional protections and controls.
The City of Spa gave the word “spa” to the world many centuries ago, and the world has done a great deal with it. Just as attorneys for the City of Spa don’t fly around the world handing cease-­and-desist notices to resort operators and hot-­tub manufacturers, we do not believe it is appropriate for them to overrun ICANN procedure to try to exert control over how that term is used in the Internet’s global addressing system.

I’m going to raise my hand to say that I’d never heard of Spa before this particular controversy arose, and I expect that goes for most of the people reading this article. Donuts surely has a point.
But that’s not to say Spa doesn’t have a point too. There are plenty of governments that managed to squeeze concessions out of applicants for gTLDs matching place names in their territories, with little complaint from applicants; it’s just that the line was drawn at capital cities, something which Spa is not.
Donuts urges ICANN to give no weight to the Spa-ASWPC deal and to move both applications forward to the next stage of the process — contention resolution.
We may see some progress at the ICANN meeting in Singapore next week, when ICANN will surely press the Governmental Advisory Committee for further advice on this string.

Belgians do want a piece of Donuts’ new gTLD action

The Belgian government is blocking approval of Donuts’ bid for the new gTLD .spa until the company agrees to hand over up to 25% of its .spa profits to the community of the city of Spa.
It emerged in a letter from Spa published by ICANN this weekend that the city is also demanding a role in managing the TLD at the registry operator’s expense.
The gTLD has been applied for by Donuts and the Asia Spa and Wellness Promotion Council.
Not only does the string .spa match the name of the city, but also the English dictionary word “spa” is actually named after Spa, which has been known for centuries for its “healing” springs.
Despite this, Spa is not a capital city — it has roughly 10,000 inhabitants — so it does not qualify as a protected geographic string under the rules of ICANN’s new gTLD program.
Spa nevertheless wants a role in the TLD’s management, in order to protect the interests of itself and its local community, and wants some of the profits to benefit its local businesses.
According to the letter (pdf) from Spa outside attorney Phillippe Laurent, ASWPC has already signed a memorandum of understanding with the city. That MoU, published with the letter, states:

The turnover generated by the exploitation of the .SPA registry will be used in priority to defray reasonable out-of-pocket expenses incurred by the City as a result of its participation in the SPARC or any other of its activity related to the management and governance of the .SPA extension.
Additionally, 25% of the net profit generated by the domain names registered in the .SPA registry by any Belgian, Dutch, Luxembourgish, French or German person or entity will be earmarks to be contributed towards Internet and spa & wellness activities development in and for the City of Spa and its region, especially as related to the scope of the “.SPA” TLD, to be directed by the City of Spa.

The deal would also see ASWPC reserve 200 .spa domain names (included potential premiums such as poker.spa and golf.spa) for the city to do with as it pleases.
Donuts has refused to sign the MoU, saying it’s inconsistent with the Applicant Guidebook and sets a “bad precedent”. Spa has therefore refused to endorse its application.
The city has its national government on its side. In the April 2013 Beijing communique of the ICANN Governmental Advisory Committee, the GAC listed .spa as one of several bids needing “further consideration”.
This was reiterated in its Durban and Buenos communiques, with the GAC noting that “discussions” between “relevant parties” were “ongoing”.
Essentially, the GAC is delaying .spa from approval while Spa tries to get Donuts to agree to hand over part of its of .spa profits.
There was a somewhat testy exchange at the Buenos Aires meeting in November, after an ICANN director asked the GAC if it was appropriate for a governmental entity to try to get a financial benefit from an applicant.
The Belgian GAC representative responded later that “no money will flow to the city of Spa”, conceding that “a very small part of the profits of the registry will go to the community served by .spa”.
That now seems to be not entirely accurate.
The MoU sees Spa getting reimbursed for its self-imposed cost of inserting itself into the management of the registry, so some money will flow to it. But it will presumably be revenue-neutral to the city.
The issue of the 25% profit cut is a bit ambiguous though.
While the money would not flow directly into city coffers, the city would get the ability to direct how it was spent. Presumably, it could be spent on projects that Spa locals would otherwise look to the city to pay for.
With Donuts and Spa apparently at an impasse, ICANN recently told the GAC that it won’t sign contracts with either applicant, yet, but that it wants “a timeline for final consideration of the string”.
It also wants the GAC to “identify the ‘interested parties’ noted in the GAC advice.”
With Laurent’s letter and the MoU seemingly spelling out exactly what Spa wants and why, perhaps ICANN can move the issue closer to resolution at the Singapore meeting next week.
Is it a shakedown? Is it appropriate behavior for the GAC to hold an application hostage while it tries to obtain financial benefit for its local businesses? Or is Donuts unreasonably trying to exploit a city’s centuries-old cultural heritage for its own economic gain?

GACmail? Belgium denies .spa gTLD shakedown

The Belgian government has denied claims that the city of Spa tried to shake down new gTLD applicants for money in exchange for not objecting to their .spa applications.
The Belgian Governmental Advisory Committee representative said this afternoon that Belgium was “extremely unhappy” that the “disrespectful allusions” got an airing during a meeting with the ICANN board.
He was responding directly to a question asked during a Sunday session by ICANN director Chris Disspain, who, to be fair, didn’t name either the government or the gTLD. He had said:

I understand there is at least one application, possibly more, where a government or part a government is negotiating with the applicant in respect to receive a financial benefit from the applicant. I’m concerned about that and I wondered if the GAC had a view as to whether such matters were appropriate.

While nobody would talk on the record, asking around the ICANN 48 meeting here in Buenos Aires it became clear that Disspain was referring to Belgium and .spa.
It was not clear whether he was referring to Donuts or to Asia Spa and Wellness Promotion Council, which have both applied for the string.
The string “spa” was not protected by ICANN’s rules on geographic names, but the GAC in April advised ICANN not to approve the applications until governments had more time to reach a decision.
My inference from Disspain’s question was that Belgium was planning to press for a GAC objection to .spa unless its city got paid, which could be perceived as an abuse of power.
Nobody from the GAC answered the question on Sunday, but Belgium today denied that anything inappropriate was going on, saying Disspain’s assertion was “factually incorrect”.
There is a contract between Spa and an applicant, he confirmed, but he said that “no money will flow to the city of Spa”.
“A very small part of the profits of the registry will go to the community served by .spa,” he said.
This side-deal does not appear to be a public document, but the Belgian rep said that it has been circulated to GAC members for transparency purposes.
There are several applicants whose strings appeared on ICANN’s protected geo names list that have been required to get letters of non-objection from various countries.
Tata Group, for example, needed permission from Morocco for .tata, while TUI had to go to Burkina Faso for .tui. Both are the names of provinces in those countries.
It’s not publicly known how these letters of non-objection were obtained, and whether any financial benefit accrued to the government as a result.