Patent troll hits registrars with $60m shakedown

A patent troll that claims it invented email reminders has launched a shakedown campaign against registrars that could be worth as much as $62 million.
WhitServe LLC, which beat Go Daddy in a patent lawsuit last year, is now demanding licenses from registrars that could add as much as $0.50 to the cost of a domain name.
According to registrar sources, registrars on both sides of the Atlantic have this month been hit by demands for hundreds of thousands or millions of dollars in patent licensing fees.
The legal nastygrams present thinly veiled threats of litigation if the recipients decline to negotiate a license.
WhitServe is a Connecticut-based IP licensing firm with connections to NetDocket, which provides software for tracking patent license annuities.
It owns US patents 5,895,468 and 6,182,078, both of which date back to the late 1990s and cover “automating delivery of professional services”.
Basically, the company reckons it invented email reminders, such as those registrars send to registrants in the weeks leading up to their domain registration expiring.
Three years ago, GoDaddy, defending itself against WhitServe’s 2011 patent infringement lawsuit, compared the “inventions” to the concept putting “Don’t forget to pick up milk” notes on the fridge: utterly obvious and non-patentable.
In December 2012, GoDaddy implied WhitServe used its patent expertise and exploited a naive 1990s USPTO to obtain “over-broad” patents.
It was trying “to monopolize the entire concept of automatic Internet reminders across all industries, including domain name registrars”, according to a GoDaddy legal filing.
But the market-leading registrar somehow managed to lose the case, opting to settle last August after its last defense fell apart, for an undisclosed sum.
Now, WhitServe is using that victory to shake loose change out of the pockets of the rest of the market.
It’s told registrars that GoDaddy and Endurance International (owner of Domain.com, BigRock and others) are both currently licensing its patents.
The deal it is offering would see registrars pay $0.50 for every domain they have under management, a number that seems to be based on .com registry numbers reported by Verisign.
The fee would be reduced to $0.30 per name for each name over one million, and $0.20 for each name over five million, I gather. That’s still more than registrars pay in ICANN fees.
If WhitServe were to target every .com registrar (which I do not believe it has, yet) its demands could amount to as much as $62 million industry-wide, given that .com is approaching 125 million names right now.
It’s not clear whether these fees are expected to be one-time payments or recurring annual fees.
It’s a trickier predicament for registrars than the usual patent shakedown, because registrars are legally obliged under their contracts with ICANN to send email reminders in a variety of circumstances.
The Expired Registration Recovery Policy requires them to email renewal reminders to customers at least twice before their registrations expire.
There’s also the Whois Data Reminder Policy, which obliges registrars to have their customers check the accuracy of their Whois once a year.
These are not services registrars are simply able to turn off to avoid these patent litigation threats.
Whether registrars will take this lying down or attempt to fight it remains to be seen.

Registrars boycotting “gag order” .sucks contract

Registrars are ignoring new provisions in their .sucks contracts that they say amount to a “gag order”.
In a letter (pdf) to ICANN from its Registrars Stakeholder Group, the registrars ask for ICANN to convene a face-to-face negotiation between themselves and .sucks registry Vox Populi, adding:

Until such time, the Registrars believe that the amendments are not yet in effect and will continue to operate under Vox Populi’s existing RRA.

That means they’re working on the assumption that the controversial changes to the .sucks Registry-Registrar Agreement, sent to ICANN by Vox in December, have not yet been approved.
Vox Pop, on the other hand, has told ICANN that the changes came into effect January 6.
As we reported at the weekend, the registry is taking ICANN to formal mediation, saying ICANN breached the .sucks Registry Agreement by failing to block the changes within the permitted 15-day window.
The registrars’ letter was sent January 20, one day before Vox Pop’s mediation demand. The Vox letter should probably be read in that context.
The registrars have a problem with two aspects of the changed RRA.
First, there’s a clause that allows Vox to change the contract unilaterally in future. Registrars say this makes it a contract of “adhesion”.
Second, there’s a clause forbidding registrars taking “action to frustrate or impair the purpose of this Agreement”. Registrars read this as a “gag order”, writing:

Many Registrars not only serve as retail outlets for the purchase of domain names, but also provide consultative services to their clients on TLD extensions and their domain name portfolios. In conjunction with the provision of those services, registrars often opine on new gTLD and ccTLD extensions, the TLDs policies, pricing methodologies, security provisions and overall utility. These provisions could easily be read to inhibit such activities and restrict a registrar’s ability to offer those valuable services.

That’s referring primarily to corporate registrars working in the brand protection space, which are kinda obliged to offer .sucks for their clients’ defensive purposes, but still want to be able to criticize its policies and pricing in public.
ICANN has yet to respond to the request for a sit-down meeting between the registry and registrars.
However, given that Vox has invoked its right to mediation, it seems likely that that process will be the focus for now.
Mediation lasts a maximum of 90 days, which means the problem could be sorted out before April 20.

.sucks sends in the lawyers in “gag order” fight

Vox Populi is taking ICANN to mediation over a row about what some of its registrars call a “gag order” against them.
Its lawyers have sent ICANN a letter demanding mediation and claiming ICANN has breached the .sucks Registry Agreement.
I believe it’s the first time a new gTLD registry has done such a thing.
The clash concerns changes that Vox Populi proposed for its Registry-Registrar Agreement late last year.
Some registrars believe that the changes unfairly give the registry the unilateral right to amend the RRA in future, and that they prevent registrars opposed to .sucks in principle from criticizing the gTLD in public.
I understand that a draft letter that characterizes the latter change as a “gag order” has picked up quite a bit of support among registrars.
ICANN has referred the amended draft of the .sucks RRA to its Registrars Stakeholder Group for comment.
But Vox Pop now claims that it’s too late, that the new RRA has already come into force, and that this is merely the latest example of “a pattern on ICANN’s part to attempt to frustrate the purpose and intent of its contract with Vox Populi, and to prevent Vox Populi from operating reasonably”.
The registry claims that the changes are just intended to provide “clarity”.
Some legal commentators have said there’s nothing unusual or controversial about the “gag” clauses.
But the conflict between Vox and ICANN all basically boils down to a matter of timing.
Under the standard Registry Agreement for new gTLDs, registries such as Vox Pop are allowed to submit proposed RRA changes to ICANN whenever they like.
ICANN then has 15 calendar days to determine whether those changes are “immaterial, potentially material or material in nature.”
Changes are deemed to be “immaterial” by default, if ICANN does not rule otherwise within those 15 days.
If they’re deemed “material” or “potentially material”, a process called the RRA Amendment Procedure (pdf) kicks in.
That process gives the registrars an extra 21 days to review and potentially object to the changes, while ICANN conducts its own internal review.
In this case, there seems to be little doubt that ICANN missed the 15-day deadline imposed by the RA, but probably did so because of some clever timing by Vox.
Vox Pop submitted its changes on Friday, December 18. That meant 15 calendar days expired Monday, January 3.
However, ICANN was essentially closed for business for the Christmas and New Year holidays between December 24 and January 3, meaning there were only three business days — December 21 to 23 — in which its lawyers and staff could scrutinize Vox’s request.
Vox Pop’s timing could just be coincidental.
But if it had wanted to reduce the contractual 15 calendar days to as few business days as possible, then December 18 would be the absolute best day of the year to submit its changes.
As it transpired, January 3 came and went with no response from ICANN, so as far as Vox is concerned the new RRA with its controversial changes came into effect January 6.
However, on January 8, ICANN submitted the red-lined RRA to the RrSG, invoking the RRA Amendment Procedure and telling registrars they have until January 29 to provide feedback.
Vox Pop’s lawyer, demanding mediation, says the company was told January 9, six days after ICANN’s 15-day window was up, that its changes were “deemed material”.
Mediation is basically the least-suey dispute resolution process a registry can invoke under the RA.
The two parties now have a maximum of 90 days — until April 20 — to work out their differences more or less amicably via a mediator. If they fail to do so, they proceed to a slightly more-suey binding arbitration process.
In my opinion, ICANN finds itself in this position due to a combination of a) Vox Pop trying to sneak what it suspected could be controversial changes past its staff over Christmas, and b) ICANN staff, in the holiday spirit or off work entirely, dropping the ball by failing to react quickly enough.
While I believe this is the first time a 2012-round gTLD registry has gone to dispute resolution with ICANN, Vox did threaten to sue last year when ICANN referred its controversially “predatory” launch plans to US and Canadian trade regulators.
That ultimately came to nothing. The US Federal Trade Commission waffled and its Canadian counterpart just basically shrugged.

Chehade to join World Economic Forum

Outgoing ICANN CEO Fadi Chehade is to join the World Economic Forum as a senior advisor, WEF announced today.
The person he will advise is Klaus Schwab, WEF’s founder and executive chairman, according to a press release.
WEF is the Switzerland-based non-profit think tank famous for its annual summits in Davos, where world leaders and super-rich businesspeople congregate in order to shed their skin-suits and plot world domination whilst in their true reptilian form.
Chehade, it seems, will be primarily involved in the “Global Challenge Initiative on the Future of the Internet”, a WEF project (pdf) focusing on internet governance, access, cybercrime and so on.
This year’s Davos meeting has been taking place this week. Much of the attention has been focused on pressing humanitarian and economic issues such as the Syrian refugee crisis and European Union immigration policy.
Chehade announced he was leaving ICANN in May last year.
He’s suspected of suffering from ICANN burnout after just a few short, albeit transformational, years on the job.
He said in August he’s taking on a role with Boston-based private equity firm ABRY Partners.
Last month, he became a joint founder of the “Wuzhen Initiative”, a China-led internet governance talking shop along the same lines as the NetMundial Initiative.
His successor has yet to be named, but given Chehade is leaving in March the announcement cannot be too many weeks away.
He starts at WEF April 1.

Pirates lose privacy rights under new ICANN rules

People operating piracy web sites would have a harder time keeping their personal information private under new ICANN rules.
ICANN’s GNSO Council last night approved a set of recommendations that lay down the rules of engagement for when trademark and copyright owners try to unmask Whois privacy users.
Among other things, the new rules would make it clear that privacy services are not permitted to reject requests to reveal a domain’s true owner just because the IP-based request relates to the content of a web site rather than just its domain name.
The recommendations also contain safeguards that would allow registrants to retain their privacy if, for example, their safety would be at risk if their identities were revealed.
The 93-page document (pdf) approved unanimously by the Council carries a “Illustrative Disclosure Framework” appendix that lays out the procedures in some depth.
The framework only covers requests from IP owners to proxy/privacy services. The GNSO was unable to come up with a similar framework for dealing with, for example, requests from law enforcement agencies.
It states flatly:

Disclosure [of the registrant’s true Whois details] cannot be refused solely for lack of any of the following: (i) a court order; (ii) a subpoena; (iii) a pending civil action; or (iv) a UDRP or URS proceeding; nor can refusal to disclose be solely based on the fact that the Request is founded on alleged intellectual property infringement in content on a website associated with the domain name.

This fairly explicitly prevents privacy services (which in most cases are registrars) using the “we don’t regulate content” argument to shoot down disclosure requests from IP owners.
Some registrars were not happy about this paragraph in early drafts, yet it remains.
Count that as a win for the IP lobby.
However, the new recommendations spend a lot more time giving IP owners a quite strict set of guidelines for how to file such requests in the first place.
If they persistently spam the registrar with automated disclosure requests, the registrar is free to ignore them. They can even share details of spammy IP owners with other registrars.
The registrar is also free to ignore requests that, for example, don’t give the exact or representative URL of an alleged copyright infringement, or if the requester has not first attempted to contact the registrant via an email relay service, should one be in place.
The registrant also gets a 15-day warning that somebody has requested their private details, during which, if they value their privacy more than their web site, they’re able to relinquish their domain and remain anonymous.
If the registrant instead uses that time to provide a good reason why they’re not infringing the requester’s rights, and the privacy service agrees, the request can also be denied.
The guidelines would make it easier for privacy service operators to understand what their obligations are. By formalizing the request format, it should make it easier to separate legit requests from the spurious requests.
They’re even allowed to charge IP owners a nominal fee to streamline the processing of their requests.
While these recommendations have been approved by the GNSO Council, they need to be approved by the ICANN board before becoming the law of the ‘net.
They also need to pass through an implementation process (conducted by ICANN staff and GNSO members) that turns the recommendations into written procedures and contracts which, due to their complexity, I have a hunch will take some time.
The idea is that the rules will form part of an accreditation program for privacy/proxy services, administered by ICANN.
Registrars would only be able to use P/P services that agree to follow these rules and that have been accredited by ICANN.
It seems to me that the new rules may be quite effective at cracking down on rogue, “bulletproof” registrars that automatically dismiss piracy-based disclosure requests by saying they’re not qualified to adjudicate copyright disputes.

ICANN confirms domain privacy is for all

Commercial entities will not be excluded from buying domain privacy services, ICANN’s GNSO Council has confirmed.
The Council last night voted unanimously to approve a set of recommendations that would make it compulsory for privacy and proxy services to be accredited by ICANN for the first time.
The recommendations govern among other things how privacy services are expected to behave when they receive notices of trademark or copyright infringement.
But missing is a proposal that would have prevented the use of privacy for “transactional” web sites, something which caused a great deal of controversy last year.
The newly adopted recommendations clearly state that nobody is to be excluded from privacy on these grounds.
The Council voted to adopt the final, 93-page report of the Privacy and Proxy Services Accreditation Issues (pdf) working group, which states:

Fundamentally, P/P services should remain available to registrants irrespective of their status as commercial or non-commercial organizations or as individuals. Further, P/P registrations should not be limited to private individuals who use their domains for non-commercial purposes.

The minority view that web sites that process financial transactions should not be able to use privacy came from intellectual property, anti-abuse and law enforcement community members.
However, opponents said it would infringe the privacy rights of home business owners, bloggers, political activists and others.
It could even lead to vicious “doxing”-related crimes, such as “swatting”, where idiots call in fake violent crime reports against rivals’ home addresses, some said.
It also turned out, as we revealed last November, that 55% of US presidential candidates operate transactional web sites that use privacy on their domains.
Two separate registrar initiatives, one backed by the Electronic Frontier Foundation, started letter-writing campaigns that resulted in over 20,000 comments being received on the the PPSAI’s initial report last July.
Those comments are acknowledged in the PPSAI final report that the GNSO Council just approved.
The adopted recommendations (which I’ll get into in a separate article) still have to be approved by the ICANN board of directors and have to undergo an implementation process that puts the rather broad policies into concrete processes and procedures.

.boston was a “distraction”, says gTLD seller

The Boston Globe newspaper decided to offload the gTLD after its new owners decided it was a “distraction”.
That’s according to a report yesterday in the newspaper itself.
Last week, it was announced that Minds + Machines, which already runs a handful of geo-gTLDs, is acquiring the .boston contract for an undisclosed sum.
Today, the Globe reports that its owners thought .boston would be “a distraction from the Globe’s central business of providing information through its print and online outlets”.
“The .boston domain business was inherited by the current management team and is not perceived as core to the mission of supporting the highest quality journalism in the region,” it quotes the Globe’s VP of marketing as saying.
The newspaper was acquired by Boston Red Sox owner John Henry in 2013, a year after the .boston application was filed, according to the report.
The acquisition, which sees M+M buy 99% the Globe subsidiary in control of the gTLD registry agreement, is subject to ICANN approving the contract reassignment.

Kinderis calls on industry to cut the bullshit

Domain Name Association chair Adrian Kinderis has called for the industry to “grow up”.
The former ARI CEO, now Neustar veep, said Monday it’s time for the industry to kick out the handful of bad actors that ruin its reputation, and to quit the “bullshit bickering” about which TLDs are best.
“For far too long this industry has turned a blind eye to the less than scrupulous activities,” he said, “and these activities have plagued this industry. Bad actors have tarnished the perception of this industry.”
“This may have been acceptable when it was a few insiders first grasping at a fledgling product in the early nineties but… we are now front and center of the internet,” he said.
“These practices of a few bad actors have led to the frustration of consumers. We have not served the best interests of our consumers at all times,” he said. “This has to change.”
He was speaking to an audience of registries, registrars and investors at the opening session of the NamesCon conference in Las Vegas on Monday.
It was a fairly standard DNA sales pitch, the kind Kinderis has given before, but few could deny the truth of his remarks.
He called upon the industry to more effectively self-regulate, working with ICANN, to keep the boogeymen of government legislators and law enforcement agencies at bay.
“It’s time to grow up and show that we can regulates ourselves and build a strong sustainable industry with integrity,” he said.
He also called for unity among industry participants, pointing out that the threats to their businesses are external to the domain industry.
“The domain name war must be over,” he said. “The infighting and bullshit bickering has to stop. The .coms, the not-.coms, the IDNs, the g’s versus the cc’s… this must stop.”
“As an industry we have been very lucky. We’ve stumbled through 20 years without a collective strategy nor cohesion,” he said. “Outside forces have not had a massive impact on us, yet. QR codes have tried. Apps are trying.”
He pointed to the recent positive “bump” that many domain companies have experienced as a result of investment from China, but attributed to “dumb luck” rather than the result of any smart marketing or outreach.
The 10-minute speech can be viewed below or on the NamePros YouTube channel.

M+M acquires .boston from Boston Globe

Minds + Machines has added .boston to its stable of geo-gTLDs, buying the contract from the publisher of the Boston Globe newspaper.
The company said today that it has acquired 99% of Boston TLD Management, a new company into which the Globe plans to sign over its .boston ICANN contract.
The deal is contingent on ICANN approving the contract reassignment.
The ink is still moist on the .boston Registry Agreement, which was signed December 10.
The gTLD is officially in pre-delegation testing right now.
But the acquisition also means M+M will take over back-end duties for .boston. Originally, the Globe had intended to use OpenRegistry.
The gTLD was officially a “geographic” string under ICANN rules, and needed support from the local government in Boston.
.boston would become M+M’s fifth geographic gTLD — sixth if you include .london.
The company said it plans to launch the TLD later this year.

Baidu, China’s Google, gets its dot-brand gTLD

Chinese web giant Baidu had its dot-brand gTLD, .baidu, go live in the DNS root zone today.
With the extraordinary amount of focus on China in the domain industry currently, this could be one of the dot-brands to watch in 2016.
There are no active domain names in .baidu just yet, but we will likely see nic.baidu put to some use or another over the coming days.
Unusually for a dot-brand gTLD, Baidu’s contract with ICANN does not contain specifications 9 or 13, which allow dot-brands to operate differently to regular gTLDs.
This suggests an open registration policy under which any registrar can sell .baidu domains to any registrant.
However, Baidu’s original gTLD application spells out quite a different plan, focused primarily on trademark protection. It says:

All available second-level strings of .BAIDU (e.g. example .BAIDU) will be initially allocated only to limited number of eligible registrants and for internal corporate business purposes. BAIDU plans to adopt this approach and expects to maintain it for 3 years from the launch of the “.BAIDU” registry service. Such approach will be regularly evaluated and adjusted if appropriate and necessary. Depending a various internal and external factors, including market demand and user expectation, BAIDU may consider a phased roll-out approach for a broader commercial marketplace but will do so after the conclusion of the initial 3-year period.

I wouldn’t expect .baidu to launch properly any time soon.
Not only is the company probably going to want to get its dot-brand contractual protections in place, it’s also showed no huge enthusiasm for making its way through the new gTLD delegation process so far.
It signed its ICANN contract January 8 last year, meaning this week was pretty much the latest date it could permissibly go into the root.
Like most dot-brands, it’s been dragging its feet, in other words.
Baidu is the leading web property in China, dwarfing even Google in terms of search market share locally.