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Nominet may owe its members millions, top lawyer says

Kevin Murphy, September 28, 2022, Domain Registries

Nominet has been charging its thousands of members annual subscription fees unlawfully for the last quarter-century, it has been claimed.

Ian Mitchell KC, who you may recall was hired by a handful of members to opine that Nominet’s voting system may be illegal, has now delivered a follow-up opinion saying that any subscription fees it has collected since 1997 should not have been paid.

Nominet non-executive director election candidate Jim Davies, one of the members who obtained the opinions, is now calling for Nominet to postpone its Annual General Meeting and the election, scheduled to take place next week, while these legal issues are addressed.

Mitchell’s opinion states that Nominet’s Articles allowed it to set a membership fee for members prior to August 29, 1997, barely a year after the company was founded, but that subsequent fees had to be set with a bylaws change approved by 75% of the membership.

That never happened, he says, meaning:

there has been no basis within the terms of the articles for subscriptions to be set and collected from and after 31st August, 1997. It follows, therefore, that the subscriptions which were collected ought not to have been paid.

Nominet has about 2,500 members, each of whom pay a £400 application fee and a £100 per year subscription. Clearly, over 25 years, that could amount to many millions of pounds.

But Mitchell also suspects Nominet could be protected by the UK’s statute of limitations, reducing its exposure to just the last six years and around £1.5 million.

Mitchell’s opinion was paid for by member Dulwich Storage, owned by former director Angus Hanton, as part of the Davies-led WeightedVoting.uk campaign, which is calling for Nominet to scrap its system that gives its members more votes depending on how many .uk domains they have registered.

Davies says he informed Nominet’s board about Mitchell’s latest opinion last week but has not received a response. So he’s now also written to Civica, the election services company that oversees Nominet ballots, to “to step in and adjourn the AGM”.

Postponing the AGM would also postpone the NED election in which Davies, former reporter Kieren McCarthy and CentralNic lawyer Volker Greimann are vying for an opening seat on the board. Voting closes in a couple of days.

While Mitchell called the subscriptions situation a “recipe for litigation”, Davies says he has no intention of suing Nominet. He says he wants, in Mitchell’s words, for “members [to] come together to see if it is possible to find a consensual way out of the mess which has undoubtedly been created”.

It’s not entirely clear what a solution would look like.

Scrapping the voting system in favor of one-member-one-vote would likely disadvantage candidates relying on winning with the backing of a small number of large registrars, which Davies believes is Greimann’s strategy.

Davies’ headline policy has been to slash .uk registration fees back to £2.50, while McCarthy and Greimann have platforms focused on transparency and member engagement.

Nominet has said that it believes its weighted voting system is lawful. The company has been contacted for comment on the latest legal drama.

Nominet gets new CFO

Kevin Murphy, September 22, 2022, Domain Registries

Nominet has recruited Vodafone’s head of finance to be its new CFO.

The company announced today that Carolyn Bedford will join on December 1, and will also take an executive director seat on the board.

She replaces Ben Hill, who was one of several directors removed from the board in a member coup in March 2021.

Last-minute bombshell in Nominet election — it may be ILLEGAL

Kevin Murphy, September 15, 2022, Domain Policy

Nominet’s current non-executive director election may be illegal, according to a legal opinion commissioned by one of the candidates.

Candidate Jim Davies, along with fellow former director Angus Hanton, say barrister Iain Mitchell KC has said that elements of Nominet’s voting practices are “clearly unlawful”, and they’ve asked Nominet to scrap them.

If Nominet accepts the opinion, it could mean the election — which is going on right now — could become a one-member-one-vote affair rather than the current system where you get more votes based on how many .uk domains you manage.

Davies and the other signatories to a letter sent to Nominet believe the company’s extremely complex “weighted voting” system is illegal under the UK’s Companies Act. They write:

This is a very serious issue for Nominet, particularly as there is an AGM and Board Election happening soon. Based on counsel’s opinion, we believe the only lawful way to conduct that meeting (and future meetings) would be one member, one vote.

Should Nominet agree and change the system, it would mean that big registrars such as GoDaddy and Tucows would get the same number of votes — one — as individual Nominet members.

This would most likely advantage IP lawyer Davies and fellow candidate Kieren McCarthy, who is a reporter rather than a registrar, at the expense of third candidate Volker Greimann, who works for Key-Systems, the large registrar owned by CentralNic.

Davies, in echoes of the PublicBenefit.uk campaign that led to a boardroom bloodbath last year, has set up a web site at WeightedVoting.uk to encourage fellow members to read the opinion and sign the letter.

While confidence in the company has arguably improved under its new leadership, member hackles were raised recently with the admission that Nominet had spunked millions of dollars on a failed attempt to enter the security market.

Voting in the NED elections began on Monday and runs until the end of the month. The results will be announced October 5, the day before Nominet’s AGM.

UPDATE: A Nominet spokesperson reached out with the following statement:

We acknowledge the receipt of a legal opinion commissioned by one of our members. We believe that our long-standing election process and voting rights are lawful and are being applied in accordance with our founding documents. We believe they have served and continue to serve both Nominet and its members well. Therefore, the election and voting will continue as planned. We will consult with our legal advisers prior to responding to our member.

Nominet sold security unit for a dollar after blowing $23.5 million

Nominet has found itself out of pocket to the tune of $23.5 million after selling its CyGlass network security business for a dollar.

Chair Andrew Green told members last week that the .uk registry sold CyGlass to a group of its employees for the nominal sum after deciding to divest itself of non-core businesses. He said in an email:

As our involvement in CyGlass is now at an end, I am in a position to share the approximate cost of the unsuccessful investment in CyGlass with members. In addition to the $6.3m cost of purchase, Nominet invested around $16.0m in supporting the ongoing running cost of the business. Costs associated with closure will be c$1.2m – approximately equivalent to continuing to support the business for a further two months. That totals c$23.5m. Converting back to GBP over a relatively long period is complex, but the total cost over 2+ years is approximately £18m.

At the time it was sold, it was costing Nominet $600,000 a month to keep CyGlass running, he said.

The strategy of diversification from the core registry business was made under previous management and ultimately was partly the cause of last year’s boardroom bloodbath that eventually led to Green’s appointment on a back-to-basics platform.

Green told members that CyGlass “struggled as a result of changing work patterns following the Covid pandemic”, adding:

While there has been continuing interest in the offering from customers, the pipeline of opportunities has been slow in converting to new long-term customers. As a result Annual Recurring Revenue – a key driver of investor interest – has been growing imperceptibly

Now independent, CyGlass recently told the security trade press it is seeking partnerships to drive growth.

Five things I learned from UK prime minister candidates’ domain names

Kevin Murphy, July 11, 2022, Gossip

Boris Johnson announced he is to resign as UK prime minister after a series of scandals last week, and as of this evening 11 of his former friends have announced their plans to replace him as leader of the Conservative party and therefore UK PM.

I’ll spare you the details of Johnson’s downfall and the process used to find his successor, but domain names became part of the story over the weekend when a so-called “Dirty Dossier” began circulating among Tory MPs, denouncing candidate Rishi Sunak.

Among the allegations was that Sunak, whose resignation as chancellor last week eventually led to the Johnson’s own resignation, had been plotting Johnson’s demise and his own rise to power since last December, using Whois records for his campaign site as a smoking gun.

I thought I’d take a look at all 11 candidates’ registrations to see what else we could learn.

1. Sunak wasn’t the only “plotter”

Sunak came under scrutiny over the weekend when it emerged that the domain name readyforrishi.com has been registered since December 23 last year, a few weeks into the Partygate scandal, when the foundations of Johnson’s premiership began to weaken.

This, it was claimed in the Dirty Dossier, showed that Sunak had been plotting his boss’s downfall for six months.

His team have subsequently claimed that the name wasn’t necessarily registered by them, and his campaign is currently using the similar domain ready4rishi.com, which was registered July 7, the day Johnson announced his resignation.

The December domain forwards to Sunak’s official campaign site, suggesting its registrant is at the least a supporter.

We can’t tell for sure because all Whois records are redacted due to GDPR, which is still in effect in the UK despite Brexit.

But Sunak wasn’t the only prescient registrant in the clown car. Liz Truss’s campaign site is at lizforleader.co.uk, which was registered June 8, a month before there was a leadership job opening available, Whois records show.

Jeremy Hunt, Tom Tugendhat and Sajid Javid have names registered last week. Penny Mordaunt’s pm4pm.com was registered in 2019, but that’s because she also stood for Tory leader in 2019, ultimately losing to Johnson.

2. Not much patriotism on display

Of the 11 candidates, only five are campaigning using .uk addresses.

Kemi Badenoch uses a .org.uk. Suella Braverman uses a .co.uk. While Jeremy Hunt usually uses a .org, he’s using a .co.uk for his campaign. Same for Truss. Javid is using a thoroughly modern .uk, eschewing the third level, at teamsaj.uk.

All the rest use a .com for their sites.

3. Truss and Hunt didn’t register their matching .uk

While Javid appears to have registered the .co.uk matching his .uk, Truss and Hunt have not registered their matching second-level domains, which is just asking for trouble from pranksters and opponents.

That said, while it’s been six or seven years since .uk domains became available from Nominet, they haven’t really caught on in terms of adoption or popular mind-share. It would be a much greater crime to register a 2LD without the matching 3LD than vice versa.

4. Two candidates own their surnames

While all of the candidates own their full names in their chosen TLDs, only Grant Shapps and Nadhim Zahawi own their .com surnames.

Whois records and Archive.org show that Shapps has owned Shapps.com since 2000, years before he won his first parliamentary seat. He has a history of being involved in questionable online get-rich-quick schemes and used to follow me on Twitter, so he’s probably quite domain-savvy.

Zahawi, who’s been Chancellor of the Exchequer since Sunak quit last week, has owned zahawi.com since he first ran for parliament in 2009.

5. Here’s what domains everyone else is using

According to Google and the Twitter accounts of the candidates, these are the URLs used by each candidate for their regular official sites and, if they have one, their premiership campaign sites.

Note that in most cases their regular sites are managed by a company called Bluetree, which specializes in running boilerplate web sites for Tories, so the choice of domain may not necessarily be the choice of the MP in question.

Kemi Badenochkemibadenoch.org.ukfacebook.com/kemibadenoch
Suella Bravermansuellabraverman.co.uk
Rehman Chishtirehmanchishti.com
Jeremy Huntjeremyhunt.orgjeremyhunt2022.co.uk
Sajid Javidsajidjavid.comteamsaj.uk
Penny Mordauntpennymordaunt.compm4pm.com
Grant Shappsshapps.com
Rishi Sunakrishisunak.comready4rishi.com
Liz Trusselizabethtruss.comlizforleader.co.uk
Tom Tugendhattomtugendhat.orgtimefortugendhat.com
Nadhim Zahawizahawi.com

Nominet opens directorship nominations

.uk registry Nominet has opened the nomination period for one of its elected non-executive directors.

The are four elected NEDs on the company’s board, and Anne Taylor’s three-year term is up this year.

Only members may nominate, but you don’t need to be a member to be nominated.

Nominations are open until June 17, elections take place in September, and the winner takes his or her seat in October.

The pay is £37,000 per year, for up to 30 days’ work.

More details can be found here.

Meds regulator won’t say why it gets domains suspended

Kevin Murphy, May 30, 2022, Domain Policy

The UK Medicines and Healthcare products Regulatory Agency has declined to reveal which .uk domain names it has had suspended and the reasons for having them suspended.

In response to a freedom of information request published last week, the agency said it had 32 domains suspended in the last 12 months — it appears that refers to the 12 months to November 2021 — but declined to list them.

It said most of the domains were being used to breach the Human Medicines Regulations 2012, which regulates the sale of medicines, but declined to give specifics, citing a FOI carve-out related to ongoing investigations.

The MHRA said that it does not have a formal suspensions policy.

The agency is one of several that regularly asks .uk registry Nominet to take down domains believed to be involved in criminal behavior. The Police Intellectual Property Crimes Unit submits by far the largest number of such requests.

.au names available today

Kevin Murphy, March 24, 2022, Domain Registries

Australians are able to register domain names directly under .au for the first time today, after ccTLD registry auDA liberalized its hierarchy.

Second-level names under .au will at first only be available to existing registrants of matching third-level names in zones such as .com.au and .net.au, under a priority allocation process.

This process lasts for six months and allows domain owners to claim their matching 2LD more or less immediately, assuming there are no other registrants with matching rights.

In cases where more than one registrant applies for the name domain — such as when example.com.au and example.net.au are owned by different people — a contention process kicks in.

Registrants with reg dates before the cut-off of February 4, 2018 get priority over those with later dates.

If there are only registrants with names newer than the cut-off date, the oldest one gets priority.

If there are only registrants with names older than the cut-off date, they’ll have to come to a bilateral agreement about who gets the name. If they can’t come to a deal, the name stays reserved, and the applicants will have to renew their applications annually, until only one applicant remains.

There are no auDA-backed auctions envisaged by the process.

Any domains that are unclaimed at the end of the priority process will be released into the available pool on September 20.

It’s a much shorter grandfathering period than other liberalized ccTLDs, such as Nominet, which gave .co.uk registrants five years to claim their matching 2LD, and it will be interesting to see what impact this has on uptake.

Direct .uk domains became available in June 2014, and six months later barely a quarter million had been registered, against over 10 million third-level names.

As the five-year priority window drew to a close in 2019, there were about 2.5 million .uk 2LDs, but this spiked to 3.6 million in the final month, as registrants waited until the last minute to claim their names.

That turned out to be the peak — .uk 2LDs stand at fewer than 1.4 million today, compared to the 9.7 million third-level names. It’s still quite rare to spot a direct .uk name in the wild here.

One interesting kink in the priority process is that auDA, which has stricter rules than many other ccTLDs, will check that anyone who applies for a 2LD is in fact eligible for the 3LD they currently hold, which could dissuade applications.

.au currently has 3.4 million third-level domains under management.

Nominet cuts off Russian registrars

Kevin Murphy, March 10, 2022, Domain Registries

Russian registrars will no longer be able to sell .uk domains, due to the war in Ukraine, Nominet announced today.

“We are not accepting registrations from registrars in Russia — we are suspending the relevant tags,” the registry said.

A “tag” is the unique identifier Nominet issues to its registrars to enable them to access the .uk registry.

I believe it’s the first example of a national domain registry taking action against Russian companies in response to the invasion of Ukraine.

While Nominet is independent, it’s pretty tight with the UK government, which with international partners has implemented some quite tough economic sanctions against Russia.

Nominet said that the “very small” number of existing domains with Russian addresses “will continue to operate as normal”.

Other measures the company announced include a £200,000 donation to the war relief effort, a reduction of its roughly £100,000 of investments in Russian companies to about £1,000, and the monitoring of new .uk registrations for possible Ukraine-related scams.

Other domain companies to announce what effectively amount to sanctions against Russia include Namecheap, Sedo, IONOS, GoDaddy and CENTR.

ICANN has also offered money to Ukraine and concessions to Ukrainian registrants, though the latter may also apply to Russians.

Nominet names Paul Fletcher new CEO

Kevin Murphy, November 18, 2021, Domain Registries

Nominet has named Paul Fletcher as its new CEO.

He’ll join the company in February, filling the spot vacated by Russell Haworth, who quit earlier this year a few days before he could be fired by members.

Fletcher is currently CEO at BCS, the Chartered Institute for IT, Nominet said. BCS, formerly the British Computer Society, is also a membership organization, with 60,000 members.

Nominet is currently headed by interim CEO Eleanor Bradley, one of the directors removed from the board at the company’s fractious Emergency General Meeting in March.

Fletcher will join the board at the same time as he joins Nominet, the company said.