Tag Archives: Philip Corwin

ICANN’s .IR Response Opens Legal Can of Worms by Philip Corwin, Internet Commerce Association

ICANN has filed its initial response to writs of attachment issued by U.S. Courts that seek to have ICANN transfer control of the country code top level domains (ccTLDs) of Iran, Syria and North Korea to plaintiffs in various legal actions. The lawsuits were brought under a U.S. law that permits victims of terrorism and their family survivors to seek the assets of governments that provided support or direction of the terrorist acts.As expected, ICANN vigorously opposed the court orders and sought to quash them. In an “everything and the kitchen sink” defense, ICANN argues that ccTLDs are not “property”; are not ‘owned” by the nations to which they are assigned; are not within US jurisdiction; are not subject to court jurisdiction under the Foreign Sovereign Immunities Act (FSIA) even if they are “property”; are not subject to ICANN’s unilateral power under its existing contractual agreements; and that forced re-delegation of the ccTLDs would destroy their value and thus be futile. All these arguments raise subsidiary questions of law and policy.Anything less than full court opposition by ICANN to the writs of attachment would be politically explosive – especially at a time when the IANA functions contract and its remaining official relationship with the US government is in transition.I have just completed a quick scan of the ICANN filing in the case of Ben Haim vs. Islamic Republic of Iran (although all of ICANN’s responses in the separate cases appear identical) and have a few preliminary observations – all of which relate to the central observation that this case has opened up a can of worms of legal issues:

  • The filing does its best to distinguish ccTLDs from gTLDs. However, because all the relevant US case law involves gTLDs it is forced to cite it and that inevitably muddies the distinction to some extent. For example, at p. 11 of the Motion to Quash (p.21 of the PDF) it cites the 1999 decision of the 9th Circuit in Lockheed Martin vs. Network Solutions which held that the then-manager of the .com registry fell “squarely on the ‘service’ side of the product/service distinction”. Extending this analogy to the present would imply that all incumbent and new gTLD registry operators, including those of .brand registries, have no property rights in those registries, notwithstanding the fact that all the relevant contracts with ICANN provide for a strong presumptive right of renewal.
  • At the top of page 18 (28), the memo makes the argument that, under the Foreign Sovereign Immunities Act (FSIA), Plaintiffs must show that the “property in the United States of a foreign state” is “used for a commercial activity in the United States”. While .IR and the other ccTLDs at issue have no commercial contacts in the U.S., this is not true for .CO and other ccTLDs that have been repurposed as quasi-gTLDs and are being administered by entities located within the U.S. – noting, of course, that this consideration would only be of consequence if a ccTLD with US commercial contacts was determined to constitute “property” under US law.
  • At p.20 (30) of the memo, it is noted that ICANN’s authority is limited to recommending a transfer of the ccTLD to the Department of Commerce (DOC) under the current IANA contract; that under that contract ICANN may only recommend re-delegation for narrow technical and ministerial reasons; and that DOC retains the ultimate authority on the matter (in essence, this position tosses this “hot potato” case into DOC’s lap).

However, this argument immediately raises the question of what the situation will be for ccTLDs will be after the IANA transition, when DOC no longer possesses final authority on TLD re-delegations and when there may be no contract at all in place governing the conduct of the IANA functions. Ironically, terminating the IANA contract between DOC and ICANN may place ccTLDs at greater risk of being re-delegated pursuant to the judicial orders of U.S. courts because this fallback contractual argument will no longer be available!For now at least the DOC does not have to take any position on these disputes, as ICANN has not recommended that any of the ccTLDs be re-delegated pursuant to the Writs. It is probably accurate to speculate that the DOC would prefer to never be asked to make the decision of whether such actions should be taken to compensate US terror victims under applicable US law, as all the answers available would have significant domestic and international political and legal repercussions.Again, these are just preliminary views based on a quick initial review of the filing. But, while ICANN has done its best to quash the writs of attachment for the ccTLDs in question, its arguments raise multiple other questions and issues.Now we must await the response of plaintiffs to these motions, assuming that they will make their best efforts to blow holes in them.But, however these cases proceed, they cannot answer the question of what the judicial exposure of ccTLDs will be when and if the IANA contract is transferred or extinguished, presuming that ICANN remains a non-profit corporation organized under California law – much less what the answer would be if ICANN ever made the IANA functions subject to another nation’s jurisdiction.ICANN’s press release regarding its response is at https://www.icann.org/resources/press-material/release-2014-07-30-en.Its legal filings are at https://www.icann.org/resources/pages/icann-various-2014-07-30-en.The original Writs of Attachment are at https://docs.google.com/file/d/0B_dOI5puxRA9M3hweE9Eel9mVTQ/edit?pli=1.This article by the Internet Commerce Association’s Philip Corwin was sourced with permission from:
www.internetcommerce.org/icanns-ir-response-opens-legal-can-of-worms/

Black Rain and Trademark Policy: Report from INTA Hong Kong by Philip Corwin, Internet Commerce Association

Philip Corwin imageIt was an omen of things to come. Just over an hour out from Hong Kong the pilot of my 777 en route from San Francisco came on the intercom. Hong Kong was temporarily closed due to torrential rain and we would need to land in Taipei to refuel before proceeding.

When we finally arrived in HKG my journey from Washington, DC was already close to 24 hours’ duration.  I cleared immigration, collected my bags, and met the driver of my hotel-dispatched Mercedes. En route the downpour began again, in sweeping waves that the locals call “black rain”. I have no idea how my driver saw the road as the wipers engaged in a futile battle with the deluge. I never spoke to him during the ride except to say “thank you” when we finally arrived at the Sheraton in Kowloon, afraid that distracting him for even a moment could have fatal consequences.

That black rain would become a metaphor for the coming deluge of Internet-related trademark law and policy proposals that could arrive as a vast storm front in the next two years. The trademark community is readying an ark to ride out the flood, and the domain investment industry must do so as well.

The Sheraton was situated directly across Hong Kong harbor from the massive Convention Center housing the annual meeting of the International Trademark Association (INTA) from May 11-14. I was attending it in my new capacity as a member of INTA’s Internet Committee, which wrestles with the intersection of trademark protection and cyberspace, as well as its Subcommittee on Internet Governance. On the first morning of the meeting I made the mistake of walking the two blocks from hotel to the Star Ferry terminal to catch the 5-minute,  two-and-a half Hong Kong dollar (33 cents U.S.) ride across to the Convention Center. During rainy season Hong Kong is akin to a giant steam bath, a mass of humanity in a cloud of humidity. I sweated through my shirt and suit on that stroll and for the rest of the stay took a taxi those two blocks to avoid a repeat of that.

Inside the cavernous convention hall, where walking from one end to the other took ten minutes at a brisk pace, it became clear how huge the world of branding is in the 21st century. Thousands were in attendance from every corner of the globe, and more than one hundred exhibitors filled a space of several acres.

While those exhibitors included booths from a variety of incumbent and new gTLD registries, registrars, and a large number of online brand protection providers, it’s no secret that the trademark world has been less than enthusiastic about ICANN’s new gTLD program — concerned about the potential for vastly expanded cybersquatting and unnecessarily draining costs for legal actions and defensive registrations. So now that the program was off the launch pad I wanted to see how the trademark sector was viewing and reacting to it.

The first feedback came at a small “Table Talk” luncheon discussion of domain name litigation and arbitration attorneys and consultants involved in the new world of 1,000-plus gTLDs. These was an informal, unofficial conversation that allow INTA members to discuss subjects among themselves. It became clear that many of the trademark experts in attendance were just beginning to focus on the new gTLD program, despite clear notice of its impending arrival and the availability of new rights protection mechanisms (RPMs) consisting of the Trademark Clearinghouse (TMCH) and Uniform Rapid Suspension (URS). Those more conversant with it were concerned by a variety of registry and registrar practices that they thought were undermining their ability to make defensive registrations at reasonable cost.

Anecdotal reports also indicated that much of the intentional cybersquatting was being done by amateurs with no understanding of trademark law — one domain industry attorney related, laughingly, how he had been asked to help broker the sale of a newly registered infringing domain to its major brand rights holder for a contingency fee, and how he had advised the registrant to just transfer the name now before he was hit with a cease-and-desist letter or worse. A major concern of discussants was whether a rights holder had to take action against every infringing domain, no matter how slight the impact, to demonstrate active policing of its rights, to protect their mark through active policing; the moderator suggested that a memo to file explaining why action had been declined might suffice, but noted that there is no way to tell how courts would treat such decisions in the context of new gTLDs.

More information came at a large general session on trademarks and new gTLDs. As of that date (May 12):

  • 46 URS actions had been filed with the National Arbitration Forum (NAF), and 3 with the Asian Domain name Dispute Resolution center (ADNDRC).
  • Complainants had prevailed in 78% of the decided URS cases, and were denied in 22%; 9 cases were still pending.
  • A total of 29,823 trademarks had been registered at the TMCH, and 97.9% had passed verification. The registrants included more than 11,000 organizations from 97 nations and involved marks registered in 117 separate jurisdictions.
  • The more than 700,000 new gTLD domain registrations had generated 46,309 Trademark Claims notifications of exact match domains to rights holders. (Note: Since the INTA meeting TMCH registrations have passed 30,000 and total new gTLD domain registrations have passed 1 million.)

Session speakers conveyed anecdotal reports of substantial levels of cybersquatting. Many rights holders appeared to be passing on TMCH registrations because they had little interest in making large numbers of defensive “sunrise” registrations at new gTLDs. Complaints were heard that the URS was unattractive because it involved perpetual monitoring of suspended domains that could later be re-registered, and that the UDRP was too slow and expensive to scale to the new world. Session attendees were reminded that ICANN would be conducting an initial review of the efficacy of the new RPMs in 2015, and that review of the UDRP would also commence next year – and were urged to document how they used the new RPMs and what their total defensive costs stemming from new gTLDs added up to.

At the meeting of the Internet Governance Subcommittee I was asked to head up a new task force to analyze ICANN’s proposal for the process to develop enhanced accountability measures to accompany the transition of the IANA functions from the US government to the multistakeholder community. This followed up on performing the same lead role regarding the IANA transition process, which resulted in submission of an INTA comment letter.

Both domain investors and rights holders appear to share similar concerns about the prospect of a termination of the remaining U.S. role absent the establishment of enhanced and enforceable accountability measures.

At the full Internet Committee I reported on the state of play of that transition and accountability process, including the key elements of ICANN’s initial proposal as well as recent Congressional oversight hearings. At that meeting I also learned more about the use of RPMs against new gTLDs. Many domain registrations that had infringement potential could not yet be the target of a URS or UDRP action because the suspect domains were still “dark” with no content, and hence bad faith use could not be alleged or proven. Overall, only 5 UDRPs had been filed against new gTLDs, so for now the URS appears to be the favored arbitration response.

I also learned at the Internet Committee meeting that the trademark community was readying itself for the major trademark law and policy debates that are likely to arise in the 2015-16 timeframe.  

The likely policy issues include:

  • Potential amendments to the US Anticybersquatting Consumer Protection Act (ACPA) — premised on the fact that the statute, developed at the dawn of the commercial Internet in 1998, was outmoded and needed modernizing, especially in the face of new gTLDs.
  • A comprehensive UDRP reform review within ICANN.
  • Review of the performance of the RPMs for new gTLDs, which will be influenced by detailed analysis of URS decisions.
  • Trademark issues related to “parked” websites.
  • Analysis of the best and worst practices engaged in by new gTLD registries.

The Committee was also getting ready to react if other parties should propose legislation related to Internet fraud, or an international treaty on cybersquatting.

I left Hong Kong with a suitcase full of business wear in need of dry cleaning – and with a much better understanding of what trademark owners are thinking about new gTLDs. While .brand gTLDs and certain new gTLD vertical categories may enhance their web presence and marketing/sales strategies, monitoring and enforcement costs are a growing concern. Even if a global brand can keep its total URS costs down to $1,000 an action for filing fees and counsel, that can readily add up to a $1 million cost per mark across the new gTLD landscape.

Hopefully, my engagement on the Internet Committee, as well as that of other domain sector attorneys, can help to bridge the understanding gap between rights holders and domainers and deliver the message that the professional domain portfolio investors represented by ICA are not cybersquatters. (That point was driven home two weeks later when I attended the TRAFFIC domain conference in Las Vegas, where major investors related their own tales of being approached by cybersquatters attempting to sell newly registered and clearly infringing gTLDs — and of telling them to get lost).

It’s prudent for the trademark sector to be gearing up for the coming Internet trademark policy debates, and it would be imprudent for the domain industry to fail to do the same. The domain community respects the measured enforcement of trademark law, and asks in return that the trademark sector recognize that domains are also valuable intangible assets — and that a reasonable balance must be established to reconcile the separate bundles of rights within trademarks and domains. ICA will be delivering that message and readying its own strategy as the debates approach.

And there are many areas where a candid dialogue may produce win-win results. Trademark owners are justifiably chagrined that a URS action only suspends a clearly infringing domain for its remaining registration period, leaving it available for re-registration and the need for a follow-up URS filing — while domain investors don’t want a domain transfer option out of equally justifiable concern that the URS could become a low-cost means of reverse domain name hijacking (RDNH). One possible reconciliation would be to amend the URS so that a lost domain is permanently barred from being reregistered. That would alleviate domainers of their hijacking concern – and take a clearly infringing domain out of circulation with no continuing defensive registration costs for the rights holder.

When it comes to UDRP reform, ICA members have discussed a variety of changes they would like to see come about, and those can be the basis for future negotiations. As for amending the ACPA, we’ll have to see what is proposed – creating secondary liability would concern the entire domain industry far beyond professional investors, including registrars and secondary markets, while a “loser pays” rule would also be of significant concern. (While there is no current indication that those items will be on any INTA wish list, they have already been floated by the DC-based Coalition Against Domain Name Abuse (CADNA)).

How these debates will play out is far from certain. But that they will soon be engaged in is absolutely certain. So everyone with a stake in the future of Internet trademark law and domain investment needs to gear up and be ready to make their case – or else be swept away by coming torrents of policy black rain.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/black-rain-and-trademark-policy

Personal Clarification Regarding .XYZ Article by Philip Corwin, Internet Commerce Association

Philip Corwin imageSeveral days ago I posted an article – “ICANN is Missing in Action on .XYZ” – expressing my personal views regarding Network Solutions’ involuntary opt-out registration of .XYZ domains for its existing customers. It was posted, as many of my opinion pieces are, at both the website of the Internet Commerce Association, which I have served as Counsel since its founding in 2006, and at CircleID.com; the two websites attract different audiences.  The article was not requested by the ICA and does not represent any official policy of the ICA in regard to such involuntary domain registrations. The ICA has not yet adopted any position on this practice.

The article questioned whether this opt-out practice violated registrant rights and was in compliance with the Registrar Accreditation Agreement (RAA) that all registrars enter into with ICANN. A particular concern was that, unless ICANN stepped in, this practice could spread to other new gTLDs, adversely affecting registrants while undermining the integrity of the new gTLD program and raising additional questions about ICANN’s contractual compliance enforcement.

Toward the end of the article I referred to a 2011 Lanham Act litigation filed by Facebook against the CEO of the .XYZ registry, Daniel Negari, and another company he headed, Cyber2media. I noted that the case had been dismissed, and stated “Of course allegations are not proof of guilt”. I also tried to give even-handed treatment earlier in the article on the question of whether .XYZ had entered into any arrangement with Network Solutions in regard to the opt-out program by reprinting the relevant text of an interview he had engaged in on that question.

I now regard my referencing of the Lanham Act litigation as a mistake in judgment.

First, it was extraneous to the main focus of the article and has generated some unintended controversy that has diluted focus on the important policy question of whether opt-out domain registrations are an ethical practice consistent with RAA provisions that protect registrants and, if not, what ICANN should be doing in reaction.

More importantly, it appears to have created the misimpression that I believe that the award of the .XYZ registry contract to Mr. Negari and his registry enterprise was questionable. I am not aware of any facts that would lead me to such a conclusion and to the extent that my unartful words may have created such an incorrect impression I offer my sincere apology to him, his colleagues and his enterprise.

That section of the article also stated that it “would be useful to know” whether the application for .XYZ had disclosed the litigation. I have since learned through a third party that it was disclosed and considered by ICANN. Such information is redacted and not made part of the publicly available portion of any gTLD application.

There also seems to be a misperception that I may have been advocating amendment of the gTLD program Applicant Guidebook to create review of dismissed or settled trademark legal actions. In fact such a provision is already part of the program’s Evaluation Questions Criteria (see http://newgtlds.icann.org/en/applicants/agb/evaluation-questions-criteria-04jun12-en.pdf).

At Section 11(g) of the Applicant Background portion of that document this Question appears:

(g) Disclose whether the applicant or any of the individuals named above has been involved in any administrative or other legal proceeding in which allegations of intellectual property infringement relating to registration or use of a domain name have been made. Provide an explanation related to each such instance. (Emphasis added)

This Note appears next to that Question:

ICANN may deny an otherwise qualified application based on the background screening process. See section 1.2.1 of the guidebook for details.

That provision is the very reason why a dismissed Lanham Act lawsuit would need to be disclosed by a gTLD applicant. It is in addition to preceding Section 11(f), the inflexible “three strikes” UDRP/ACPA disqualification clause against which I lobbied at considerable length; while that effort was unsuccessful, a similar disqualifier was added for those cited for repeated Reverse Domain Name Hijacking. ICANN has stated that it intends to conduct a thorough review of all provisions of the Applicant Guidebook prior to any second round of new gTLDs, and that will provide an opportunity to revisit all these provisions.

I hope that this clarification facilitates a return to consideration of the opt-out registration issue and an appropriate ICANN response. I wish Mr. Negari and his marketing team well in their efforts to promote affirmative domain registrations in the .XYZ registry.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/personal-clarification-regarding-xyz-article/

ICANN is MIA on .XYZ by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoThe .XYZ opt-out domain registration situation has been a major focus of domain industry press reports since the registry’s recent launch. But it raises more than questions about how to properly rank the “success” of new registries and whether unsavory practices are involved.

The more critical inquires that should be made are whether ICANN is effectively and affirmatively enforcing registrar and registry contractual agreements; whether it conducts sufficient background checks on new gTLD registry applicants – and, most important, whether involuntary “registrants” are being subjected to potential trademark infringement liability without affirmative intent or consent.

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By now anyone who’s part of the domain investment or broader ICANN community is aware of the curious saga of the recently launched .XYZ registry. Soon after its young CEO boldly stated, “We hope to reach 1 million .XYZ registrations in the first year and 5 million registrations in the first three years.”, the registry launched with a remarkable total of nearly 18,000 registrations on its first day, a total that has quickly grown to more than 100,000.

But it was soon noted that “the zone files showed that over 70% of all .XYZ registrations had been made at NetworkSolutions, an expensive registrar that has a less than 5% share of most new gTLD registrations.” (The NetSol percentage of .XYZ registrations has reportedly since climbed to more than 85%.) Then it was further discovered that the surprisingly large number of registrations was not the result of affirmative registration decisions made by individuals responding to a compelling marketing or incentive campaign, but to a NetSol decision to give away “free domains”, most  matching domain names  already owned by its customers, if they did not “opt out” of the involuntary domain registration in response to an e-mail.  That revelation prompted one of the two organizations tracking new gTLDs to delete all NetSol-supplied free .XYZ names from its gTLD rankings, dropping .XYZ from its number one position to “number 14 on the list of most registered new gTLD’s with just under 15,000 registrations”. Yet some individuals are still attempting to resell .XYZ domains for substantial monetary gains to uninformed individuals by touting its NetSol-inflated gross registration numbers.

These events gave rise to the question of whether the .XYZ registry had made arrangements with NetSol to embark on this promotion and thereby turbocharge its initial registration numbers. But in a published interview, its CEO Daniel Negari  stated:

Each Registrar (or store) then makes its own decision on the retail price it wants to charge for the different domain names (products) it offers.

We have over 200 registrars from all around the word in all languages offering .xyz domain names. I do not know the details of every promotion or marketing campaign that they are doing every day.

Here is what I do know:

Regardless of whether a registrar charges $100, $5, or gives the domains away for free, I get paid the ENTIRE wholesale price, which is the same price that every registrar pays.

Yet there remains no explanation for why NetSol embarked on this aggressive campaign for this one new gTLD registry.

Regardless of whether the registry had any active part in encouraging NetSol’s actions, it continues to proclaim that “.xyz became the first new domain extension to cross the 100,000 registration mark”. But among professional domain investorsthe damage to the registry’s reputation has been done and is likely permanent. As one respected industry observer recently observed:

With NetSol you have a registrar that is three times more expensive than other registrars making themselves an even less attractive option by telling customers we will decide what domains are put in your account instead of you!

…With .XYZ you have a registry that has proclaimed themselves the next .com but instead are proving themselves not to be an alternate .com but an alternate reality based on fictional numbers of real registrants. Instead of becoming the next .com they are in danger of becoming the next .tk – the ccTLD for the obscure Pacific Ocean territory of Tokelau that gives away its domains for free.

Is deception really the business plan a registry expects to succeed with? While declaring oneself the winner based on a blatantly stuffed ballot box still happens in places like Syria it is generally regarded as poor form in the rest of the world (and is certainly not a good calling card for any business).

Of course new gTLD skeptics are loving this, saying that it proves the new extensions are already on the ropes, having so little of value to sell that they have to resort to giving the product away (and not just giving it away, but forcing it upon people who never asked for it) and then trumpeting inflated numbers. As you would expect registries that are doing it the right way hate that they are being unfairly painted with the same brush. I’ve seen key executives from at least three other new gTLD registries publicly post their dismayover how this is tarnishing the entire new GTLD program.So far the discussion within the domain industry has mostly been about what arrangement if any existed between NetSol and .XYZ and how to dissect new gTLD registration numbers to meaningfully decide which ones are successful – should it be based on gross registrations, registry revenues, or websites that have been actively developed?

But that misses two other big issues.

What about the rights and potential legal liability of the registrants who have been involuntarily signed up for these “free” .XYZ domains?

And, presuming that someone at ICANN monitors the domain industry press that has been feverishly reporting this story, why hasn’t it stepped forward to announce that, for the protection of registrants and the integrity of the new gTLD program, it is investigating to see whether either party is in violation of its contract with ICANN.?

After all, ICANN’s CEO proclaimed last year that registrants were its number one concern.

Given continued community misgivings about the effectiveness of ICANN’s contractual compliance enforcement efforts, as well as the intense scrutiny it is undergoing in conjunction with stakeholder consideration of the IANA functions transition and accompanying enhanced accountability mechanisms, you’d think the organization would welcome a chance to demonstrate that it doesn’t need a third party monitor to tell it that it should look into this type of situation and take appropriate action.

For starters, NetSol may be creating potential trademark infringement liability for these involuntary registrants. As has been reported, “Clear-cut cases of cybersquatting seem to be among those .xyz domain names that Network Solutions has registered to its customers without their explicit request…They’re all registered via NetSol’s Whois privacy service, which lists the registrant’s “real” name in the Whois record, but substitutes mailing address, email and phone number with NetSol-operated proxies.”

One website cited in that article is www.disneytime.xyz . That parked website features a Network Solutions corporate name and logo in the upper right hand corner along with an “under construction” notice, and has links to entertainment-related topics such as “Top Ten Music Artist” and “Pop Hits Music”. Clicking on any of those links brings one to yet more pages with pay-per-click (PPC) ad links. Overall, the parked page appears to be under NetSol’s control and presumably they choose the PPC link labels and receive any income derived from the ads. (Ironically, there is also a link on the bottom of the page labeled “Trademark Free Zone” – clicking on that takes one to http://imptestrm.com/ which has links to such topics as “Cheapest Insurance” and “Lose Weight”.) It would be interesting to get the opinion of the Disney Corporation regarding the propriety and legality of an ICANN-accredited registrar involuntarily registering this domain on behalf of a customer who failed to opt-out — and then populating it with music-related ad links.

“Registrants” shouldn’t be involuntarily exposed to the potential of receiving a cease-and-desist letter, much less being the target of UDRP or URS arbitration or even a trademark infringement lawsuit. As for the trademark owners, they may not have effective recourse to a UDRP or URS arbitration action. One element that must be proven by a complainant is “bad faith registration”, and bad faith involves affirmative intent – and there’s not much intent involved with a failure to click on an opt-out link in an e-mail that may not even have been read. (But there is a plausible argument that NetSol might be considered the actual registrant for dispute resolution purposes, since it chose the domain name and completed the registration absent any clear direction from its customer.) There’s also the legal twist that, where NetSol matched the registered .XYX domain to one the customer already had in an incumbent registry, the existing customer agreement with a registrant in such legacy gTLDs does not include consent to be subject to the Trademark Clearinghouse (TMCH) and Uniform Rapid Suspension (URS).

And that raises another critical question: If any of these opt-out registrations of infringing domains triggered a Trademark Claims Notice to the involuntary registrant, did any of them ever see it and have a second opportunity to opt-out at that point? After all, as described above, the registrant’s real name was listed in the WHOIS record, but not their e-mail address; instead, the listed address was for NetSol’s proxy service. Did NetSol receive any Claims Notices and go ahead and register the domain anyway without passing that Notice along to the “registrant”?

There’s also the matter of whether involuntary registrations are in compliance with the 2013 Registrar Accreditation Agreement (RAA) entered into by all those selling new gTLDs. Section .7.7 states, “Registrar shall require all Registered Name Holders to enter into an electronic or paper registration agreement with Registrar”. An opt-out procedure arguably fails to satisfy that requirement. NetSol reportedly tried to get around that by including, as a less than conspicuous footnote in its e-mail, this statement, “Please note that your use of this .XYZ domain name and/or your refusal to decline the domain shall indicate acceptance of the domain into your account, your continued acceptance of our Service Agreement located online at http://www.networksolutions.com/legal/static-service-agreement.jsp, and its application to the domain.” But it’s not clear that any court would view that as satisfying the RAA’s contractual requirement.

The RAA also contains an addendum titled “ADDITIONAL REGISTRAR OPERATION SPECIFICATION” that includes a statement of “Registrants’ Benefits and Responsibilities”. One of those rights is, “You shall not be subject to false advertising or deceptive practices by your Registrar or though (sic) any proxy or privacy services made available by your Registrar. This includes deceptive notices, hidden fees, and any practices that are illegal under the consumer protection law of your residence.”

Is an opt-out registration a deceptive practice and notice, or illegal under any national law, and thereby in violation of that registrant right? It could well be. Further, if a registrant involuntarily received a free .XYZ domain, and had previously opted for automatic renewals of its domains held by NetSol, would reregistration a year hence at a hefty fee be an unfair and deceptive trade practice? Those are questions that the Federal Trade Commission (never a fan of the new gTLD program) or other national consumer protection agencies, as well as states’ attorney general, might want to investigate, especially if ICANN doesn’t move quickly.

Overall, this situation appears to raise the most significant questions about the effectiveness of the RAA and ICANN’s compliance enforcement since the Registerfly fiasco of early 2007. It is not of the same character, since that situation involved a registrar stealing customer domains and funds, but it is still quite disturbing. Back in 2007 then-ICANN CEO Paul Twomey declared, “What has happened to registrants with RegisterFly.com has made it clear there must be comprehensive review of the registrar accreditation process and the content of the RAA. This is going to be a key debate at our Lisbon meeting scheduled for 26–30 March 2007. There must be clear decisions made on changes. As a community we cannot put this off…Registrants suffer most from weaknesses in the RAA and I want to make sure that ICANN’s accreditation process and our agreement gives us the ability to respond more strongly and flexibly in the future.”

While the 2013 RAA is substantially stronger on paper than the one in use seven years ago, in the end it is only as strong as ICANN’s compliance enforcement makes it.

As for the .XYZ registry , if it did have some arrangement with NetSol to undertake this involuntary registration program, and if it involved any consideration not offered to other registrars, that would raise the question of whether it is in violation of its Registry Agreement, as Section 2.9 of that contract requires non-discriminatory access for all registrars.

There’s also an open question regarding the efficacy of the ICANN background check for new gTLD registries and their top executives. The CEO of .XYZ, along with his company Cyber2media, were the lead defendants in a Lanham Act lawsuit filed by Facebook on July 22, 2011, months before the new gTLD application window opened in January 2012. That complaint alleged four separate violations of the Lanham Act as well as two other civil counts. Further, the scheme that defendants were alleged to be engaged in was far more sophisticated than the one described above for disneytime.xyz. According to the lawsuit, rather than landing on pages that were clearly parked, consumers who mistakenly typed in typographic variations of Facebook were redirected to websites that mimicked Facebook’s design and used its distinctive marks and logos. They were then invited to take part in social media “surveys” and thereby have a (fictional) chance to win a MacBook, iPad, or iPhone — in exchange for divulging proprietary personal information including their phone number and e-mail address.

Of course allegations are not proof of guilt, and this lawsuit appears to have been dismissed against those two defendants within days after the .XYZ application was submitted to ICANN. But, if only to inform ICANN of potential background check alterations for the next round of the gTLD program, it would be useful to know whether this very relevant litigation was revealed in that application – and, if not, whether the background screeners conducted a simple web search that should have brought up information about the lawsuit – and in either event what further investigation was undertaken and resolved.

Summing up, there’s a lot more at stake in this situation than which registry has the most registrations.

There are significant contract compliance and consumer protection issues, compounded by possible involuntary trademark infringement. Thousands of registrants are directly affected, and all registrants are potentially at risk. Can it really be permissible for any ICANN-accredited registrar to involuntarily assign new gTLD domains to existing customers on an opt-out basis, given the substantial potential legal liability that accompanies domain registrant status? If that is permitted then we could see hundreds of thousands or even millions of involuntary domain registrations occur over the coming months as hundreds of new gTLDs become available to the general public. Aside from the risks to “registrants”, such a development could substantially erode the public perception and reputation of the entire new gTLD program – and of ICANN.

It should be as simple as ABC for ICANN to realize it needs to step up to the plate and take responsibility for initiating   a full inquiry and report on what has transpired in the initial .XYZ registration phase. The answers are important for registrants, for registrars who don’t engage in opt-out registration practices, and for the other operators of new gTLD registries who are busy trying to create value that attracts willing registrants.

It’s also of immense consequence for ICANN’s own reputation as a critical time in its history. As the community is beginning to deliberate on enhanced accountability measures to accompany the IANA functions transition, it would be exceedingly useful for ICANN to demonstrate that it can act of its own volition and investigate suspicious situations involving contracted parties — and hold them duly accountable if transgressions are found.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/icann-is-mia-on-xyz/

 

Senate Appropriators Add IANA Transition Language as House Requests GAO Study and Civil Society Groups Oppose Shimkus Amendment by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoThe Senate Appropriations Committee just reported out on June 5th its version of the Commerce-Justice-State Departments Appropriations bill for FY 15. In the course of its deliberations it added a consensus amendment on the IANA transition offered by Sen. Mike Johanns (R-NE). The amendment reads:

  1. Amendment proposed by Senator Johanns

On page 24 of the report, in the paragraph beginning with “Internet”, strike the sentence beginning with “While” and replace with:

“While NTIA has stated that it will not accept a proposal that includes government-led or intergovernmental control over ICANN the Committee directs NTIA to conduct a thorough review and analysis of any proposed transition of the IANA contract. This review shall ensure that ICANN has in place a NTIA approved multi-stakeholder oversight plan that is insulated from foreign government and inter-governmental control. Further, the Committee directs NTIA to report quarterly to the Committee on all aspects of the privatization process and further directs NTIA to inform the Committee, as well as the Committee on Commerce, Science, and Transportation, not less than 7 days in advance of any decision with respect to a successor contract.”

In addition to that statutory language, the Committee report on the bill, which creates its “legislative history”, contains this relevant passage:

Internet Corporation for Assigned Names and Numbers [ICANN].-The Committee remains concerned that the Department of Commerce, through NTIA, has not been a strong advocate for American companies and consumers and urges greater participation and advocacy within the Governmental Advisory Committee [GAC] and any other mechanisms within ICANN in which NTIA is a participant. The Committee strongly encourages NTIA to be an active supporter for the interests of the Nation within ICANN and to ensure that the principles of accountability, transparency, security, and stability of the Internet are maintained for consumers, business, and the Government. The Committee awaits the past due report on NTIA’s plans for greater involvement in the GAC and the efforts it is undertaking to protect U.S. consumers, companies, and intellectual property.

Parsing the amendment’s language, the requirement that NTIA conduct a thorough review and analysis of any proposed IANA transition plan amounts to telling it to do its job properly; implicit in this requirement is that the analysis be shared with Congress. The requirement that the review ensures a multi-stakeholder oversight plan links the IANA transition to the enhanced ICANN accountability that many groups have already said must accompany and be implemented simultaneously with any IANA transition plan. The requirement for quarterly NTIA reports to Congress on all aspects of the “privatization process” reinforces that it must assure continued private sector leadership, and that Congress does not want to be kept guessing as to where things stand. As for the requirement that Congress receive at least seven days’ advance notice of any NTIA decision on a successor IANA contract, that seems too brief an interval for meaningful Congressional review – but this amendment will not likely be the final form of any language sent by Congress to the President.

As for the accompanying Report language, the fact that the Committee is dissatisfied with NTIA’s advocacy for US interests within the GAC raises the implicit question of whether the IANA transition itself is in the national interest. And the inclusion of a note of displeasure regarding “the past due report on NTIA’s plans” indicates impatience with NTIA’s responsiveness to Congressional directives.

The House-passed counterpart to this CSJ Appropriations bill contains the Duffy Amendment that would deprive NTIA of any funds to carry out the IANA transition. While that flat prohibition has close to zero chance of being accepted by the Senate, the inclusion of this IANA-related language significantly enhances the chances for compromise language being worked out during future negotiations to reconcile the bills. The middle ground could well be a modified version of the Shimkus Amendment (incorporating the full DOTCOM Act) that was attached to the Defense Authorization Act in the House, as it is now clear that both sides of Capitol Hill want some degree of assurance that they will receive updated reports on the progress of IANA transition deliberations as well as some opportunity to review a succession plan prior to its implementation. There also remains a strong possibility that the Senate Commerce Committee will hold an IANA oversight hearing prior to full Senate consideration of this CSJ bill, and if that happens it could provide new fodder for related floor amendments.

In a related development, also on June 5th a group of six House Republicans, including the Chairman and Vice-Chair of the Energy and Commerce Committee, sent a letter to the Governmental Accountability Office “requesting an examination of the Obama administration’s recent proposal to transition Internet oversight to the global multi-stakeholder community”. The letter asks GAO to address such issues as potential national security implications and other possible risks of the IANA transition, how to assure against a future multilateral ICANN takeover, future enforcement and enhancement of the Affirmation of Commitments (AOC), and useful evaluation criteria beyond those set by the NTIA. This request implements the study portion of the Shimkus Amendment but lays aside its one year delay. By taking this action the way may be better cleared for a House-Senate compromise agreement that assures a meaningful Congressional oversight and review role on the transition.

Meanwhile, on June 3rd a group of seven civil society organizations sent a letter to Senate Majority Leader Harry Reid as well as the leaders of key Senate Committees expressing their opposition to the Shimkus Amendment, which would delay adoption of any IANA transition plan forwarded by ICANN for up to one year while the GAO analyzed it.

The organizations base their opposition in a belief that:

[T]he DOTCOM Act will give additional ammunition to foreign governments and stakeholders who oppose Internet freedom, bolstering their argument for an overhaul of the current Internet governance system to facilitate greater control by non-democratic governments or international organizations… Passage of the DOTCOM Act would unnecessarily interfere with the announced transition process, which is still in development through an open consultation convened by ICANN. Further, it would damage the reputation of the United States as a champion of multi-stakeholder Internet governance and contradict previous bipartisan statements of Congressional support for the multi-stakeholder governance model.

The letter’s final operative paragraph reads:

It is critical that the IANA transition proposal development process be fair and transparent, and we welcome Congressional interest and participation as an equal stakeholder in the process. However, efforts to interfere with or delay this transition process, or require the Congressional approval beyond the criteria suggested by NTIA, will neither achieve the goals of the bill nor reflect Congress’s previously stated position on Internet governance. We therefore strongly urge the Senate to oppose the Shimkus Amendment #6 to the FY15 NDAA and other efforts to block this transfer and to show support for an Internet that is free, open, and guided by global, multi-stakeholder governance principles.

While these views are sincere and all the signatory groups do good work on behalf of Internet freedom and privacy, we doubt that Russia, China, Iran and other nations which already restrict their own citizens’ Internet freedom need any new incentives or arguments to push for multilateral control of the DNS.

And there is a bit of a mixed message in welcoming Congress as an “equal stakeholder” in the transition process while essentially asking it to trust in and defer to NTIA’s determinations on a decision that, once made, cannot be redone.

It’s doubtful that the Senate will accept the Shimkus Amendment/DOTCOM Act in the form sent over from the House. But this new Senate Appropriations bill and House GAO study request are the latest indicators of evolving bipartisan and bicameral interest in the IANA transition — and that could well lead to the negotiation of compromise language adopted on a bill funding three of the most important Executive Branch agencies that assures a truly equal role for Congress.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/senate-approps-iana/

Second House Amendment Ups the Stakes on IANA Transition by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoThe House of Representatives has passed another measure related to the proposed IANA functions transition, and has again attached it to “must pass” legislation. This move ups the ante and may well be the final straw that compels the Senate Commerce Committee to hold its own oversight hearing on the IANA transition proposal.

On May 30th the House adopted the Duffy Amendment to the Appropriations bill funding the Commerce, Justice, and State Departments in FY 2015. The final vote on the amendment was 229 in favor and 178 opposed – it was fairly partisan outcome, with only ten Democrats voting aye while just one Republican voted nay. The amendment not only prohibits the Commerce Department from surrendering the US counterparty role on the IANA contract but also slashes the NTIA’s budget by nearly $15 million. The underlying bill passed later that evening.

In speaking for his amendment, Rep. Duffy (R-WI) stated:

Thank you, Mr. Chairman. I think most Americans are aware that the President has recently stated that he intends to transfer the core functions of the internet to an international or foreign body.

What my amendment does today will prohibit the President from using any of these funds to relinquish control of those core functions to the internet. I think this is an incredibly important amendment because America in our zest for freedom of speech has made sure that the internet an open forum for dialogue, an open forum for ideas. By relinquishing these rights, our core functions to a foreign body, I don’t think we will retain the current system of the internet and the current rights or freedom of speech that internet currently enjoys. if you look at stakeholders who have a say in how the internet is run, I think when we use the term stakeholders what we are referring to are foreign governments and corporations, I think we have to ask the question, do we think that China, that Russia, that Iran who have a say in the core functions of the internet have the same concern for freedom of speech that we Americans do? I think it’s important that this institution use its control of the purse strings to limit the president’s authority to transfer those core functions to this foreign body. With that I retain the balance of my time.

Adoption of the Duffy Amendment follows by one week House passage of the Shimkus Amendment to the Defense authorization bill. That amendment would mandate up to a one-year delay in carrying out the transition while the GAO studied and reported to Congress regarding the implications of any IANA transition plan forwarded by ICANN for NTIA review. Rep. Shimkus (R-IL) said via his press office that he also voted for the Duffy measure “to send a message that Congress is prepared to put a stop to the IANA transition altogether if the Administration continues to disregard the potential risks and dismiss his reasonable call for GAO review.” He reiterated his view that “Congressional oversight [is the] best path forward” and said he is “hopeful the Senate will adopt that approach as well.”

However, Commerce Committee member Rep. Mike Doyle (D-PA) responded to the amendment’s passage by declaring, “I am again disappointed by the irresponsible actions taken by House Republicans to delay NTIA’s transition of the IANA functions…Stakeholders from around the Internet including ISPs, edge providers, industry associations, technology experts, and public interest groups, all support NTIA’s transition plan. I will work with my colleagues in the House and Senate to ensure that these provisions are removed as this bill moves forward.”

Two balls are now in the Senate’s court, and a negotiated version of the Shimkus GAO study Amendment would certainly appear a more palatable course for the Administration than the flat IANA transition prohibition and NTIA budget slashing of the Duffy Amendment. Neither bill will be on the Senate floor in the immediate future, which gives the Senate Commerce Committee more than enough time to hold its own IANA functions transition and ICANN accountability oversight hearing.

A Senate Commerce hearing could give NTIA a platform to demonstrate that it is effectively overseeing the process and will not just rubber stamp any proposal served up by ICANN. It could also inquire into whether the IANA transition and enhanced accountability processes proposed by ICANN adequately comport with NTIA’s request that it convene stakeholders for the purpose of creating acceptable plans — without trying to control that process or its outcome. ICANN received broad resistance to its original transition plan process blueprint and has yet to announce whether it will respond with course corrections.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/duffy_ups_stakes/

DOTCOM Act Passes House as Rubio Leads Senate Call for IANA Oversight Hearings by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoThe Shimkus Amendment to the $601 billion National Defense Authorization Act (HR 4435) passed the House of Representatives yesterday on a mostly partisan vote of 245 – 177. While all 228 Republicans present and voting supported the amendment only 17 Democrats voted “aye”, with 177 in opposition. Final passage on the entire bill was a bipartisan vote of 325-98.

The Senate has not yet passed its version of a FY 2015 Pentagon funding bill, and once it does all the differences between the two versions must be reconciled before it can be sent to President Obama for his signature.  There’s no indication yet whether a similar amendment will be offered in the Senate or whether enough Democratic votes can be picked up to pass it on that side of Capitol Hill.

The Shimkus amendment embodied the text of the DOTCOM Act. It would prohibit the NTIA from transitioning oversight of the IANA root zone functions from US oversight to a multistakeholder entity until Congress had received a report from the GAO analyzing the implications of the transition plan. It would provide GAO with a one-year period to complete that study, with the clock starting when ICANN transmitted a transition plan for NTIA review. As no such plan is expected to be forthcoming until sometime in 2015, the Act would essentially make it all but impossible to complete the transition by the September 2015 end date of the current IANA contract, and would thus trigger the need for a two-year extension – an option already provided for in that contract. NTIA head Larry Strickling and ICANN CEO Chehade stressed in recent Congressional testimony that September 2015 was just a goal and not a deadline. But we’d wager that ICANN very much wants to avoid a contract extension, and parties outside the US want IANA globalization by 2015 as expressed in the final document issued at last month’s NETmundial meeting in Brazil.

Meanwhile, in the Senate, Senator Marco Rubio of Florida and eight other Senate Republicans have just sent a letter to Commerce Committee Chairman Jay Rockefeller asking that the Committee hold an oversight hearing on the IANA transition proposal. With the DOTCOM amendment on its way over from the House, and with the House expected to shortly pass a Department of Commerce appropriations bill that slashes NTIA funding to deny it the monetary capability to carry out the transition, it would appear to be a good time for the Senate to start informing itself on the matter. Rockefeller has shown past interest in ICANN, having held oversight hearings on the new gTLD program and most recently sending a letter to NTIA raising concerns about .Sucks and similar new gTLDs. Any Senate Commerce oversight hearing might well include a look at the status of the new gTLD program, as it is the largest and riskiest effort ever undertaken by ICANN and the market and operational status of the new gTLD rollout might be viewed as indicative of its readiness to sever its last formal connection with the US government.

The text of the Rubio letter follows:

May 21, 2014

Dear Chairmen Rockefeller, Pryor and Ranking Members Thune and Wicker:

We are writing to respectfully request that the Senate Committee on Commerce, Science, and Transportation (“the Committee”) hold a hearing to review the National Telecommunications and Information Administration’s (NTIA) announcement to transition oversight of certain Internet domain name functions to the global multistakeholder community. This transition, if it occurs, could have profound consequences on the future of Internet governance and freedom, and therefore deserves a close examination by the Committee.

Last Congress many of us were leaders on S. Con. Res. 50 (SCR 50), which reinforced the U.S. government’s opposition to ceding control of Internet governance to the International Telecommunications Union (ITU) or to any other governmental body. By unanimously passing SCR 50, Congress sent a strong message of support for the existing bottom-up, multistakeholder approach to Internet governance. The current model has enabled individual empowerment and technological advancement around the world, and has ensured the Internet remains free from the control of governments and intergovernmental organizations.

Congress must once again lead the cause for Internet freedom. All of the signatories of this letter also sent several questions to NTIA in March. While we appreciate NTIA’s response, there are a number of unresolved questions concerning NTIA’s decision, as well as uncertainty about how this transition will unfold. NTIA’s announcement must be carefully considered and understood, which is why the Committee must conduct rigorous oversight of this decision and process.

Since the announcement by NTIA, the United States has sent delegations to the Internet Corporation for Assigned Names and Numbers (ICANN) 49 conference in Singapore and to the NETmundial meeting on the future of Internet governance in Brazil. NTIA’s decision and ICANN’s future role were discussed at both conferences, and we understand that countries like China and Russia pushed back against the multi-stakeholder model and toward greater control over the Internet.

It is important that the Committee, Congress, and the American people hear from NTIA, members of the U.S. delegation, and other Internet stakeholders about how these conferences went and what the global community is proposing. Chairman Rockefeller, when the Committee held a hearing in December 2011 on ICANN’s expansion of top level domains, you stated:

As the Senate Committee tasked with examining issues related to the Internet, it is critical that we understand what this will mean for the millions of Americans who use the Internet on a daily basis and the thousands of businesses and organizations that now depend upon the Internet to reach their customers and members.

That statement certainly applies today to NTIA’s proposed transition. As this process unfolds and NTIA engages the global Internet community, it is imperative the Committee exercise its jurisdiction and conduct careful oversight on behalf of the American people to ensure Internet freedom is protected. The House has already held two hearings, and the global Internet community continues to convene. We must do the same. This announcement and the outcome of this proposed transition are too important for the Committee to remain silent. We appreciate your consideration of this request and look forward to working with all of you on this important issue.

Sincerely,

Marco Rubio

Ted Cruz

Ron Johnson

Dean Heller

Roy Blunt

Kelly Ayotte

Dan Coats

Deb Fischer

Tim Scott

 This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/DOTCOM_Passes_House

House Committees Taking Aim at IANA Transition Proposal by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoIn an unanticipated move a third Committee of the US House of Representatives has weighed in with concerns regarding the NTIA’s proposed transition of the US role as counterparty to ICANN’s IANA functions contract to one with the “global multistakeholder community”.

On May 13th the House Armed Services Committee Report for HR 4435, the Defense Authorization bill, was released. It contains language referring to the ICANN transition and, in particular, the .Mil top level domain which is administered by the US Department of Defense Network Information Center (NIC, which also runs the g-root authoritative root server — while the h-root server is operated by the US Army Research Lab). The Report language (reproduced at the end of this post) questions whether .Mil, which has always been available solely for US military operations, will remain protected post-transition – and also states that “any negotiations that occur should include verifiable measures for maintaining a separation between the policymaking and technical operation of root-zone management functions and that such protections should be a red line in interagency discussions and U.S. Government positions.” (Emphasis added) The introduction of US national security concerns brings a new element into discussions of the IANA transition.

This latest action follows on the heels of IANA-related steps recently taken by two other House Committees:

  • The Commerce Committee passed the DOTCOM Act (HR 4342), which would delay any final decision on transfer of IANA oversight for up to one year while the GAO studied the matter.
  • Even more significantly, exercising the Congressional “power of the purse”, the Appropriations Committee slashed NTIA’s budget for the coming fiscal year by $14.3 million, from $51 to $36.7 million, with the specific intent of denying NTIA any funds to carry out the IANA transition in FY15.

The House will likely take up The Commerce, Justice, Science and Related Agencies Appropriations Act for FY2015, which contains that cut in NTIA funding, next week. Further, we have just learned that Rep. John Shimkus, lead sponsor of the DOTCOM Act, has filed the text of that legislation as an amendment to be offered to the Defense Authorization bill that is currently being considered on the House floor, and we expect both it and the underlying bill to pass the House.

All of these prior actions were taken on party-line votes in the Republican-controlled and highly polarized House, and next week’s House floor vote will likely follow that pattern. While such Senate Democrats as Robert Menendez and Mark Warner have expressed concerns about the IANA transition, we’d wager that if these proposals are passed by the House and sent over to the Senate they will never receive a vote so long as Harry Reid is the Democrat’s Majority Leader. Senate Democrats will also likely resist accepting the House provisions if a conference committee is appointed to seek resolution of the different positions on the appropriations bill.

However, given that the earliest goal for completing the IANA transition is September 2015, when the current contract term expires (although the US has the option of extending it for two more 2-year terms) the situation could change dramatically if Republicans succeed in gaining control of the Senate in the November 2014 elections. Most pollsters and election analysts give them a slightly better than even chance of doing so, given President Obama’s current low approval ratings as well as the historic trends for mid-term Congressional elections in a President’s second term. Yesterday’s primary results, in which Senate Minority Leader Mitch McConnell and other “establishment” GOP candidates defeated “tea party” challengers probably enhance that possibility of Republican Senate control in 2015-16.

ICANN’s initial proposal for both the process and scope of IANA transition discussions has already encountered broad and vocal opposition. Its new proposal for a parallel process to determine enhanced accountability mechanisms may prove equally controversial (we’ll be writing more on that shortly). While it remains to be seen how ICANN will respond to criticism of its proposed pathway, the NTIA has made clear that it expects it to convene an unbiased community discussion that results in a transition plan and accompanying accountability provisions that are credible and have broad consensus support. That deliberative process will take some considerable time, and in the interim the US political context could undergo significant alterations.

Here’s the Armed Services Committee Report language—

INTERNET GOVERNANCE

The committee is aware of a recent proposal by the Department of Commerce to start the process of transferring the remaining Department of Commerce-managed Internet Assigned Numbers Authority (IANA) functions to the global multi-stakeholder community. The committee is also aware that such a transition is supported by the Administration, many in industry, and the international community.

The committee urges caution in such discussions to understand the full ramifications of any transition of responsibility, since the United States has played an important role in overseeing the stability of the Internet. As noted in recent testimony before the Committee on the Judiciary of the House of Representatives, “Any pledge, commitment, or oath made by the current ICANN [Internet Corporation for Assigned Names and Numbers] leadership is not binding unless there is some accountability mechanism in place to back up that promise. Until now, the United States has served that role. If the U.S. Government is no longer providing that stability, an alternative mechanism is needed to ensure that ICANN is held accountable to the public interest.” Additionally, as this testimony points out, “U.S. oversight has served as a deterrent to stakeholders, including certain foreign countries, who might otherwise choose to interfere with ICANN’s operations or manipulate the Domain Name Servers for political purposes. For example, a country may want to censor a top-level domain name or have ICANN impose certain restrictions on domain name registries or registrars.”

Because of the Department of Defense’s equities in a secure and transparent Internet governance system, the committee believes it is important to ensure that any new Internet governance construct includes protections for the legacy .mil domains and maintains the associated Internet protocol numbers. Furthermore, the committee believes that any negotiations that occur should include verifiable measures for maintaining a separation between the policymaking and technical operation of root-zone management functions and that such protections should be a red line in interagency discussions and U.S. Government positions.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from the ICA blog at:
www.internetcommerce.org/House_Targets_IANA_Transition

ICA on the Record at ICANN Singapore by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoWe have finally had a chance to review the transcript of the Public Forum with the ICANN Board held on March 27th in Singapore. ICA generally takes advantage of those opportunities for interaction to acquaint the Board with matters of concern to the domain investment community.

Two issues were addressed in our Singapore statement. The first was the attempt by UN-affiliated International Governmental Organizations (IGOs), as well as some International Non-Governmental Organizations (INGOs), to block their acronyms from being available at any new gTLD – a position that could eventually threaten some valuable domains at incumbent gTLDs. Our remarks reiterated support for the unanimously adopted GNSO Council resolution on this matter. Subsequent to the Singapore meeting we filed a comment letter that told ICANN it was time to respond to these unreasonable demands with a firm and responding “No”.

The second matter was cybersquatting at new gTLDs. From its inception ICA’s Code of Conduct has taken a strong stand against intentional trademark infringement. Several domain industry bloggers have noted clearly infringing activity going on at new gTLDs. And one law firm reported in February in regard to the just-launched .Bike gTLD:

[O]f the 20 brands selected for the study, as of February 10, 2014, all 20 were registered as domain names in .BIKE. However, only four of the 20 brands have clearly been registered by the actual brand owner. According to WHOIS data, another three are being held by the registry Donuts, and it is unclear for what purpose—whether as a premium name, as part of a blocking program, or otherwise. The other 13 are all being held by third parties who seemingly have no relation to the brand owner, quite possibly cybersquatters. While the sample size of this study is small and not necessarily statistically significant, it supports the supposition that most bicycle brands either were not aware of the .BIKE launch or did not take protective steps to prevent potential cybersquatting once the launch occurred.

Just after that study was issued I received an unsolicited e-mail from an individual in India offering many new gTLD domains for sale – including formula.bike, a name associated with an Italian manufacturer of specialty racing bike parts.

We don’t yet know the extent of intentional cybersquatting at new gTLDs and whether it is significant, and not every generic word registered at a particular new gTLD is going to meet the dual UDRP/URS standard of bad faith registration and use. We also don’t know if any of these cybersquatted domains is receiving any substantial traffic and thereby generating any type of significant income to the registrant (doubtful); or whether any are being for bad purposes beyond infringement.

What we do know is that such activities are not just stupid because they invite legal action, but that they are wrong. And we know that when UDRP reform is initiated in 2015 certain trademark interests may point to these activities as evidence that allegedly supports changes that would reduce the due process rights of legitimate domain registrants. Ditto for proposed changes to national laws such as the U.S. Anticybersquatting Consumer Protection Act (ACPA).

That’s why it’s important for ICA to get on the record reiterating our condemnation of such infringement and asking what ICANN is doing to monitor and analyze the situation. When we engage in that UDRP review discussion we want no questions raised about the commitment of ICA and its members to respecting trademark law — so that we can better press the point that domain rights and trademark rights should be equitably balanced.

The transcript follows–

 

http://singapore49.icann.org/en/schedule/thu-public-forum/transcript-public-forum-27mar14-en.pdf

 

BILL GRAHAM: Thank you. Next. Mr. Corwin

 

PHILIP CORWIN: Good afternoon. Philip Corwin speaking in my capacity as counsel to

the domain name investors and developers of the Internet Commerce

Association and briefly addressing two issues related to the new TLD

program. The first is the ongoing discussion of the protections for

acronyms of IGOs and INGOs at new TLDs. ICA is strongly in support of

the resolution adopted unanimously by the GNSO council on this issue.

We think it’s important at a time when we’re ‐‐ a multistakeholder

model is being watched by the world — for that resolution to be put into

effect and also to address concerns about the role of governments in a

post‐NTIA environment. I would note that many short acronyms are

extremely valuable domain names. They can be used in a totally noninfringing

fashion and that it’s extremely critical to my members that

there being a meaningful appeals process which is both perceived and

actually provides a fair treatment of both parties.

 

Turning to the second issue, it’s too early to make a judgment but we

have noticed from various analyses and reports that there is

unfortunately some intentional cybersquatting going on at new TLDs.

ICAs Code of Conduct since its inception has strongly condemned that.

We’re monitoring this situation. We’re also monitoring the use of the

URS and so far it does seem to be being used as a narrow supplement to

the UDRP, and we certainly hope that ICANN staff is giving full attention

to this issue because it’s important to the perception of the program

and setting up the environment for the discussion of UDRP reform

which will start next year. Thank you very much.

 

BILL GRAHAM: Thank you. We’ll have a brief presentation on the NGO/INGO names at

the beginning of the next session.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/On_record_at_ICANN_Singapore

“Digital Divide” Domain Tax Advocated at NETmundial Opening Ceremony by Philip Corwin, Internet Commerce Association

Internet Commerce Association logoThe NETmundial meeting in Sao Paulo kicked off on the morning of April 23rd and one of the speakers at its Opening Ceremony proclaimed that the Internet was a curious type of “Public Commons” in which private domain registrants should be obligated to pay a fee to fund access, capacity-building, and general bridging of the Internet gap between the developing and developed world. That proposal for turning ICANN into a species of Internet tax collector and transnational development project fund disburser came from Nnenna Nwakanma, identified on the event agenda as a member of Civil Society from Africa. Her remarks received resounding applause from attendees.

Surprisingly, similar remarks came during the same session from World Wide Web developer Tim Berners Lee, who declared that the Internet had become “an essential public utility” and that ICANN should act in the best interest of the global Internet community – a duty that he linked to spending funds devoted to “closing the digital divide”. And that divide has been growing, even in those developing nations identified with technological and economic growth – according to a new Global Information Technology Report from the World Economic Forum “many large emerging nations such as China, Brazil and India saw their rankings drop”.

For the past few weeks those who expressed concerns that US withdrawal from its IANA counterparty role might result in greater Internet censorship, or even a global Internet tax, have been met with ridicule from some quarters. Perhaps their concerns are not so ridiculous. It’s easy to imagine the rationale for a “modest” $1 annual digital development fee levied on each registered domain, and ICANN might welcome the opportunity to build ties to Governmental Advisory Committee (GAC) member nations by doling out development dollars.

How much could such a $1 fee raise? According to VeriSign’s April 2014 Domain Name Industry Brief there are now 271 million registered domains, of which 123.5 million are ccTLDs operated by individual nations and likely to be excluded from such a fee as ICANN has no direct authority over them. That leaves 147.5 million domains at gTLDs and would yield $147.5 million per year.  Once the precedent is set it’s a simple step to up the levy in future years – crank it up to $5, add in the natural growth in gTLD registrations accelerated by the rollout of more than a thousand new gTLDs, and you can get close to a billion dollars annually without breaking a sweat. That’s a very tempting target, and one that might well be advocated by ICANN’s own GAC at some point – especially if it switches to a majority vote decisional system as an outcome of the Internet governance evolution initiated at NETmundial.

Even more worrisome – the precedent has already been set! Few realize it, but the 2005 .Net registry operator contract between ICANN and VeriSign contained this language levying a 75 cents per .net domain fee for several purposes, one of which was a restricted fund for helping developing nation stakeholders better participate in ICANN :

Registry-Level Transaction Fee. Commencing on 1 July 2005, Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN-accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS.

ICANN mixed that Transaction Fee into its general revenues and never really provided an accounting of how those funds were allocated. Yet the follow-up 2011 .Net agreement contained almost identical language, with an added proviso that ICANN was not required to segregate the funds or establish separate accounts for the designated purposes:

Registry-Level Transaction Fee. Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS; provided, that ICANN will not be required to segregate funds for any such purpose or establish separate accounts for such funds.

Notwithstanding that provision, the ICANN Board committed to an annual accounting when it approved the 2011 .Net contract:

“Whereas, the .NET agreement provides for a US$0.75 registry-level transaction fee, and ICANN has used the funds to support developing country Internet communities to participate in ICANN, enhancing security and stability of the DNS, and for general operating funds. ICANN commits to provide annual reporting on the use of these funds from .NET transaction fees.” http://www.icann.org/en/groups/board/documents/resolutions-24jun11-en.htm#4.rationale

Yet, so far as we can find, ICANN has never provided such annual reports even though the Board committed to them, and the fee is still siphoned into its general funds. That lack of reporting goes to the ongoing problems of ICANN accountability and transparency.

But, getting back to our original point, two speakers at NETmundial opening session suggested that ICANN needs to allocate more funds to closing the digital divide – and ICANN, as we know, gets the vast majority of its funding through the fees paid by domain registrants to registrars and then up-streamed to registries and ICANN. The great majority of gTLD domain registrants reside in the developed world, and the proposal put forward would have them pay a fee to fund projects in the developing world. So the issue of an ICANN-administered “tax” on registrants isn’t that far-fetched after all and does not require a UN takeover to occur. This important issue bears continued close watch by ICA and others.

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Other observations drawn from  observing the NETmundial meeting remotely for more than ten hours on its opening day:

  • For a meeting supposedly conceived to strengthen the private sector-led multistakeholder consensus-based policymaking model, we found it curious that 27 of the 30 speakers at the interminable Welcome Remarks session yesterday morning were from governments or UN agencies — with just 1 each from civil society, the private sector, and academia. Not surprisingly, many of those speakers from governments wanted more government involvement in Internet governance.
  • Notwithstanding the stated desire of the NTIA and ICANN to keep the discussion of the IANA transition confined largely within the ICANN and I-star technical  communities, numerous speakers – including Nellie Kroes of the EU and Brazil President Rousseff – called for all global stakeholders to have input. How that will be handled and how it impacts the transition plan’s development remains to be seen. Further, many speakers said that the September 2015 termination of the current IANA contract should be a decisional deadline, and not the mere goal stressed by NTIA and ICANN in recent Congressional hearings.
  • Despite promises that NSA surveillance would not be discussed, it was raised numerous times in the context of “privacy” and “human rights”. One shot of the meeting room showed numerous attendees holding aloft pictures of Edward Snowden.
  • Likewise, notwithstanding assurances that NETmundial would just produce general principles and a roadmap for the evolution for Internet Governance, numerous speakers have called for at least producing a list of deliverables and a schedule for achieving them.
  • It seems almost certain that the Internet Governance Forum (IGF) process will be strengthened as a result of NETmundial, with that meeting being allocated some future decisional powers. This may be a good thing if it staves off greater UN involvement – and likewise, up to a point, for some of the calls for strengthening the role of the Governmental Advisory Committee (GAC) within ICANN.
  • Net neutrality emerged as a somewhat unexpected issue, probably to the chagrin of the telecommunications firms in attendance.

Finally, the first day’s Fence Straddler Award goes to President Rousseff for her declaration that there was “no opposition” between the government-dominated multilateral model and the private-sector led multistakeholder model. And the MIA Award goes to ICANN CEO Fadi Chehade, who was the only participant in the Opening Ceremony who did not say a word.

As the afternoon session went on, the discussion finally opened up to attendees, who provided their own multiple suggestions for how the conference output document should be amended. That process will continue into NETmundial’s second and final day. Stay tuned.

This article by Philip Corwin from the Internet Commerce Association was sourced with permission from:
www.internetcommerce.org/Digital_Divide_Tax