Should there be cross-ownership between registries and registrars? DAG4 states that applications will not be
considered from ICANN Accredited Registrars or their affiliates or entities controlling 2% or more of any class of security in such a registrar.Acknowledging in a foot note that,“The draft proposed strict limitations represent a default position and GNSO stakeholder-based policy development is encouraged”, ICANN is seeking a solution to enable it to combat bad actor registry operators who allocate valuable domains to associated registrars. Better compliance might be the obvious answer but as ICANN is not yet offering this, the Community in Brussels were offered a number of alternatives.
There was a practical proposal from the so-called JN2 Consortia which suggests that cross-ownership should be restricted to a 15% shareholding except in three cases:
The RACK proposal put forward by a group including Afilias (the registry operator of .info which is owned by a consortium of registrars) proposed a flat limit of 15% on cross ownership with no exceptions which might have merits but felt like incumbent providers setting the terms of entry for new players.
In contrast the Free Trade proposal would eliminate cross ownership restrictions, allowing a registry (e.g. a private brand registry) to own its own registrar – but there would still be a requirement to offer other registrars equal access.
Most worrying of all was the Competition Authority Model which proposes referring applications for TLDs where there is cross-ownership of more than 15% to national competition authorities.
Can ICANN find a solution to this conundrum that does not upset the registry operators and registrars who pay them so much of their revenues? Why does this matter to IP owners? After all even the 2% limit on cross ownership proposed as the default position by ICANN could lead to problems if two other parties have 49% each?
It matters because brand owners seeking to apply must be allowed to place names in their own registries for use by their own staff without going through an expensive third-party registrar (or worse still) several registrars.
Related links:
The Government Advisory Committee has done well in DAG4. Perhaps because they were alarmed at the ability of the GAC to slow the process down but more likely because they recognise the importance of avoiding consumer confusion, the ICANN staff have greatly strengthened measures to protect geographical terms. At the Top Level, any term on the ISO 3166-1 list of country names in both their long and short form (e.g. Afghanistan and “AF”) are excluded from registration in any script whilst the short form (two letter code) is also excluded at the second level. Applicants for terms that match the name of any city where the intention of the applicant is to use the domain in association with the city or a sub-national place name such as a state or province must “enlist the support or obtain the non-objection” of a get a Letter of Endorsement from a government authority. In the case of an application which matches a capital city name, national government endorsement must be obtained. A Geographic Names Panel will determine if a character string is a Geographic Name. If a Government withdraws support after a gTLD has been delegated, a Registry Restrictions Dispute Resolution Procedure will be available. If a registry that matches a Geographic Term is subject to a change of control, prior Government approval will be required.
ICANN undertook to assess the economic impact of its plan to accept applications for an unlimited number of gTLDs two years ago. With earlier reports criticised for being US-centric and compiled in indecent haste, a new study was released on 16 June 2010 compiled by Greg Rosston from Stanford University and Michael Katz from the University of California Berkeley. This new study (An Economic Framework for the Analysis of the Expansion of Generic Top-Level Domain Names - PDF 67 pages) covers three topics:
Rosston and Katz demonstrate a clear understanding of the needs and concerns of IP owners stating, “the biggest likely costs are consumer confusion and trademark protection”. (Valideus sister company Com Laude supplied data on the costs of managing both trademark and domain name portfolios to Rosston & Katz which were obtained from some Com Laude clients). If there is a criticism of the report it is that major conclusions are deferred until the completion of the second study which might include a research project described as follows: “A potentially significant external cost of new gTLDs stems from the need to protect trademarks or brands through the use of defensive registrations. This project would involve estimating the share of organizations or brand names that engage in defensive registrations, as well as the costs incurred by organizations in monitoring domain name registrations and engaging in legal proceedings to protect their brand names and trademarks. The project would evaluate these costs over time, paying particular attention to how those costs have changed with the introduction and changes in the popularity of new domain names, including country codes.”
What ICANN does well is to maintain the stability of the domain name system in the face of an ever-increasing volume of registrations (now 195 million and counting) and attempts to compromise stability. DAG4 tells us that applied-for character strings will be reviewed by a DNS Stability Panel “to determine whether the string creates a condition that adversely affects the throughput, response time, consistency or coherence of responses to internet servers” and that all applicants must describe in detail “additional registry services that are unique to their TLD”. With customary registry services being defined as “Receipt of data from registrars…provision of status information on zone servers…dissemination of TLD zone files…dissemination of information concerning domain name registrations and DNSSEC” this implies that ICANN really is expecting some applicants to deliver the innovation they have heralded. The pre-delegation testing of registries will also now cover DNS infrastructure as well as registry operations whilst ICANN ‘s modelling has shown that it can add 924 character strings to the root zone annually without fear of instability (see the Root Zone Scaling Report of March 2010). ICANN is pressing ahead with its concept of a voluntary High Security Zone for registry operators that “demonstrate and uphold enhanced security-minded practices and policies, though it states that, “its development and operation are beyond the scope of the guidebook”. All applicants must implement DNSSEC and publish a DNSSEC Policy Statement as well as making Zone files available through a standardised process to “credentialed users”
There have been a number of improvements designed to prevent and mitigate malicious conduct – the main improvement in DAG4 is to strengthen the background checks on all applicants “to protect the public interest in the allocation of critical internet resources”. Applicants will now have to make “specific declarations” about their involvement in the domain industry including “intellectual property violations”. The checks will be performed by a third party firm “that can execute these checks based on public information”. The example is given of an applying entity failing because “it has been found liable in a series of cybersquatting proceedings”.
However, there is currently no requirement on registry operators to validate information provided by registrants in whois, to use CAPTCHA to prevent domains being registered by BOTS, to maintain a list of fraudulent IP addresses or to regulate privacy curtains. In Brussels, several law enforcement agencies called for such measures to be applied across all TLDs and received the endorsement of the Government Advisory Council (GAC) provided they can be implemented with respect to “applicable local law”. Paul Hoare of the UK Serious Organised Crime Agency said: “We believe that the industry needs mandatory minimum standards, because otherwise the good practices that some registries and registrars have only displace criminals to those with less strict regimes and less strict audits.”
FBI spokesperson Robert Flaim called for the contracts between ICANN and both registry operators and registrars to be tightened. “Certain individuals very much need privacy, and we respect that. But … law enforcement with due process should be able to trace the proxies” – a suggestion that is unpopular with such operators based outside the USA. Thick whois (where all records are held by the registry operator and not spread across registrars) has been mandated for all new gTLDs but, as the law enforcement specialists stated, the data needs to be accurate, up to date and freely available. ICANN also now promises to “perform regular audits” of applicants as part of its contractual compliance function.
| In the first in a series of short articles exploring the key issues discussed at Brussels, we examine what is perhaps the most contentious issue – trademarks and rights protection mechanisms for gTLDs. Forthcoming articles will examine issues of Malicious conduct, Security and stability, Economic impact, Geographic terms and Vertical integration.
|
 |
Trademark Clearinghouse: ICANN will shortly be posting an RFP for organisations who wish to run its Clearinghouse, which it describes as, “a central repository for information to be authenticated, stored and disseminated pertaining to the rights of trademark holders”. The Clearinghouse will hold a database of verified registered rights. Registry owners must implement either a Sunrise or an IP Claims system. They can pull from the Clearinghouse or have pushed to them lists of identical verified marks (no plurals or hyphens) thus saving the cost of having the same records validated time and again. As proposed by the Implementation Recommendation Team (IRT), the Clearinghouse should include trademarks registered at any national or multi-national registry without discrimination. However, ICANN formed a Special Trademarks Initiative (STI) team, the majority of whom were not practising trade mark attorneys, and asked them to review this proposal. Fearing gaming by speculators who obtained expedited marks in order to participate in earlier RPMs, the STI recommended that the Clearinghouse should exclude trademarks from countries that do not conduct substantive review. Neither the STI nor ICANN defined substantive review. Following a rearguard campaign by many IP organisations, ICANN finessed this debate by proposing that registries must recognise all marks from either “a jurisdiction that conducts substantive examination prior to registration” or that have been “Court or Trademark Clearinghouse validated”. Whilst this may be a practical solution, it does mean that the Clearinghouse will become “the arbiter of the validity of trademarks legitimately obtained”, as WIPO’s Erik Wilbers has said in a letter to ICANN.
URS: The Uniform Rapid Suspension Scheme was designed to tackle what the IRT describes as, “Slam-Dunk cases of cybersquatting” but through is now described as not fit for purpose. Although it can now be used by complainants with trade mark registrations from jurisdictions that conduct substantive examination (again undefined) and those with Clearinghouse validated marks, many issues remain: the burden of proof is higher than the UDRP; it is “Not for any proceeding where there is an open question of fact”; the loser does not pay; the cost has crept up from a recommended $100 to $300; there is no fast-track for defaults; the name is locked until renewal date with the possibility of a one year extension – there is no transfer of property; complaints can be up to 5,000 words long; panellists must be rotated; there is the possibility of an appeal stretching for two years after a decision; worst of all, with the possibility of the respondent applying for an extension to the Response Date, the URS could now take 45 days. This compares poorly with the eUDRP process: the first eUDRP managed through WIPO, Nokia Corporation vs. Jameela Seif took just 35 days between December 2009 and 2010.
The Post Delegation Dispute Resolution Procedure (PDDRP) was designed by the IRT to combat registry owners who act in bad faith, with intent to profit from the systemic registration of infringing domain names or who otherwise use a gTLD for an improper purpose. With the number of gTLD registry owners to increase by a factor of at least 10 and more likely 20 in the first round alone, it is possible that some owners will behave as some bad actor registrars have done, warehousing domains, using aliases to disguise transactions between networks of associated companies, declining to implement UDRP decisions or to maintain accurate whois data. Although the PDDRP as set out in DAG4 allows a trademark owner to instigate a complaint on the basis of infringement on a trade mark, the prospect of monetary damages has been removed. Once again, it is WIPO that is leading the charge to amend the PDDRP: “The scope of the current PDDRP – as limited to affirmative conduct – undermines the intended effect of encouraging responsible TLD management and domain name system credibility”. In a letter to Rod Beckstrom and Peter Dengate Thrush dated 16 June 2010, WIPO calls for “the very real possibility of wilful blindness occurring in the course of the management of the new domains…it is unconstructive to expect trade mark owners to perpetually turn to second-level enforcement in a multi-jurisdictional context. A pro-active approach would be to focus on the design of Safe Harbours – which would not include a sweeping policing duty for registration authorities”.
Start-up Rights Protection Mechanisms: ICANN now mandates that all applicants must implement at a minimum either a Sunrise or a Trademark Claims service during the Transition to Delegation of a character string. There is an encouraging additional comment that, “Registry operators may introduce additional rights protection measures relevant to the particular gTLD”.
ネット空間が大きく変わっています。インターネットのIPアドレスやドメイン名などの各種資源を全世界で調整・管理するICANNがトップレベルドメインの自由化を進めており、ブランド名や都市名にもとづいた新たなジェネリックトップレベルドメイン名（gTLDs）の取得が可能になるからです。ブランド gTLDs、都市gTLDsの開発や取得でコンサルティング業務を展開する英企業、ヴァリデウスのディベロップメント・ディレクター、リズ・ウィリアムズ博士に新たな動きの背景やメリットについて聞きました。
In what may be the last chance for the IP community to comment on matters such as Rights Protection Mechanism (RPMs), registry and registrar accountability (Vertical integration) and other issues, the public comment period on DAG4 only remains open until 21 July 2010. Recent comments have been posted by organisations including WIPO, AIM (European Brands Association), Lego and Arla Foods. All comments are published on ICANN’s site.
Although ICANN analyses all comments, it has been criticised in the past for attaching equal weighting to a submission from an international IP membership organisation representing hundreds of brand owners and to a response from a single individual.
Valideus encourages IP owners to email their views to ICANN 4gtld-guide@icann.org.
A summary of DAG4 and all relevant documents is available on the ICANN site.
You might wish to paraphrase the statement below:
“We are concerned that the introduction of an unlimited number of new gTLDs will lead to a rise in bad faith registration which will impact negatively on intellectual property owners and the consumers around the world who depend on trademarks in the domain name system as signs of authenticity. ICANN’s proposed Rights Protection Measures must be tightened. In particular we recommend that the URS is reviewed again: internet users need a mechanism to take down infringing sites within 14 days. We also urge ICANN to invest in contract compliance to ensure that registry owners and registrars maintain accurate whois and do not warehouse domains. We support WIPO’s call for the PDDRP to be re-engineered”.
The ICANN Brussels meeting, at which Valideus was a silver sponsor, featured a session called, “Brand management in the age of new gTLDs” moderated by Valideus MD Nick Wood, with issues and observations made by a formidable panel of speakers including: |
|
You can listen to an audio podcast of the event (fast forward approx. one minute), read the full transcript and the presentation slides that panel were invited to respond to. We have selected key highlights and thematically grouped them below:
Brand | Marketing and Sales | Trademarks and RPMs | Applying | Registry Operations | Public Interest