Internet Commerce Association (ICA) Tells Department of Commerce that USG and GAC Scorecard Goals Could Undermine ICANN’s Multi-Stakeholder Model While Trampling on Registrant Rights

The ICA has just dispatched a letter to Assistant Secretary of Commerce Lawrence Strickling in advance of the talks scheduled in Brussels on February 29-March 1 between ICANN’s Board and its Governmental Advisory Committee (GAC). Our letter expresses strong concerns that the positions being advocated by the U.S. government and the GAC regarding the proposed Final Applicant Guidebook (AG) for new generic Top-Level Domains (gTLDs) would be detrimental to ICANN’s multi-stakeholder policy process and would undermine the rights of legitimate registrants at new gTLDs. ICA believes that wholesale acquiescence by ICANN’s Board to the GAC “scorecard” would set a very undesirable precedent and convert the GAC into a mini-UN exercising effective veto power on ICANN policies. The letter also notes that the GAC’s proposed changes to the new Uniform Rapid Suspension (URS) mechanism are so unbalanced as to eviscerate registrant rights while doing serious harm to the economic prospects of all new gTLDs, stating, “We seriously doubt that any informed prospective registrant would voluntarily choose to subject themselves to a rights protection scheme so substantially biased against them as compared to the UDRP available at incumbent gTLDs.”

ICA will be monitoring the meeting in Brussels and plans to be present at the follow-up consultation scheduled for March 17th during the ICANN meeting in San Francisco. And of course ICA will continue to speak out and work against any significant alteration of the balanced rights protection measures that are currently in the proposed AG.

The full text of the letter follows.

* * *

BUTERA & ANDREWS
Attorneys at Law
1301 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-1701
202-347-6875
Philip S. Corwin, Partner
[email protected]

February 24, 2011

Honorable Lawrence E. Strickling
Assistant Secretary of Commerce for Communications and Information
U.S. Department of Commerce
National Telecommunications and Information Administration
1401 Constitution Avenue, NW
Room 4898
Washington, DC 20230

Dear Secretary Strickling:

I am writing on behalf of the Internet Commerce Association (ICA) in regard to the upcoming discussions that will take place between the ICANN Board and the Governmental Advisory Committee (GAC) in Brussels, Belgium on February 28-March 1, as well as the formal consultation scheduled to take place between them during the ICANN meeting in San Francisco on March 17.

ICA is a not-for-profit trade association representing the domain name industry, including domain registrants, domain marketplaces, and direct search providers. Its membership is composed of domain name registrants who invest in domain names (DNs) and develop the associated websites, as well as the companies that serve them. All of these entities, both individuals and companies, qualify as small businesses. Despite the relatively small size of their organizations, ICA’s members collectively own or manage approximately ten percent of all currently registered generic domain names.

The purpose of this letter is to raise two important considerations prior to U.S. participation in those upcoming meetings:

• The general positions taken by the U.S. Government (USG) in its proposed “scorecard” for the meetings - now incorporated within the GAC’s indicative scorecard, which also contains additional proposals for significant alterations of the (Final Applicant Guidebook for new gTLDs (AG) - could have a deleterious impact on ICANN’s unique functioning as a non-profit, private sector-led organization developing policy through a bottom-up consensus process. We are fearful that the upcoming deliberations could transform the GAC from an advisory body having a defined role in the review process established under the Affirmation of Commitments (AOC) into one exercising an effective veto over decisions arrived at through ICANN’s multi-stakeholder policy development process. Quite simply, for the Board to now acquiesce to any substantial number of the long and broad list of proposed AG changes would set the precedent that the GAC can intervene in any ICANN policy process, even at a near-final stage, and require massive alterations at odds with ICANN community consensus reached in its internal policy development process. We believe it would be very unfortunate if the GAC became, in effect, a mini-UN within ICANN as this would tend to elevate political considerations above other important criteria in ICANN’s policy process.
• The specific positions taken by the U.S. government and the GAC on rights protection mechanisms are at strong odds with the balanced resolution contained in the now-pending AG, and even introduce concepts that have never been advanced prior to this date. We would urge that the USG and the GAC reconsider these positions and instead support and participate in the comprehensive process for UDRP reform recently initiated by ICANN’s lead policymaking body, the Generic Names Supporting Organization (GNSO).

Proper Role of the GAC

Having just reviewed your Keynote Remarks delivered on February 14th at the Silicon Flatirons Conference in Boulder, Colorado, we are well aware of your personal commitment, and that of the Commerce Department and the Administration, to ICANN’s multi-stakeholder model, and of the delicate balance involved in convincing governments that they can play a meaningful role within that model and thereby achieve the “buy-in” necessary to deflect the forces that seek to replace ICANN with a government-dominated Internet governance body. We applaud your efforts in that regard. ICA also shares the concerns expressed by the USG, the GAC, and others that ICANN has not fully articulated convincing rationales for accepting an unlimited number of applications for new gTLDs, and that it has often fallen short in fully explaining decisions on key issues in the AG. Nonetheless, the process for developing the AG has been largely open and transparent, with all important issues receiving extended debate and discussion over several years.

While we recognize that the USG terminated the Joint Project Agreement (JPA) during the time that the AG was being developed, and that the GAC’s role in ICANN oversight is enhanced under the AOC, it nonetheless remains an advisory organization under the revised oversight arrangement. The positions taken by the USG could, we believe, lead to an unfortunate transformation of that role. If ICANN’s Board were to acquiesce to those positions it would not only mark the end of a new gTLD program that envisions a largely entrepreneurial approach to applications and approvals, but the practical end of ICANN as a private sector-led entity in which policy is developed through a bottom-up consensus process. While ICA and others have sometimes criticized ICANN’s fidelity to that model, we continue to believe it is the right approach and that the goal should be to improve ICANN’s unique role and functioning as established by the USG when it launched ICANN, not to discard it—and it is clear that you and the Commerce Department share that perspective .Likewise, in her February 15th speech on “Internet Rights and Wrongs”, Secretary of State Clinton declared, “And because the internet must work evenly and reliably for it to have value, we support the multi-stakeholder system that governs the internet today, which has consistently kept it up and running through all manner of interruptions across networks, borders, and regions.”

That potential transformation of the GAC’s role could result not just from the wholesale reopening of a large number of generally settled issues addressed by the AG, but by some of the specific positions advocated by the USG and GAC. In particular, proposed review by governments, through the GAC, of all new gTLD applications—with any GAC member able to raise an objection to a proposed string “for any reason”—would appear to give inordinate power to individual governments, or governments acting collectively, to quash proposed gTLDs. It would also mean that any business organization which doesn’t think its objection to a proposed string will prevail under the standard criteria and procedure will seek to have a government object on its behalf, given that almost all government objections could constitute a de facto veto. As proposed by the GAC, the objection of a single nation would then lead to consideration by the entire GAC of advice to provide to the ICANN Board, leading to the possibility of extended delay in an application’s consideration if the GAC is unable to reach consensus. And if it did reach consensus to object, for any reason, that proposed string would likely be terminated. As you stated in your Boulder remarks, “If the GAC reaches a consensus view to object to a particular application, that view will be submitted to the Board. The Board…would have little choice but to reject the application.” (Emphasis added)

Other proposals related to “community-based strings”, and for extensive criteria to weigh the costs and benefits of every gTLD application, would further enhance the review powers of governments and create such substantial uncertainty about the prospects of approval as to discourage many applications from ever being submitted given the substantial time and capital resources that must be put at risk. In particular, the GAC recommendation that applications for any proposed strings ” that refer to particular sectors, such as those subject to national regulation (such as .bank, .pharmacy) or those that describe or are targeted to a population or industry that is vulnerable to online fraud or abuse, should also be considered “community-based” strings” so expands that category as to make it almost unrecognizable in our highly regulated global economy, and with almost any new gTLD being marketed to at least one population subset that may be vulnerable to online “abuse”. This vast expansion of the category of community-based strings is particularly troubling given the GAC’s demand that governments be able to object to them, for any reason, at no cost.

And, as next described, the positions taken by the USG and GAC on rights protections would not only rewrite adopted positions advocated by intellectual property interests, but would introduce provisions that even they thought inappropriate and overreaching during the policy development process. In this regard, while we recognize that governments have legitimate interests in assuring robust intellectual property protections, it seems clear that the GAC positions on rights protections have resulted largely from intensive lobbying of GAC members conducted by trademark interests who were dissatisfied with the results of a long and considered multi-stakeholder consensus policy development process and now seek to have the GAC intervene to rewrite that consensus in an entirely one-sided manner. Such action does not uphold the multi-stakeholder model but severely undermines it.

Trademark Protections

ICA supports strong but balanced rights protections. Its member Code of Conduct takes a strong stand against “cybersquatting”, with the relevant provision stating:

Protection of Intellectual Property Rights: A registrant shall follow accepted trademark law and respect the brands and trademarks of others. Members will not intentionally and in bad faith register and use a domain name that is identical or confusingly similar to a trademark or service mark. Registrants shall respond promptly to legitimate disputes relating to alleged infringement of intellectual property rights.

In this spirit, ICA has supported action by ICANN to curb practices that may abet cybersquatting, such as successful measures undertaken by ICANN that have effectively eliminated abusive domain “tasting”. We have also supported a balanced approach to trademark protection that has led to the incorporation of new consensus rights protection measures in the pending final AG—and it must be remembered that, whatever their alleged shortcomings, these new protections go far beyond what is available in incumbent gTLDs.

As you are surely aware, the contentious issues involved with rights protections for new gTLDs simmered, and sometimes boiled over, on ICANN’s front burner throughout 2009. The Intellectual Property Constituency (IPC) was asked by ICANN to create an Implementation Recommendation Team (IRT) to suggest a protective regime. ICA and others questioned the IRT’s membership and manner of operation, and took strong exception to a number of its recommendations. The IRT report was unable to achieve consensus support within ICANN, so in late 2009 the Board asked the Generic Names Supporting Organization (GNSO), ICANN’s lead policy group, to seek consensus. The GNSO in turn created the Special Trademark Issues—Recommendation Team (STI-RT) which, quite remarkably, was able to arrive at unanimous consensus within a few short weeks, with the full participation of the IPC. The STI-RT’s report was adopted by ICANN’s Board and now essentially constitutes the rights protection provisions of the AG. ICANN has been on record that the trademark protections in the AG are largely closed, although the Board will consider revisions that “improve” their implementation. As our further discussion documents, the statement in the GAC scorecard that “These changes would bring the URS back into line with its original objectives as agreed by the IRT and STI” is simply incorrect, as the USG and GAC proposals for altering the URS propose concepts that were explicitly rejected by the IRT; as the current AG closely incorporates the final work product of the STI-RT; and as new concepts have been placed on the table that have never been the subject of any prior discussion during the AG’s development.

The briefing paper on Protection of Rights Owners just published by ICANN in preparation for the Brussels meeting correctly notes that the current version of the URS varies somewhat from the original version proposed by the IRT because “A compromise was necessary to balance the rights of trademark holders and the rights of legitimate registrants.” The ICA worked long and hard, and in good faith, along with many other members of the ICANN community to achieve a balanced compromise that respects the rights of all parties. That briefing document also correctly notes that many of the trademark protection measures that the GAC now finds fault with—such as the “clear and convincing” evidentiary standard for domains to be suspended under Uniform Rapid Suspension (URS), and the restriction to “exact matches” for names to be registered with the Trademark Clearinghouse—came directly from the IRT. That is, on these issues, the current provisions in the AG fully reflect the original recommendations of the IPC/IRT, and they should surely not be subject to revision at this late date. It is clear that the GAC positions on these matters are not rights-balancing but instead lean heavily toward the wish list of trademark holders—the GAC scorecard pointedly notes that “Surveys and consultations undertaken by GAC representatives show that few in-house trade mark counsel believe that the proposed URS system in the final DAG provides a cost effective, expedited process in clear cut cases of trade mark abuse.”, making quite clear that the GAC has informed itself by the views of only one party to the debate.

While the GAC has sought to revisit issues that reflect the original position of the IPC, the USG’s and GAC’s “scorecards” raise issues that were never on the table for discussion at any time through the AG development process. In regard to the proposed Uniform Rapid Suspension (URS) mechanism, the proposed U.S. and GAC scorecards advocate that ICANN instruct its staff to alter the AG to add a “loser pays” model applicable to domain name registrants, and include the ability to transfer a domain name so that the complainant is not forced to pursue a further UDRP proceeding to secure the transfer. But these two proposals were a bridge too far even for the IRT, can in no way be characterized as mere “improvements” to the current AG rights protection provisions, and would be highly detrimental to registrant rights. They are in fact grossly imbalanced.

A “loser pays” regime would give even more power to the large corporate interests who generally initiate UDRPs and would likely be the main users of the URS. Individual registrants already face a substantial economic disparity when they consider contesting a UDRP. A “loser pays” regime would have a broad chilling effect on domain registrations, as a registrant would face the possibility of paying a complainants’ URS fees and its legal fees not just in regard to exact trademarks but to unlimited variants of those marks (when considered in combination with the USG and GAC positions on the Trademark Clearinghouse).

The IRT Report was quite clear in its rejection of a “loser pays” model, stating:A number of comments were submitted requesting a loser-pays system. The IRT considered a variety of situations and did not feel that this type of system can be implemented throughout the URS.

Likewise, the IRT emphasized throughout the process that the URS was being proposed as a supplement to, and not a substitute for, the UDRP—and that a losing registrant would face domain suspension but not transfer. As described in the IRT Report:The URS will provide a low-cost and rapid means for taking down infringing domain name registrations, yet preserving a registrant’s right to a hearing and/or appeal. In addition, the URS does not result in the transfer or cancellation of a domain name registration. Rather domain name registrations found to be violating a brand owner’s rights will be placed in a frozen state, for the life of the registration, and only will resolve to a specific error webpage. (Emphasis added)

A footnote in the IRT Report further explained its reasoning:The IRT received comments relating to the transfer of domains as a possible remedy of the URS. After much consideration the IRT decided against including transfer as a remedy since transfer as a remedy is already available in the UDRP and under applicable national law, such as the Anti-Cybersquatting Consumer Protection Act (“ACPA”) in the United States. The URS is foreseen as just one of the tools available to brand owners for dealing with brand abuse in the domain name system. By keeping the remedy of the URS to 1) locking of the domain registration and 2) taking down the associated harmful use, the URS can remain quick while still balancing the right of the registrant by not transferring the property during an expedited process. In leaving transfer as a remedy to the UDRP and ACPA, the URS fulfills its purpose of becoming an addition to the existing available mechanisms without displacing the UDRP or ACPA. (Emphasis added)

By now proposing to make domain transfers available through the URS, the USG and GAC are essentially advocating that the URS displace both the UDRP and national laws such as ACPA. The GAC scorecard states, “A successful complainant should have the right of first refusal for transfer of the disputed domain name after the suspension period so that the complainant is not forced to pursue a UDRP proceeding to secure a transfer.” This would not only overturn the entire ICANN policymaking process that has resulted in the current AG provisions, but would thoroughly undermine the prospects for well-considered and balanced UDRP reform. Ironically, the GNSO approved a Motion to initiate an Issues Report on the state of the UDRP on February 3, 2011 that will be the first step in such a reform process.

The proposed transformation of the URS into a substitute for a UDRP action is particularly troubling in light of other GAC recommendations that —

• the cost of filing a URS action be lowered to a range of $200-$300
• the maximum length of complaint text be shortened from 5,000 words to 500
• the evidentiary standard be lowered and made identical to that for a UDRP action
• the URS should go beyond exact matches of marks to at least include a mark plus any other generic word
• the “bad faith” requirement be deleted, and
• a registrant who has lost five or more URS complaints lose all future right to respond to any subsequent URS filing.

Cumulatively, these changes would place a heavy thumb on the scales of justice in favor of URS complainants and encourage large numbers of low-cost, minimum due process URS filings as a substitute for a UDRP arbitration system that, whatever its shortcomings, affords some measure of protection and predictability to registrant rights. They would also, in some instances, place ICANN in the position of not protecting rights but creating rights that have no basis in evolving online trademark law. Given the substantial bias toward complainants being proposed, it is particularly troubling to see it advocated that some registrants might be stripped of all future right to respond to any URS complaint brought against them, no matter how dubious its merits.

The USG and GAC should consider that wholesale adoption of these recommendations would not only be grossly unfair to registrants, and subvert the UDRP reform process at its inception, but could do serious harm to the economic prospects of all new gTLDs. We seriously doubt that any informed prospective registrant would voluntarily choose to subject themselves to a rights protection scheme so substantially biased against them as compared to the UDRP available at incumbent gTLDs.

The USG recommendations on the Trademark Clearinghouse also raise substantial concerns, especially as a listing in the Clearinghouse could be the precursor to a slam-dunk URS decision favoring the complainant. Those recommendations, now reflected in the GAC scorecard, include:

• Delete the definition of “substantive evaluation” to make it clear that any trademark registration, regardless of whether examined on substantive or relative grounds, can qualify for participation in the pre-launch sunrise mechanisms.
• Expand the Trademark Clearinghouse to cover “trademark + keyword” or typographical variations specified by the rights holder.

The first recommendation, which makes Clearinghouse listing available to any registration, regardless of examination procedures, would be likely to dramatically increase the number of listed marks while diluting their overall quality and raising questions about their entitlement to protective rights.

But the second point is even more worrisome. The GAC scorecard now reflects this recommendation in its request to allow all “typographical variations identified by the rights holder”. Allowing rights holders to specify the unlimited typographical variations of a mark that can be registered in the Clearinghouse will likely lead in many instances to the registration of hundreds or even thousands of variations of a single mark, resulting in potential URS losses for domains that are multiple degrees of separation away from the actual mark and that are not being used for a purpose that is in any way similar to the product and service associated with the mark. We believe that the degree of variation of a mark that qualifies as being “confusingly similar” is a complex matter that should be left to consideration in the UDRP reform process.

As for allowing registration of “trademark+keyword” (or trademark plus “key terms associated with goods or services identified by the mark”, as stated in the GAC scorecard) , we are unclear as to exactly what this means—but it could result in the trademark protection regime for new gTLDs nullify U.S. and E.U. court decisions that have allowed search engines such as Google to sell trademarks as keywords, as well as overturn recent UDRP decisions that allowed the unauthorized use of a trademark as part of a domain name where the domain was associated with a completely legal business service legitimately directed to the trademarked activity. ICA has proposed that the UDRP be brought into alignment with evolving online trademark law, while these USG and GAC proposals could result in them inhabiting separate and very unequal universes.

Summing up, we are dismayed that the USG and GAC have taken positions which go far beyond those advanced by trademark interests during the entire development of rights protection provisions of the AG. If adopted, these positions would undermine and delegitimize a meaningful UDRP reform process while casting aside the balanced rights protections measures now contained in the AG.

On January 7th of this year, responding to a request by the Patent and Trademark Office (PTO) regarding abusive litigation tactics employed by some trademark interests, ICA filed a comment letter urging “the Department of Commerce, including both USPTO and NTIA, to support efforts to undertake comprehensive and balanced UDRP reform by ICANN. Such reform should further the legitimate rights of both complainants and registrants.” In the spirit of that request, we respectfully urge the USG and your negotiating team in Brussels and San Francisco to reconsider the positions taken in the proposed USG and GAC scorecards on rights protections, to only advocate actual technical improvements of the existing rights protection mechanisms contained in the AG, and to urge ICANN and all concerned parties to engage in a meaningful and balanced process of UDRP reform.

Conclusion

Thank you for your consideration of the views expressed in this letter. While we clearly have marked differences of opinion regarding the upcoming meetings between the Board and GAC, we appreciate the open and candid lines of communication we have enjoyed with you and your able staff and look forward to continued dialogue and cooperation into the future.

Sincerely,
Philip S. Corwin
Counsel, Internet Commerce Association