This is a guest post By Philip S. Corwin, Esq, Founding Principal, Virtualaw LLC; Of Counsel, Greenberg & Lieberman; and Strategic Advisor, ICANN Sherpa
TheDomains.com publishes Guest Posts from time to time, by well known leaders and authorities in the domain industry. As always Guest Posts are posted in their entirety and unedited:
“”On the afternoon of April 11, 2013, the last day of ICANN’s recent Beijing Meeting, its Governmental Advisory Committee (GAC) delivered a highly detailed 12-page Communique outlining safeguards and other substantial alterations that its constituent governments want implemented before new gTLDs can launch.
The document has implications for every new gTLD applicant, but especially for those seeking gTLD names relating to regulated industries and professions as well as other sensitive categories. Its consideration and implementation-to whatever extent ICANN’s Board decides to accommodate the GAC – may well delay the program for at least several months. And large chunks of it are likely to be adopted – because there is a presumption in favor of ICANN accepting GAC advice, and because ICANN needs at least multi-governmental acquiescence, if not active support, to retain its long-term control over the DNS.”
“The Communique contains GAC advice on the controversial subject of “closed generic” gTLDs.
These are generic, dictionary words in which the applicant/registry operator holds no trademark rights yet proposes that it shall be the sole registrant, thereby excluding all present and future competitors from obtaining a domain address that may be the most relevant to its goods, services, and overall identity. Amazon and Google are the most noted new closed generic gTLD applicants, but companies such as L’Oreal and Richemont have also sought to register generic word, non-brand gTLDs consisting of a key industry term (e.g., .beauty and .jewelry) from which all competitors could be excluded.
On this matter, the GAC advice is simple and clear – a closed generic should only be allowed if it serves the public interest, not just the applicant’s private interest:
For strings representing generic terms, exclusive registry access should serve a public interest goal.
Following receipt of the GAC Communique, ICANN invited all new gTLD applicants to file comments on any aspect of it, with a closing date of May 10th. It also invited the general public to comment on the “safeguard” advice, which includes the “Exclusive Access” directive, with that window closing on June 4th.
It is probable, once all comments are analyzed by staff, that the ICANN Board will respond to the GAC at the next public meeting scheduled for Durban, South Africa in mid-July.
Yet, even while these comment periods remain open, it appears that ICANN may have already accepted the GAC advice on closed generics.
On April 29th ICANN released a revised draft of the New gTLD Registry Agreement (RA) – until this document is finalized no new gTLDs can be added to the Internet’s root zone, because there will not be a standard agreement for a registry operator to sign. Specification 9 of the RA, the “Registry Operator Code of Conduct” (COC), contains a significant modification that shuts an arguable loophole for closed generics and moves ICANN substantially toward the GAC’s position.
Section 6 of the COC contains an exemption provision that was developed in response to concerns of ICANN’s Business Constituency that the Applicant Guidebook did not allow an applicant to operate a .brand gTLD (consisting of a trademarked company name or product) solely for its own use. Section 6 was not altered in the new RA and states in its entirety:
Registry Operator may request an exemption to this Code of Conduct, and such exemption may be granted by ICANN in ICANN’s reasonable discretion, if Registry Operator demonstrates to ICANN’s reasonable satisfaction that (i) all domain name registrations in the TLD are registered to, and maintained by, Registry Operator for its own exclusive use, (ii) Registry Operator does not sell, distribute or transfer control or use of any registrations in the TLD to any third party that is not an Affiliate of Registry Operator, and (iii) application of this Code of Conduct to the TLD is not necessary to protect the public interest. (Emphasis added)
As can be seen, Section 6 contains the same “public interest” standard that the GAC articulated. It says that in deciding whether to grant a COC waiver ICANN must determine that enforcement of the COC is unnecessary for protection of the public interest, while the GAC wants closed generic gTLDs permitted only where ICANN makes an affirmative determination that a particular application serves a public interest goal. So, while the COC exemption and GAC approval standards are not identical they are close, with both based upon a “public interest” standard.
The provision of the COC that closed generic applicants would be seeking an exemption from is Section 1.b, which formerly stated that an applicant registry operator and all its subsidiaries, affiliates, contractors, and all other related entities would not register domain names in its own right, except for names registered through an ICANN accredited registrar that are reasonably necessary for the management, operations and purpose of the TLD.
That provision had been cited by some closed generic applicants as exempting them from any need to seek an ICANN exemption if they simply declared that the “purpose’ of their gTLD was to exclude all other registrants. While many lawyers would cite this as a classic attempt to “have the exception swallow the rule”, the argument was made with a straight face and whether ICANN would buy it remained an open question.
Until now – the revised RA contains a major reconstruction of Section 1.b, deleting the phrase “that are reasonably necessary for the management, operations and purpose of the TLD” and replacing it with new language stating that a registry operator “may withhold from registration or allocate to Registry Operator up to one hundred (100) names pursuant to Section 3.2 of Specification 5”.
Now the cross-referenced Section 3.2 is also an entirely new portion of the RA, and reads:
“Registry Operator may activate in the DNS at All Levels up to one hundred (100) names (plus their IDN variants, where applicable) necessary for the operation or the promotion of the TLD. Registry Operator must act as the Registered Name Holder of such names as that term is defined in the then-current ICANN Registrar Accreditation Agreement (RAA)…At Registry Operator’s discretion and in compliance with all other terms of this Agreement, such names may be released for registration to another person or entity”.
So, read in combination, revised Section 1.b of Specification 9 and new Section 3.2 of Specification 5 allows any gTLD applicant to reserve up to 100 domains necessary for the operation or promotion of the gTLD. “Management” and “purpose” are gone; “promotion” has been added.
These unanticipated modifications make it much more difficult for a closed generic applicant to argue that it can avoid the necessity of applying for a COC exemption – which ICANN will decide under the “public interest” standard discussed above. And even if such a loophole is argued and accepted, 100 domains is likely to be far short of what the applicant envisioned for the scope of its closed generic gTLD – for example, Amazon almost surely intended far more than 100 domains for a proprietary .book.
Now that’s not the end of the story.
ICANN still has to forge some overarching policy position on whether and when a closed generic gTLD does not harm the public interest. That policy might accommodate .brands on the basis of protecting trademark rights at the top level of the DNS, or it might not (the GAC advice mentions no exemption for trademarks consisting of generic words).
Whatever policy is adopted, each closed generic applicant applying for a COC exemption must be judged against it.
If the policy is heavily weighed against closed generic approval, the question will arise as to whether applicants for closed gTLDs who claimed they relied upon an earlier version of the COC will be permitted to alter their applications in the middle of the ongoing evaluation and approval process.”
So the story’s ending is yet to come. But, make no mistake, the COC revision in the latest version of the RA moves ICANN much closer to the GAC position on closed generics — making the public interest the paramount consideration for approval.