Yesterday, the House judiciary committee held a hearing on ICANN’s performance as well as the .sucks gTLD. This followed ICANN’s requests to the US Federal Trade Commission (FTC) and Canada’s Office of Consumer Affairs (OCA) to investigate what it called Vox Populi’s predatory pricing for the .sucks gTLD.
Not impressed
Representative Darrell Issa opened the session with frankly critical comments of .sucks and perhaps even the new gTLDs as a whole.
Referring to .sucks as “legalised extortion”, he asked if, rather than serving a public interest in expanding the name space for users to find appropriate names for their sites, these new gTLDs have instead become a new business model that was never envisioned.
Vox Populi has started an aggressive campaign to publicise the launch of .sucks. Last week, it sparked considerable discussion at INTA’s annual meeting in San Diego where it roamed the streets with an “INTA.sucks” mobile billboard. Vox Populi representatives also handed out .sucks condoms and t-shirts outside the convention centre and had a much-visited booth inside it.
Much of the focus in San Diego and at yesterday’s judiciary hearing centred on the gTLD’s tiered pricing model.
For the sunrise period, Vox Populi placed an MSRP of $2499 on what it considers premium domains, many of which contain trade marks. However, unlike most other gTLDs where the price drops in the general availability phase, these domains are placed in what Vox Populi terms the “market premium” list, where the price stays up even after sunrise ends.
“We have set the price at how we think they will be valued on the market,” Vox Populi CEO John Berard told Managing IP.
What is particularly controversial is the .sucks subsidy programme, which can significantly lower the price for registrants that are unaffiliated with the trade mark owner. According to Berard, the registrars may provide a subsidy to third party applicants who will use a domain to facilitate discussion about a particular topic. The details of the programme are not finalised, but generally that the applicant will have to answer a series of questions about why it deserves a subsidy. The ultimate decision as to whether an applicant will receive the subsidy, he stressed, will lie with the registrar and not Vox Populi.
According to the .sucks website, the goal of the subsidy programme is to drive the price of registering such domains by third parties to below 10 dollars.
“The whole model of brand owners always paying a higher price is emblematic of what is problematic with .sucks,” Elisa Cooper of MarkMonitor told Managing IP.
This subsidy programme also drew critics’ ire at yesterday’s hearing. Representative Jerrold Nadler said that this “tiered pricing scheme which allows critics to register a name for a nominal charge while brand owners pay exorbitant prices to protect their brands looks to many people like extortion”.
Mei-Lan Stark, testifying in her capacity as past president of INTA, also found fault with this model. She argued that it violated the spirit of the registry agreements that governed the new gTLDs and criticised the subsidy as a smokescreen to hide its discriminatory nature.
“The overall pricing scheme is clearly aimed at reaping immense profits based on the fame and value of recognised trade marks,” she testified.
Berard told Managing IP that this is an unfair characterisation. He said that third party registrants do not automatically qualify for a subsidy and again noted that it is the registrar that decides who gets the subsidy.
Furthermore, he noted that there are also non-trade marked terms with premium pricing, such as life.sucks and marriage.sucks.
Berard also the emphasised the free speech aspects of .sucks, saying that the purpose of the programme is to find users who are “passionate” about sparking a discussion about the topic.
ICANN in the crosshairs |
Vox Populi and .sucks were not the only targets at the hearing. In fact, much of the discussion at the hearing concerned ICANN’s governance of the internet, particularly in light of the National Telecommunications and Information Administration (a part of the US Department of Commerce) releasing its oversight of the group. For example, Mei-Lan Stark of INTA said that the .sucks controversy is an example of ICANN’s management failures. Furthermore, she said that the situation would improve if ICANN simply enforced registry agreements and rules already in place. Philip Corwin of the Internet Commerce Association testified that while Congress should not reflexively resist ICANN’s transition from US governmental oversight to a multi-stakeholder governance model, ICANN has not demonstrated the level of transparency and accountability needed to make such a change successful. He also cited the organisation’s response to .sucks as a sign of its need for improvement. “ICANN’s request that the FTC and OCA determine whether the .sucks gTLD business model is illegal is an abdication of responsibility rather than its embrace,” he testified. Chairperson Bob Goodlatte made the same point, saying that “ICANN’s…recent public request to consumer protection officials in the United States and Canada to investigate the applicant that ICANN just awarded the new domain to demonstrates the absurdity and futility of ICANN’s own enforcement processes”. |
Flipping the Trademark Clearinghouse
Critics also accused Vox Populi for abusing tools designed to protect brand owners. Stark testified that Vox Populi’s premium list contains only marks found in the Trademark Clearinghouse (TMCH). She said that such behaviour violates the spirit and intention of the TMCH, which is designed to provide trade mark owners notice of third parties trying to register their marks.
Cooper of MarkMonitor made very much the same point in a letter to Akram Atallah, president of ICANN’s global domains division. Writing as chair of ICANN’s business constituency, she argued that “this approach turns the creation of the TMCH on its head – instead of using the TMCH to promote an efficient approach to dealing with recognised trade marks, it penalises businesses that have chosen to use the process and register their marks in the TMCH”. She further noted that using the TMCH in this manner would violate Vox Populi’s registry agreement with ICANN.
Philip Corwin of the Internet Commerce Association also testified that he believed that entities are abusing the TMCH. He cited an ICANN study showing that as of February, there were around 4 million total registrations in the new gTLDs and 25 million claims notices generated, the warnings that someone is trying to register a domain that matches an entry in the Trademark Clearinghouse.
“In my opinion there were not six times as many attempts to register infringing domain names as there were actual domains registered at that point in time,” he said. “The only explanation that I can get is that some parties- and they may be operators of new registries- began registrations not with the intent of registering the domains but with the intent of getting claim notices and saying: ‘That name is in the Clearinghouse and now I can set a premium price for it’.”
Berard told Managing IP that he strongly disputed this. He said that though .sucks’ premium pricing list does contain trade marks, it was made independent of the TMCH. When asked if Vox Populi or any affiliated third parties employed techniques similar to what Corwin described, he said that he “saw and heard nothing” of the sort.
Not too worried
Berard said that practically nothing said in the hearing was new to him. He pointed to the letter sent by his lawyers at Fish & Richardson to ICANN, arguing that despite ICANN’s complaints and allegations, it has not identified or explained the “manner in which any law might actually have been broken; instead they merely suggest (without explanation or logic) that Vox Populi's pricing may lead to "cybersquatting" that could damage trade mark owners”.
“Watching the hearing just reminded me that Congressional hearings are often more about noise than substance,” he said.
