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The launch of .web top-level domain is once again at risk of being delayed by baseless procedural maneuvering.
On May 2, the Internet Corporation for Assigned Names and Numbers (ICANN) Board of Directors posted a decision on the .web matter from its April 30 meeting, which found “that NDC (Nu Dotco LLC) did not violate the Guidebook or the Auction Rules” and directed ICANN “to continue processing NDC’s .web application,” clearing the way for the delegation of .web. ICANN later posted a preliminary report from this meeting showing that the Board vote on the .web decision was without objection.
Less than 24 hours later, however, Altanovo (formerly Afilias) – a losing bidder whose repeatedly rejected claims already have delayed the delegation of .web for more than six years – dusted off its playbook from 2018 by filing yet another ICANN Cooperative Engagement Process (CEP), beginning the cycle of another independent review of the Board’s decision, which last time cost millions of dollars and resulted in years of delay.
Under ICANN rules, a CEP is intended to be a non-binding process designed to efficiently resolve or narrow disputes before the initiation of an Independent Review Process (IRP). ICANN places further actions on hold while a CEP is pending. It’s an important and worthwhile aspect of the multistakeholder process…when used in good faith.
But that does not appear to be what is happening here. Altanovo and its backers initiated this repeat CEP despite the fact that it lost a fair, ICANN-sponsored auction; lost, in every important respect, the IRP; lost its application for reconsideration of the IRP (which it was sanctioned for filing, and which was determined to be frivolous by the IRP panel); and has now lost before the ICANN Board.
The Board’s decision expressly found that these disputes “have delayed the delegation of .web for more than six years” and already cost each of the parties, including ICANN, “millions of dollars in legal fees.”
Further delay appears to be the only goal of this second CEP – and any follow-on IRP – because no one could conclude in good faith that an IRP panel would find that the thorough process and decision on .web established in the Board’s resolutions and preliminary report violated ICANN’s bylaws. At the end of the day, all that will be accomplished by this second CEP and a second IRP is continued delay, and delay for delay’s sake amounts to an abuse of process that threatens to undermine the multistakeholder processes and the rights of NDC and Verisign.
ICANN will, no doubt, follow its processes for resolving the CEP and any further procedural maneuvers attempted by Altanovo. But, given Altanovo’s track record of losses, delays, and frivolous maneuvering since the 2016 .web auction, a point has been reached when equity demands that this abuse of process not be allowed to thwart NDC’s right, as determined by the Board, to move ahead on its .web application.
The post Will Altanovo’s Maneuvering Continue to Delay .web? appeared first on Verisign Blog.
The .web Independent Review Process (IRP) Panel issued a Final Decision six months ago, in May 2021. Immediately thereafter, the claimant, Afilias Domains No. 3 Limited (now a shell entity known as AltaNovo Domains Limited), filed an application seeking reconsideration of the Final Decision under Rule 33 of the arbitration rules. Rule 33 allows for the clarification of an ambiguous ruling and allows the Panel the opportunity to supplement its decision if it inadvertently failed to consider a claim or defense, but specifically does not permit wholesale reconsideration of a final decision. The problem for Afilias’ application, as we said at the time, was that it sought exactly that.
The Panel ruled on Afilias’ application on Dec. 21, 2021. In this latest ruling, the Panel not only rejected Afilias’ application in its entirety, but went further and sanctioned Afilias for having filed it in the first place. Quoting from the ruling:
In the opinion of the Panel, under the guise of seeking an additional decision, the Application is seeking reconsideration of core elements of the Final Decision. Likewise, under the guise of seeking interpretation, the Application is requesting additional declarations and advisory opinions on a number of questions, some of which had not been discussed in the proceedings leading to the Final Decision.
In such circumstances, the Panel cannot escape the conclusion that the Application is “frivolous” in the sense of it “having no sound basis (as in fact or law).” This finding suffices to entitle [ICANN] to the cost shifting decision it is seeking…the Panel hereby unanimously…Grants [ICANN’s] request that the Panel shift liability for the legal fees incurred by [ICANN] in connection with the Application, fixes at US $236,884.39 the amount of the legal fees to be reimbursed to [ICANN] by [Afilias]…and orders [Afilias] to pay this amount to [ICANN] within thirty (30) days….
In light of the Panel’s finding that Afililas’ Rule 33 application was so improper and frivolous as to be sanctionable, a serious question arises about the motives in filing it. Reading the history of the .web proceedings, one possible motivation is becoming more clear. The community will recall that, five years ago, Donuts (through its wholly-owned subsidiary Ruby Glen) failed in its bid to enjoin the .web auction when a federal court rejected false allegations that Nu Dot Co (NDC) had failed to disclose an ownership change. After the auction was conducted, Afilias then picked up the litigation baton from Donuts. Afilias’ IRP complaint demanded that the arbitration Panel nullify the auction results, and award .web to itself, thereby bypassing ICANN completely. In the May 2021 Final Decision the IRP Panel gave an unsurprising but firm “no” to Afilias’ request to supplant ICANN’s role, and instead directed ICANN’s Board to review the complaints about the conduct of the .web contention set members and then make a determination on delegation.
A result of this five-year battle has been to prevent ICANN from passing judgment on the .web situation. These proceedings have unsuccessfully sought to have courts and arbitrators stand in the shoes of ICANN, rather than letting ICANN discharge its mandated duty to determine what, if anything, should be done in response to the allegations regarding the pre-auction conduct of the contention set. This conduct includes Afilias’ own wrongdoing in violating the pre-auction communications blackout imposed in the Auction Rules. That misconduct is set forth in a July 23, 2021 letter by NDC to ICANN, since published by ICANN, containing written proof of Afilias’ violation of the auction rules. In its Dec. 21 ruling, the Panel made it unmistakably clear that it is ICANN – not a judge or a panel of arbitrators – who must first review all allegations of misconduct by the contention set, including the powerful evidence indicating that it is Afilias’ .web application, not NDC’s, that should be disqualified.
If Afilias’ motivation has been to avoid ICANN’s scrutiny of its own pre-auction misconduct, especially after exiting the registry business when it appears that its only significant asset is the .web application itself, then what we should expect to see next is for Afilias/AltaNovo to manufacture another delaying attack on the Final Decision. Perhaps this is why its litigation counsel has already written ICANN threatening to continue litigation “in all available fora whether within or outside of the United States of America.…”
It is long past time to put an end to this five-year campaign, which has interfered with ICANN’s duty to decide on the delegation of .web, harming the interests of the broader internet community. The new ruling obliges ICANN to take a decisive step in that direction.
The post IRP Panel Sanctions Afilias, Clears the Way for ICANN to Decide .web Disputes appeared first on Verisign Blog.
As I noted on May 26, the final decision issued on May 20 in the Independent Review Process (IRP) brought by Afilias against the Internet Corporation for Assigned Names and Numbers (ICANN) rejected Afilias’ petition to nullify the results of the public auction for .WEB, and it further rejected Afilias’ demand to have it be awarded .WEB (at a price substantially lower than the winning bid). Instead, as we urged, the IRP Panel determined that the ICANN Board should move forward with reviewing the objections made about .WEB, and to make a decision on delegation thereafter.
Afilias and its counsel both issued press releases claiming victory in an attempt to put a positive spin on the decision. In contrast to this public position, Afilias then quickly filed a 68-page application asking the Panel to reverse its decision. This application is, however, not permitted by the arbitration rules – which expressly prohibit such requests for “do overs.”
In addition to Afilias’ facially improper application, there is an even more serious instance of rule-breaking now described in a July 23 letter from Nu Dot Co (NDC) to ICANN. This letter sets out in considerable detail how Afilias engaged in prohibited conduct during the blackout period immediately before the .WEB auction in 2016, in violation of the auction rules. The letter shows how this rule violation is more than just a technicality; it was part of a broader scheme to rig the auction. The attachments to the letter shed light on how, during the blackout period, Afilias offered NDC money to stop ICANN’s public auction in favor of a private process – which would in turn deny the broader internet community the benefit of the proceeds of a public auction.
Afilias’ latest application to reverse the Panel’s decision, like its pre-auction misconduct 5 years ago, has only led to unnecessary delay of the delegation of .WEB. It is long past time for this multi-year campaign to come to an end. The Panel’s unanimous ruling makes clear that it strongly agrees.
The post Afilias’ Rule Violations Continue to Delay .WEB appeared first on Verisign Blog.
On Thursday, May 20, a final decision was issued in the Independent Review Process (IRP) brought by Afilias against the Internet Corporation for Assigned Names and Numbers (ICANN), rejecting Afilias’ petition to nullify the results of the July 27, 2016 public auction for the .WEB new generic top level domain (gTLD) and to award .WEB to Afilias at a substantially lower, non-competitive price. Nu Dotco, LLC (NDC) submitted the highest bid at the auction and was declared the winner, over Afilias’ lower, losing bid. Despite Afilias’ repeated objections to participation by NDC or Verisign in the IRP, the Panel ordered that NDC and Verisign could participate in the IRP in a limited way each as amicus curiae.
Consistent with NDC, Verisign and ICANN’s position in the IRP, the Order dismisses “the Claimant’s [Afilias’] request that Respondent [ICANN] be ordered by the Panel to disqualify NDC’s bid for .WEB, proceed with contracting the Registry Agreement for .WEB with the Claimant in accordance with the New gTLD Program Rules, and specify the bid price to be paid by the Claimant.” Contrary to Afilias’ position, all objections to the auction are referred to ICANN for determination. This includes Afilias’ objections as well as objections by NDC that Afilias violated the auction rules by engaging in secret discussions during the Blackout Period under the Program Rules.
Afilias’ claims for relief were based on its allegation that NDC violated the New gTLD Program Rules by entering into an agreement with Verisign, under which Verisign provided funds for NDC’s participation in the .WEB auction in exchange for NDC’s commitment, if it prevailed at the auction and entered into a registry agreement with ICANN, to assign its .WEB registry agreement to Verisign upon ICANN’s consent to the assignment. As the Panel determined, the relief requested by Afilias far exceeded the scope of proper IRP relief provided for in ICANN’s Bylaws, which limit an IRP to a determination whether or not ICANN has exceeded its mission or otherwise failed to comply with its Articles of Incorporation and Bylaws.
Issued two and a half years after Afilias initiated its IRP, the Panel’s decision unequivocally rejects Afilias’ attempt to misuse the IRP to rule on claims of NDC or Verisign misconduct or obtain the .WEB gTLD for itself despite its losing bid. The Panel held that it is for ICANN, which has the requisite knowledge, expertise, and experience, to determine whether NDC’s contract with Verisign violated ICANN’s Program Rules. The Panel further determined that it would be improper for the Panel to dictate what should be the consequences of an alleged violation of the rules contained in the gTLD Applicant Guidebook, if any took place. The Panel therefore denied Afilias’ requests for a binding declaration that ICANN must disqualify NDC’s bid for violating the Guidebook rules and award .WEB to Afilias.
Despite pursuing its claims in the IRP for over two years — at a cost of millions of dollars — Afilias failed to offer any evidence to support its allegations that NDC improperly failed to update its application and/or assigned its application to Verisign. Instead, the evidence was to the contrary. Indeed, Afilias failed to offer testimony from a single Afilias witness during the hearing on the merits, including witnesses with direct knowledge of relevant events and industry practices. It is apparent that Afilias failed to call as witnesses any of its own officers or employees because, testifying under penalty of perjury, they would have been forced to contradict the false allegations advanced by Afilias during the IRP. By contrast, ICANN, NDC and Verisign each supported their respective positions appropriately by calling witnesses to testify and be subject to cross-examination by the three-arbitrator panel and Afilias, under oath, with respect to the facts refuting Afilias’ claims.
Afilias also argued in the IRP that ICANN is a competition regulator and that ICANN’s commitment, contained in its Bylaws, to promote competition required ICANN to disqualify NDC’s bid for the .WEB gTLD because NDC’s contract with Verisign may lead to Verisign’s operation of .WEB. The Panel rejected Afilias’ claim, agreeing with ICANN and Verisign that “ICANN does not have the power, authority, or expertise to act as a competition regulator by challenging or policing anticompetitive transactions or conduct.” The Panel found ICANN’s evidence “compelling” that it fulfills its mission to promote competition through the expansion of the domain name space and facilitation of innovative approaches to the delivery of domain name registry services, not by acting as an antitrust regulator. The Panel quoted Afilias’ own statements to this effect, which were made outside of the IRP proceedings when Afilias had different interests.
Although the Panel rejected Afilias’ Guidebook and competition claims, it did find that the manner in which ICANN addressed complaints about the .WEB matter did not meet all of the commitments in its Bylaws. But even so, Afilias was awarded only a small portion of the legal fees it hoped to recover from ICANN.
It is now up to ICANN to move forward expeditiously to determine, consistent with its Bylaws, the validity of any objections under the New gTLD Program Rules in connection with the .WEB auction, including NDC and Verisign’s position that Afilias should be disqualified from making any further objections to NDC’s application.
As Verisign and NDC pointed out in 2016, the evidence during the IRP establishes that collusive conduct by Afilias in connection with the auction violated the Guidebook. The Guidebook and Auction Rules both prohibit applicants within a contention set from discussing “bidding strategies” or “settlement” during a designated Blackout Period in advance of an auction. Violation of the Blackout Period is a “serious violation” of ICANN’s rules and may result in forfeiture of an applicant’s application. The evidence adduced in the IRP proves that Afilias committed such violations and should be disqualified. On July 22, just four days before the public ICANN auction for .WEB, Afilias contacted NDC, following Afilias’ discussions with other applicants, to try to negotiate a private auction if ICANN would delay the public auction. Afilias knew the Blackout Period was in effect, but nonetheless violated it in an attempt to persuade NDC to participate in a private auction. Under the settlement Afilias proposed, Afilias would make millions of dollars even if it lost the auction, rather than auction proceeds being used for the internet community through the investment of such proceeds by ICANN as determined by the community.
All of the issues raised during the IRP were the subject of extensive briefing, evidentiary submissions and live testimony during the hearing on the merits, providing ICANN with a substantial record on which to render a determination with respect to .WEB and proceed forward with delegation of the new gTLD. Verisign stands ready to assist ICANN in any way we can to quickly resolve this matter so that domain names within the .WEB gTLD can finally be made available to businesses and consumers.
As a final observation: Afilias no longer operates a registry business, and has neither the platform, organization, nor necessary consents from ICANN, to support one. Inconsistent with Afilias’ claims in the IRP, Afilias transferred its entire registry business to Donuts during the pendency of the IRP. Although long in the works, the sale was not disclosed by Afilias either before or during the IRP hearings, nor, remarkably, did Afilias produce any company witness for examination who might have disclosed the sale to the panel of arbitrators or others. Based on a necessary public disclosure of the Donuts sale after the hearings and before entry of the Panel’s Order, the Panel included in its final Order a determination that it is for ICANN to determine whether the Afilias’ sale is itself a basis for a denial of Afilias’ claims with respect to .WEB.
The post IRP Panel Dismisses Afilias’ Claims to Reverse .WEB Auction and Award .WEB to Afilias appeared first on Verisign Blog.
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