Namecheap sues ICANN over .org price caps

Namecheap has sued ICANN in California, asking a court to force the Org to revisit its decision to lift price caps on .org and .info domain names five years ago.

Registrar CEO Richard Kirkendall announced the suit on Twitter this afternoon:

Today we filed suit against @ICANN. After a previous ruling via a mediation process they have taken little action towards the recommendations of that ruling and so our hand has been forced to take this action. We feel that ICANN is in direct violation of their mandate and…

— Richard Kirkendall (@NamecheapCEO) February 5, 2024

The lawsuit follows an Independent Review Process case that Namecheap partially won in December 2022, where the panel said ICANN should hire an economist to look at whether price caps are a good idea before revisiting its decision to scrap them.

The panel found that the ICANN board of directors had shirked its duties to make the decision itself and had failed to act as transparently as its bylaws mandate.

Namecheap says that over a year after that decision was delivered, ICANN has not implemented the IRP panel’s recommendations, so now it wants the Superior Court in Los Angeles to hand down an injunction forcing ICANN to do so.

Before 2019, .org was limited to 10% price increases every year, but the cap was lifted, along with caps in .info and .biz, when ICANN renewed, standardized and updated the respective registries’ Registry Agreements.

After the decision was made to scrap .org price caps, despite huge public outrage, Namecheap rounded up its lawyers almost immediately.

The caps decision led to the ulimtately unsuccessful attempt by Ethos Capital to acquire Public Interest Registry, which runs .org.

Namecheap’s new lawsuit wants the judge to issue “an order directing ICANN to comply with the recommendations of the IRP Panel”.

That means ICANN’s board would be told to consider approaching PIR and .info registry Identity Digital to talk about reintroducing price caps, to hire the economist, and to modify its procedures to avoid any future transparency missteps.

ICANN picks its first ever Supreme Court

After foot-dragging for a decade, ICANN has finally approved a slate of a dozen jurists to act as its de facto Supreme Court.

Its board of directors voted at the weekend to create the first-ever Independent Review Process Standing Panel, a pool of legal experts from which panels in future IRP proceedings — the final appeals process for ICANN decisions under its bylaws — will be drawn.

ICANN has not named the 12 people yet. The names are redacted from the published resolution, presumably because they haven’t signed contracts yet. ICANN said they are “well-qualified” and “represent a diverse breadth of experience and geography”.

The names were put forward by a cross-community working group called the IRP Community Representatives Group, which looked after the application and interview process. A thirteenth CRG pick was deemed “ineligible” by ICANN for undisclosed reasons.

The Standing Panel is intended to make IRPs faster and cheaper by drawing the three-person panel in each case from an established pool of experienced professionals. The panelists will be contracted for staggered terms of service.

The ICANN bylaws have called for the establishment of such a panel for over a decade, but its timely creation was another victim of the lethargy that consumed ICANN for years. The lack of a Standing Panel has been raised by claimants in multiple IRPs, some of which are ongoing.

Elsewhere in IRP policy-making, a separate staff/community working group called the IRP Implementation Oversight Team expects to shortly publish certain revisions to the IRP rules for public comment, but the fact that the legal language of the rules is to be written by the law firm Jones Day, which represents defendant ICANN in IRP cases, has raised some eyebrows.

Looks like the fight for .hotel gTLD is over

One of the longest-running fights over a new gTLD may be over, after three unsuccessful applicants for .hotel appeared to throw in the towel on their four-year-old legal fight with ICANN.

In a document quietly posted by ICANN last week, the Independent Review Process panel handling the .hotel case accepted a joint request from ICANN and applicants Fegistry, Radix and Domain Venture Partners to close the case.

The applicants lawyers had told ICANN they were “withdrawing all of their claims” and the panel terminated the case “with prejudice”.

They had been fighting to get ICANN to overturn its decision to award .hotel to HOTEL Top-Level-Domain (HTLD), formerly affiliated with Afilias, which had won a controversial Community Priority Evaluation.

CPE was a process under the 2012 new gTLD program rules that allowed applicants in contention sets to avoid an auction if they could show sufficient “community” support for their bids, which HTLD managed to do.

The Fegistry complaint was the second IRP to focus on this decision, which was perceived as unfair and inconsistent with other CPE cases. The first ran from 2015 to 2016 and led to an ICANN win.

Part of the complaints focused on allegations that an HTLD executive improperly accessed private information on competing applicants using a vulnerability in ICANN’s applications portal.

The IRP complainants had also sued in Los Angeles Superior Court, but that case was thrown out in July due to the covenant not to sue (CNTS) that all new gTLD applicants had to agree to when they applied.

The fight for .hotel had been going on for longer than that for .web, but unlike .web it appears that this fight may finally be over.

.web fight back in “court”

ICANN is heading back to the quasi-courtroom of its Independent Review Process, after .web auction runner-up Altanovo Domains filed its second IRP complaint about the controversy-ridden gTLD.

I first reported that the complaint had been filed back in July, but it was not until last Thursday that ICANN published the document, along with thousands of pages of exhibits and its own response, almost all thoroughly redacted to remove references to the one contract at the heart of the mess.

Now-independent Altanovo, which was part of Afilias before that company was acquired by Donuts, claims that ICANN broke its bylaws commitments to apply its policies equitably to everyone.

The company remains incredibly cheesed off that it lost the 2016 auction for .web, which saw a company called Nu Dot Co pay ICANN $135 million for the domain, at a time when it was secretly backed by Verisign.

Altanovo claims that NDC broke the terms of ICANN’s Applicant Guidebook and the rules of the auction by declining to disclose the existence of the Domain Acquisition Agreement it had signed with Verisign.

That deal saw Verisign bankroll and dictate the terms of NDC’s handling of the auction; in exchange, NDC would transfer .web to Verisign shortly after signing its ICANN registry agreement.

Altanovo has already won one IRP about this. The panel in the first case ruled in May 2021 that ICANN broke its bylaws because its board did not make a decision on whether NDC’s behavior was kosher.

As a result of that ruling, the board spent over a year mulling and eventually decided this April that, no, NDC didn’t break the rules. It’s that decision that Altanovo is challenging now. The complaint says:

NDC had no independent business plan for .WEB that it intended to implement. Its sole purpose in applying for .WEB was to obtain it for the oldest of the incumbent players, not to market .WEB itself in any way or to compete in the market… No one in the Internet Community, including the other .WEB Contention Set members, had any clue that, as of August 2015, they were competing with Verisign and not NDC.

ICANN’s response to the complaint states that its board was exercising its “business judgement”, which must be deferred to, and that Altanovo’s claims about bylaws breaches merely amount to differences of interpretation.

Speaking to analysts on Verisign’s third-quarter earnings call last week, company CEO Jim Bidzos quoted from the conclusion of ICANN’s IRP response and added: “Altanovo’s IRP request should be denied. We agree with ICANN.”

“We continue to believe that this IRP filed by Altanovo and its backers has been filed for the purpose of delay,” he said.

Altanovo reckons that Verisign and ICANN have been colluding on their legal responses to the .web and that certainly seems likely in terms of the redactions ICANN has made to the complaint and response published last week.

All quotations of the Verisign-NDC DAA are redacted in the Altanovo complaint are redacted as “third party confidential”, presumably at Verisign’s request; in the ICANN response the single DAA quote remains unredacted.

.web hit by second ICANN complaint

Altanovo Domains, the Afilias spin-off that is fighting Verisign for control of the .web gTLD, has filed a second Independent Review Process complaint with ICANN.

The filing could add years to Verisign’s launch runway for .web, which it won via secret proxy Nu Dot Co at auction in 2016.

ICANN has not yet published the IRP complaint — presumably it’s being redacted to remove commercially confidential information — but documentation shows Altanovo has “filed” an IRP.

Altanovo and ICANN has been in a Cooperative Engagement Process — a form of negotiation designed to avoid an IRP — since May 3, but a document published July 19 shows that the CEP is now over.

It was quite a brisk process. Other CEPs have been known to last many months.

When the CEP first emerged in May, Verisign was pretty brutal in its reaction, accusing Altanovo of “delay for delay’s sake”.

As the second-place bidder, Altanovo could stand to take control of .web if Verisign’s bid was found to be outside the rules. That was the focus of the first IRP case, which lasted almost four years.

The first IRP panel ruled that ICANN broke its bylaws by failing to consider whether Verisign secretly bidding via NDC broke the new gTLD program rules. But ICANN a couple months ago finally bit the bullet and ruled that Verisign did no wrong.

ICANN decided not to rule on whether Altanovo, then Afilias, broke the auction rules by communicating with NDC during a comms blackout period.

The specific allegations in the new IRP are not yet known. The IRP is only for complaints about ICANN’s actions or inaction breaking its own bylaws and other foundational documents.

.web delay likely after Verisign rival files ICANN appeal

The .web gTLD appears unlikely to see the light of day any time soon, after the Afilias spin-off that came second to Verisign in the $135 million auction in 2016 kicked off another appeals process.

Altanovo, which is made up of bits of Afilias left over when Identity Digital acquired the company, has asked ICANN to enter a Cooperative Engagement Process, according to ICANN’s records.

The CEP is a form of mediation companies can force ICANN into when they have beef. It’s designed to avoid the relative expense of a full-on Independent Review Process. They usually result in an IRP anyway.

Altanovo made its request the same day ICANN announced that its board of directors had decided to take .web off hold and resume registry contract negotiations with Verisign, following Altanovo’s original, unsuccessful IRP.

Verisign yesterday said the move amounted to an “abuse of process” and “baseless procedural maneuvering”, likely to lead to “delay for delay’s sake”.

IRPs typically last years and cost many hundreds of thousands of dollars in panel fees, not counting each party’s lawyer fees.

Altanovo believes that Verisign broke ICANN’s new gTLD program rules when it bid for .web via a secret intermediary. Verisign has countered that its rival, then Afilias, broke the rules by trying to negotiate a private deal during the auction’s “black out” period.

Verisign WILL get .web, ICANN rules

Verisign did nothing wrong when it won the $135 million .web gTLD auction via a secret intermediary, ICANN’s board of directors has decided.

The board voted at the weekend to declare that Nu Dot Co, the shell company that applied for .web “did not violate the Guidebook or the Auction Rules” when it signed a secret side-deal that would see Verisign fund its bid in exchange for handing over the registry contract after it is signed.

The board has told ICANN management to continue to process NDC’s application, which has been tied up in legal red tape since the auction in 2016.

ICANN did not rule on Verisign’s claims that second-place bidder Afilias broke the rules when executives sent text messages trying to resolve the contention set during a “black out” period immediately prior to the auction.

The ruling means that, absent any further legal action, NDC can soon sign its Registry Agreement and attempt to transfer it to Verisign, a procedure that is not often controversial when M&A takes place.

It could mean .web, which has been fiercely contested for over 20 years, launches this year.

.web gTLD was first applied for in 2000. Afilias, Neustar (then Neulevel) and others viewed it as the best probable competitor for .com and wanted that sweet, sweet action.

But ICANN instead awarded them .info and .biz respectively, in part because another applicant, Image Online Design, was already running .web in an alternate root.

There were seven applicants in the 2012 round, but attempts at privately resolving the contention set were resisted by NDC, leading to suspicions that it was being secretly bankrolled by a much larger non-applicant company.

That turned out to be true when Verisign fessed up after the auction that it was funding NDC’s $135 million winning bid.

Because Verisign has market power, ICANN referred the deal to US competition regulators, the Department of Justice, which gave the all-clear in 2018.

Runner-up Afilias immediately set the ball rolling to file an Independent Review Process complaint with ICANN, which it did in 2018, claiming ICANN broke its bylaws by failing to establish that Verisign was NDC’s sugar daddy before the auction.

The Afilias .web application is currently owned by Altanovo, the company formed of all the bits of Afilias that Identity Digital (then Donuts) didn’t want when it acquired Afilias.

The IRP panel ruled for Afilias, saying ICANN should have at the very least made a decision on whether the deal was kosher before starting to contract with NDC. That ruling became final at the end of 2021.

It’s taken ICANN 16 months to actually make its decision.

And its rationale? Hard to say with any degree of certainty.

Both sides’ arguments rely heavily on the text of the Domain Acquisition Agreement between Verisign and NDC, and ICANN has redacted all references to that document’s contents (presumably at Verisign’s demand) in its resolution and accompanying rationale.

The board said:

NDC remains the applicant and, if NDC enters into a Registry Agreement with ICANN, NDC will become the Registry Operator for .WEB. Whether or not NDC then attempts to assign the Registry Agreement to Verisign is, at this point, an event that has not occurred and conceivably may not occur depending on the circumstances at the time. And if NDC subsequently decides to request such an assignment, there are processes in place to review such a request, including the need for ICANN’s approval of that request. Such an assignment does not equate to a “circumvention” of the application process but, rather, is a necessary component for servicing Registry Operators and allowing the continued operation of gTLDs.

The board additionally notes that the process of sorting all this out took years and millions of dollars of legal fees.

IRP panel tells ICANN to stop being so secretive, again

ICANN’s dismal record of adverse Independent Review Process decisions continued last week, with a panel of arbitrators telling the Org to shape up its transparency and decision-making processes.

The panel has essentially ruled that ICANN did everything it could to be a secretive as possible when it decided to remove price controls from its .org and .info registry contracts in 2019.

This violated its bylaws commitments to transparency, the IRP panel found, at the end of a legal campaign by Namecheap commenced over three years ago.

Namecheap wanted the agreements with the two registries “annulled”, but the panel did not go that far, instead merely recommending that ICANN review its decision and possibly enter talks to put the price caps back.

But the decision contains some scathing criticisms of ICANN’s practice of operating without sufficient public scrutiny.

Namecheap had argued that ICANN broke its bylaws by not only not applying its policies in a non-discriminatory manner, but also by failing to adequately consult with the community and explain its decision-making.

The registrar failed on the first count, with the IRP panel ruling that ICANN had treated registry contract renegotiations consistently over the last 10 years — basically trying to push legacy gTLDs onto the 2012-round base Registry Agreement.

But Namecheap succeeded on the second count.

The panel ruled that ICANN overused attorney-client privilege to avoid scrutiny, failed to explain why it ignored thousands of negative public comments, and let the Org make the price cap decision to avoid the transparency obligations of a board vote.

Notably, the panel unanimously found that: “ICANN appears to be overusing the attorney-client privilege to shield its internal communications and deliberations.”

As one example, senior staffers would copy in the legal team on internal communications about the price cap decision in order to trigger privilege, meaning the messages could not be disclosed in future, the decision says.

ICANN created “numerous documents” about the thinking that went in to the price cap decision, but disclosed “almost none” of them to the IRP due to its “overly aggressive” assertion of privilege, the panel says.

As another example, staffers discussed cutting back ICANN’s explanation of price caps when it opened the subject to public comment, in order to not give too much attention to what they feared was a “hot” and “sensitive” topic.

ICANN’s failure to provide an open and transparent explanation of its reasons for rejecting public comments opposing the removal of price controls was exacerbated by ICANN’s assertion of attorney-client privilege with respect to most of the documents evidencing ICANN’s deliberations…

ICANN provided a fairly detailed summary of the key concerns about removing price caps, but then failed to explain why ICANN decided to remove price caps despite those concerns. Instead, ICANN essentially repeated the explanation it gave before receiving the public comments.

The panel, which found similar criticisms in the earlier IRP of Dot Registry v ICANN, nevertheless decided against instructing ICANN to check its privilege (to coin a phrase) in future, so the Org will presumably be free to carry on being as secretive as normal in future.

Namecheap also claimed that ICANN deliberately avoided scrutiny by allowing Org to remove the price caps without a formal board of directors resolution, and the panel agreed.

The Panel finds that of the removal of price controls for .ORG, .INFO, and .BIZ was not a routine matter of “day-to-day operations,” as ICANN has asserted. The Price Cap Decision was a policy matter that required Board action.

The panel notes that prior to the renewal of .org, .info and .biz in 2019, all other legacy gTLD contracts that had been renewed — including .pro, which also removed price caps — had been subject to a board vote.

“ICANN’s action transitioning a legacy gTLD, especially one of the three original gTLDs (.ORG), pursuant to staff action without a Board resolution was unprecedented,” the panel writes.

Quite why the board never made a formal resolution on the .org contract is a bit of a mystery, even to the IRP panel, which cites lots of evidence that ICANN Org was expecting the deal to go before the board as late as May 13, 2019, a month before the anticipated board vote.

The .org contract was ultimately signed June 30, without a formal board resolution.

(Probably just a coincidence, but Ethos Capital — which went on unsuccessfully to try to acquire .org registry Public Interest Registry from ISOC later that year — was formed May 14, 2019.)

The IRP panel notes that by avoiding a formal board vote, ICANN avoided the associated transparency requirements such as a published rationale and meeting minutes.

The panel in conclusion issued a series of “recommendations” to ICANN.

It says the ICANN board should “analyze and discuss what steps to take to remedy both the specific violations found by the Panel, and to improve its overall decisionmaking process to ensure that similar violations do not occur in the future”.

The board “should consider creating and implementing a process to conduct further analysis of whether including price caps in the Registry Agreements for .ORG and .INFO is in the global public interest”

Part of that process should involve an independent expert report into whether price caps are appropriate in .info and especially .org.

If it concludes that price controls are good, ICANN should try to amend the two registry agreements to restore the caps. If it does not conduct the study, it should ask the two registries if they want to voluntarily restore them.

Finally, the panel wrote:

the Panel recommends that the Board consider revisions to ICANN’s decision-making process to reduce the risk of similar procedural violations in the future. For example, the Board could adopt guidelines for determining what decisions involve policy matters for the Board to decide, or what are the issues on which public comments should be obtained.

ICANN is on the hook to pay the panel’s fees of $841,894.76.

ICANN said in a statement that it is “is in the process of reviewing and evaluating” the decision and that the board “will consider the final declaration as soon as feasible”.

Namecheap says it won legal fight over .org price caps

Namecheap claims to have won a fight against ICANN over the lifting of contractual price caps in .org and .info back in 2019.

The two parties have been battling it out for almost three years in an Independent Review Process case over ICANN’s decision to allow the .info and .org registries to increase their prices by as much as they want.

Namecheap now claims the decision has been delivered and “the IRP panel decided that ICANN had, indeed, violated its Bylaws and Articles of Incorporation and that ICANN’s decision to remove the price caps was invalid.”

The registrar also says it failed in its attempt to have a similar ruling with regrds the .biz TLD, but it’s not clear why.

Neither party has yet published the decision in full (ICANN is likely redacting it for publication as I type), and ICANN has yet to make a statement, so we only have Namecheap’s interpretation to go on.

It seems the IRP panel disagreed with ICANN that it was within its staff’s delegated powers to renegotiate the price provisions of the contracts without input from the board of directors.

Rather, there should be a open and transparent process, involving other stakeholders, for making such changes, the panel said according to Namecheap.

What the panel does not appear to have said is that the price caps can be unilaterally restored to the contracts. Rather, it seems to suggest a combination of voluntary reinstatements, expert competition reviews, and bilateral renegotiations.

The decision also seems to say that price controls are more important in .org than .info, due to its not-for-profit nature, which flies in the face of ICANN’s long-term push to standardize its contracts to the greatest extent possible.

The row over .org pricing emerged shortly before the ultimately unsuccessful takeover attempt of Public Interest Registry by for-profit private equity firm Ethos Capital was announced. Ethos had planned to raise prices, but PIR, still a non-profit owned by the Internet Society, to date has not.

Namecheap’s IRP claims related to ICANN’s handling of that acquisition attempt were thrown out in 2021.

.info was an Afilias TLD when the IRP was filed but is now Ethos-owned Identity Digital’s biggest gTLD following consolidation.

I’ll have more on this story after the full decision is made public.

Blind auditions underway for ICANN’s supreme court

An ICANN volunteer committee says it is close to picking a slate of judges for what amounts to ICANN’s much-delayed “supreme court”, but it’s doing so without knowing the identities of the candidates.

The Independent Review Process Community Representatives Group said in a blog post that it expects to wrap up its work — picking at least seven members of an IRP Standing Panel — by the end of the year, though it views the deadline as “challenging”.

The group said that it’s currently reviewing applications for the posts, but with the identities of the candidates redacted, and expects to start interviewing shortly. The members wrote:

While we only see information about various applicants’ qualifications, gender and ICANN regional residency, we do not at this point know the identity of the candidates. These are data points to assist our winnowing process and our endeavor to achieve cultural, linguistic, gender and legal diversity. Diversity by geographic region is indicated in ICANN’s Bylaws.

The skill-set mandated for panelists by ICANN’s bylaws is pretty rarefied — requiring knowledge of international law, arbitration, the DNS and ICANN itself — so it seems likely that LinkedIn and Google could be useful to identity candidates, if CRG members were so inclined.

The CRG said it has a wealth of qualified candidates “a sizeable group of individuals with impressive and suitable backgrounds”, making the selection process “difficult”.

The Standing Panel is envisaged as a kind of supreme court for ICANN. Whenever somebody challenges an ICANN decision with an Independent Review Process complaint, three members of the panel would be selected to hear the case.

The idea is that IRP should become more consistent, objective and speedy, retaining more institutional knowledge, with a stable set of rotating panelists. The current system has ICANN and complainants select their panelist.

ICANN’s bylaws have been calling for the creation of a Standing Panel since April 2013, but ICANN is ICANN and the panel has been delayed by years of foot-dragging and red tape. The CRG was only created to audition candidates in February 2022.

Many IRP cases over the last near-decade have been complicated and delayed by the absence of the panel, even resulting in a lawsuit.

This is great for lawyers who bill by the hour, not so great for complainants and ICANN’s credibility as an accountable organization.

The CRG has seven members drawn from the GNSO, ALAC, ccNSO and GAC, including government representatives of Iran and Nigeria. It’s chaired by Verisign’s David McAuley.