RE: [bc-gnso] Assessing the "Domain Name Exchange" service proposed by VeriSign

["Deutsch, Sarah B" <sarah.b.deutsch@xxxxxxxxxxx>]

Steve,
 
Thanks for giving all of us more background on the proposed Verisign
service.  My view is that because this proposal could pass through very
quickly with little ICANN input and has very serious potential
consequences for businesses and brand owners, we should quickly reach
out to ICANN staff and tell them that there are enough concerns that the
process must be slowed down and studied carefully.
 
The concerns I've raised have nothing to do with someone registering
generic names.  Whether we call it "tasting" or something else, the fact
remains that this service allows someone for the price of a single
domain name, to register at least 12 different domain names a year.
So, if you spent $8 to register 100 domain names under the exchange
service, you could wind up registering nearly 10,000 different domain
names.  On its face, this seems to be a recipe for mischief and abuse.
 
When we had full blown domain name tasting under the AGP for free, the
number of infringements skyrocketed, but even today, brand owners face
thousands of instances of new infringements because cybersquatters are
still willing to pay a relatively low registration fee for the high
quality names that drive traffic.  The recent report on cybersquatting
out of Harvard shows that even vigilant companies like Verizon still
face many hundreds of typosquatting incidents -- all from infringers who
are willing to pay a fee for our trademarked names.   The report
estimates that the top 100,000 websites containing cybersquatted domains
collectively receive at least 68.2 million daily visitors.  If these
cybersquatted sites were considered as a single website, they would be
ranked by Alexa as the 10th most popular website in the world.  So it is
reasonable to be concerned that a service which allows one to register
multiple domain names for a single price will only add to this problem.
 
I appreciate that Verisign believes it has taken some steps to make
their service more "transparent," but I don't believe transparency is
the same as fixing your business model to prevent infringements in the
first place.  A few questions, comments and ideas:
 
1) A "free" reporting service on exchanged names is better than no
reporting service -- but it appears that the burden, administrative
costs and enforcement costs shifts to business and brand holders, who on
a daily or even hourly basis, must check this reporting service for
possible infringements.  What will Verisign do when the brand holder
writes to them and demands they stop selling the name?  My guess is that
they would not be accountable for taking this name out of circulation
and the trademark owner would be sending numerous cease and desist
letters, filing more UDRP actions and filing more lawsuits.
 
2) Your mention of the WHOWAS service does not say whether this will be
provided for free or at a cost.  In any case, the same concerns about
pushing the burden on trademark owners remains.  Also, what steps does
Verisign intend to take to ensure the accuracy of the information
provided in its WHOIS, WHOAS and its reporting service associated with
this service?  Will it permit applicants to "exchange" names through a
proxy service?
 
3) Will there be a cap on the number of domain names someone could
register under the exchange service?
 
If Verisign is serious about limiting harms to brand owners, why not: 
 
1) Limit the service to generic names only?  Why not allow trademark
owners to provide Verisign with a list of their registered trademarks
that should not be permitted to be sold under the exchange service and
allow them to opt names out of this service?  
 
2) Why not build in protections for the trademark owner up front when
offering the service?  For example, when an applicant searches for the
availability of a name, the trademarked names provided by owners who opt
out would pop up with a warning telling the applicant that the name is a
trademark owned by a third party, warning them about the penalties
associated with cybersquatting and requiring them to declare that they
have a legal right to use such name.
 
3) Why not beef up requirements for accurate WHOIS contact information
and prohibit exhanging names through a proxy?
 
Obviously, the issues are all quite complicated as are the potential
fixes, so more reason that this proposal be slowed down and studied
carefully with all affected stakeholders.

Thanks,

Sarah
 


Sarah B. Deutsch 
Vice President & Associate General Counsel 
Verizon Communications 
Phone: 703-351-3044 
Fax: 703-351-3670 

 

________________________________

From: owner-bc-gnso@xxxxxxxxx [mailto:owner-bc-gnso@xxxxxxxxx] On Behalf
Of Steve DelBianco
Sent: Thursday, April 08, 2010 11:05 AM
To: bc - GNSO list
Subject: [bc-gnso] Assessing the "Domain Name Exchange" service proposed
by VeriSign


BC Members:

On April 5, VeriSign (operator of .com, .net, and .name) proposed a new
registry service called "Domain Name Exchange."  VeriSign's proposal and
QA& is posted at
http://www.icann.org/en/registries/rsep/verisign-dnex-05apr10-en.pdf
Here's how VeriSign describes the service:



        Based on ongoing discussions with registrars who represent
diverse business models and market segments, VeriSign has developed the
concept for the Domain Name Exchange Service to allow a registrar to
repurpose a domain name registration that has significant time remaining
until expiration.   Today when a registrant terminates a package of
services from a registrar after, for example, an introductory 1 or 3
month period, the registrar is forced to recoup the investment in the
associated domain via monetization or the secondary market. The domain
exchange will allow a registrar to offer another registrant a package
that sits on top of that same registration using a new domain.
        The Domain Name Exchange Service is an optional service that is
designed to provide registrars and registrants with an effective and
efficient way to manage domain name registration terms for domain names
that are no longer needed.
        
        

For many website hosting service providers, the registration of a domain
name is a secondary service.  For example, the European registrar 
1and1 offers web hosting with "free domains included" ( http://1and1.eu
) in order to attract new clients to establish their online presence.
Domain Exchange lets 1&1 re-use the registration if a client wants to
drop the website and domain after just a few months.   Registrars would
pay around 1.5x the cost of a regular annual registration in order to
get the Exchange option, and they could exchange once per month.
Perhaps there will be significant demand for this service from
registrars who have lots of turnover with hosting clients.

Domain Exchange is being proposed only for .net domains, but VeriSign
may propose it for .com at some point.  And that's where several BC
officers are already raising concerns that Domain Exchange could be a
new form of "domain tasting" that would lead to even more
cyber-squatting and typo-squatting.  

"Domain tasting" is a loaded term in ICANN circles.  "Tasting" is how
domainers test a domain name to learn whether type-in traffic generates
enough advertising revenue to cover costs of registering the domain.
The names typically tasted were generic words and phrases (like
SpringCleaning.com or SpringFashions.com) that some users might guess at
by entering the URL ( instead of going thru a page-ranked search
engine). 
Domainers make money on these domain names by "parking" a page with ads
for related products and services. 

The parked pages that result from tasted names are objectionable in the
way that highway billboards are objectionable, but there's nothing
illegal about monetizing domain traffic with advertising.  Moreover,
several BC members are domainers who monetize traffic this way, and
other BC members providing online advertising services to support the
trade. 

But nothing infuriates BC members and Internet users more than tasting
or parking domains that involve trademarked terms or typographical
variants designed to deceive users.  Cybersquatting and typosquatting
could increase if a new service makes it easier to discover domain names
that mislead users into thinking they have landed on a page belonging to
a known business or organization they intended to reach.

Domainers discovered they could taste traffic for 5 days for zero cost
by using the Add Grace Period (AGP) that has always been offered by
registrars and registries.   That led to rampant tasting in domains like
.com.   The ICANN community, incl many in the BC, pushed ICANN to end
the practice of free tasting thru abuse of the AGP privilege.  Using the
policy development process, ICANN effectively eliminated free AGP
tasting in 2009 (http://www.icann.org/en/tlds/agp-policy-17dec08-en.htm
)

Question is, will a new Domain Exchange service increase the incidence
of trademark and typographical squatting?  I asked my friends at
VeriSign (a NetChoice member) about this concern, and here's what I
learned: 

Domain Exchange is not going to replace the free and unchecked tasting
that was done with AGP before 2009.  First, a domain 'taster' has to
actually buy a 1-year registration to be able to use domain exchange at
11 monthly intervals. That's cheaper than buying a dozen registrations,
but its not free.  Second, it would take a year just to 'taste' a dozen
names for ad traffic.   

Still, VeriSign acknowledges that some parties may see Domain Exchange
as a way to "taste" and then register names that infringe on trademarks.
So VeriSign is offering additional IP protection tools described in
their proposal, such as limitations on exchanges, free reporting on
exchanged names,  and the WhoWas service (a permanent record of
historical Whois).  

VeriSign is open to suggestions from the BC (and IPC) about other tools
that would minimize use of Domain Exchange for TM infringement or other
illegal purposes.  They're also prepared to answer questions in a direct
dialogue with our members if that's easier and quicker than using the
public comment process described below.

So let's begin internal discussions on BC List, with an intent to send
concerns and questions to staff, to VeriSign, and eventually in ICANN
public comments.


Finally, a word about the ICANN process for review and approval of new
registry services: 


        
        ICANN evaluates new registry services thru its Registry Service
Evaluation Process (RSEP).  ICANN staff has 15-days to make a
"preliminary determination" whether this Registry Service requires
further consideration by ICANN because it could raise significant issues
with Security & Stability or competition.  There's no official comment
period during these 15 days, but BC members can always explain concerns
to staff.  See RSEP at http://www.icann.org/en/registries/rsep/rsep.html
        
        If ICANN determines that the service might raise significant
Stability or Security issues, it goes to the Registry Services Technical
Evaluation Panel and simultaneously invites public comment on the
proposal (2nd chance to comment).  This panel has 45 days to do a
written report regarding the proposed service effect on Security or
Stability.
        
        ICANN's Board then posts the report for public comment (3rd
chance to comment), and the Board has 30 days to reach a decision. "In
the event the ICANN Board reasonably determines that the proposed
Registry Service creates a reasonable risk of a meaningful adverse
effect on Stability or Security, Registry Operator will not offer the
proposed Registry Service."
        
        So there are 2 or 3 chances to comment over a period of 45 days
(or 90 days if the panel raises S&S concerns).