RE: [bc-gnso] RE: McCarthy/Franklyn comments on closed generics

[Phil Corwin <psc@xxxxxxxxxxx>]

Mike:

With all respect, Prof. McCarthy's 7-volume treatise on Trademarks and Unfair 
Competition has been cited in more than 3,000 judicial opinions 
http://en.wikipedia.org/wiki/J._Thomas_McCarthy. So I would hesitate to agree 
that he is "obviously wrong" on this matter.  At a minimum, given all the time 
and energy that ICANN has devoted to respecting and protecting trademarks 
through such new gTLD RPMs as the TMC and URS, his expert view on the 
incompatibility of closed gTLDs with trademark law should be taken very 
seriously.

While I personally disagree that closed generics [which I regard as 
applications in which it is proposed that the registry operator be the sole 
registrant in a proposed string in which the applicant holds no trademark 
rights; that is, not a .brand] don't raise trademark law concerns, I do concur 
that competition issues also arise and may even be the primary issue. In that 
regard, as well as in regard to claims that the ICANN request for comments on 
closed generics somehow raises a new issue, sets a precedent for major changes 
in the Applicant Guidebook, or portends an unfair change in rules that 
applicants relied upon, I would respond that the need to obtain an exemption 
from the Code of Conduct (COC) for a closed registry has always been present, 
as well as the application of a public interest standard to the granting of 
such a waiver, and that applicants cannot now claim surprise or ignorance.

Section 2.14 of the Registry Agreement has always stated that a registry 
operator must comply with the COC set forth at Specification 9.

Section 1.b of the COC has always stated that the registry operator and its 
parents, affiliates, subcontractors, or other related entities can only 
register domains in the registry to a very limited extent - restricted to names 
that are reasonably necessary for the management, operations, and purpose of 
the TLD.

Section 6 of the COC provides for an exemption process whereby ICANN may, in 
its sole discretion and conditioned on its "reasonable satisfaction", allow the 
registry operator to register and maintain  all domain registrations for its 
own exclusive  use - if ICANN determines that "application of this Code of 
Conduct to the TLD is not necessary to protect the public interest". My 
understanding of the exemption clause is that it arose from the BC to 
accommodate .brands, without any contemplation that certain applicants would 
seek to lock up dozens of key dictionary words for their own exclusive use (in 
fact, their goal may be less to use the registries than to deny access to 
current and potential competitors).

So in my view this debate is not about creating a new definition for "closed 
generics" but whether the public interest requires ICANN to deny exemption 
requests for proposed non-.brand closed registries. (And I absolutely reject 
the sophistic and unconvincing arguments I have seen that an applicant can 
bypass the exemption process entirely  by simply declaring that its gTLD's 
"purpose" is to be for its own exclusive use - that would allow the exception 
to swallow the rule and render Section 6 a pointless nullity.)

My personal view is that closed generic gTLDs are inherently anti-competitive 
monopolies and that ICANN should adopt a position that denial of such exemption 
requests is necessary to protect the public interest. These applications are 
incompatible with the competition and innovation justifications made for the 
new gTLD program because they are motivated by anti-competitive self-interest 
and the goal of denying these strings as a platform for pro-competitive 
innovation to others. New gTLDs are the perfect platform for competitive 
vertical search - are competition, innovation and the public interest better 
served by a .book for Amazon's exclusive use and protection of its existing 
dominance, a .search for Google's exclusive use and protection of its existing 
dominance,  or by open gTLDs for those strings that can be utilized by 
thousands of innovative market entrants?

I further believe that such a position is in ICANN's best long-term interest, 
as well as the interest of all who want to preserve its multi-stakeholder model 
against governmental intrusion. While it is true that the competitive issues 
raised by closed gTLDs are the ultimate responsibility of national competition 
authorities, ICANN will do itself no favors if it approves closed generic gTLDs 
that subsequently require years of investigation, enforcement actions, and 
expenditure of human and financial resources (in an era of constrained public 
resources) by such authorities when the matter could have been avoided in the 
first place by adopting a responsible position of the public interest 
consideration for granting COC exemptions.

A final consideration is the potential spectacle of thousands of closed generic 
applications flowing into ICANN on the second round if it accommodates them in 
the first. Domain and marketing consultants will surely be advising the world's 
largest companies that if they don't file applications to lock up key 
dictionary words for their own  primary commercial activities that their 
competitors may well grab then and close them off. ICANN could well realize a 
$billion in application fees in the second round by marketing key words in the 
world's major languages for the purpose of locking them away rather than making 
them available to global Internet users. I for one find the prospect of selling 
off exclusive use of such words as if they were municipal  stadium naming 
rights to be crass and unseemly and, while in ICANN's financial interests, 
inconsistent with its responsibilities and role of managing the DNS in a manner 
consistent with the public good.

In closing, while I shall leave it to Professor McCarthy to decide whether to 
take offense and respond to your assertion that his comment letter constitutes 
an "apparent conflict of interest" because of Microsoft's sponsorship of the 
annual McCarthy Symposium, I am incredulous that he would make the statements 
contained in his comment letter if he did not fully subscribe to them. For the 
sake of full disclosure, while the views expressed above are my personal views, 
I am providing counsel to a new gTLD applicant that is in contention with a 
Google application for a closed generic (ICA, the client with whom I am 
generally associated and which I represent on the BC, did not have a consensus 
among its members on closed generics). For the sake of full disclosure, and 
especially given your assertion that Professor McCarthy's comments evidence a 
conflict of interest, will you disclose whether you are advising applicants for 
closed generics?

Regards,
Philip





Philip S. Corwin, Founding Principal
Virtualaw LLC
1155 F Street, NW
Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/cell

Twitter: @VlawDC

"Luck is the residue of design" -- Branch Rickey

From: Mike Rodenbaugh [mailto:mike@xxxxxxxxxxxxxx]
Sent: Wednesday, March 06, 2013 11:43 AM
To: Phil Corwin; 'bc - GNSO list'
Cc: IPC Discussion List
Subject: RE: [bc-gnso] RE: McCarthy/Franklyn comments on closed generics

Phil, thanks for sending around Prof. McCarthy and Prof. Franklyn's statement 
on so-called 'closed generic' TLD strings.  I have great respect for Prof. 
McCarthy; he taught me trademark law at USF in the early '90's and his treatise 
is a leading authority.  However, this statement is not persuasive.  The 
fundamental premise you quote is obviously wrong.

While trademark law, by definition, may prohibit trademark registration of 
generic terms, it does not and has never prohibited individuals from gaining 
exclusive property rights in generic terms.  There are millions of generic 
terms that are the subject of exclusive domain name property rights, i.e. 
chocolate.com, sex.com, etc.  Many countries recognize that chocolate.com, for 
example, can function as a trademark even for the service of selling chocolate, 
particularly after a period of exclusive use by which distinctiveness is 
acquired.  As you well know, there are many such trademark registrations in 
many jurisdictions.  Exclusive ownership has always been permitted in regards 
to domain names at all levels of the DNS - including the top level.  Why should 
there be any policy difference between TLDs and .com domains?  Though the US 
has been more conservative in granting trademark rights in domain names or TLD 
strings, no US law has ever sought to prohibit exclusive use of generic domain 
names, and many arguably generic words are registered as marks for related 
goods and services (as well as a few arguably generic TLD strings).  Indeed 
many TLD operators and prospective TLD operators have secured trademark 
registration in their TLD string, some in the U.S. and many more in Europe and 
elsewhere.

As Prof. McCarthy taught me and thousands of others, trademark law seeks to 
prevent confusion as to source of a good or service.  The type of confusion he 
and Prof. Franklyn cite in their statement on this issue has nothing to do with 
product source, and is purely speculative.  They say (and you quote):

"consumers may mistakenly believe they are using a gTLD that allows for 
competition, when in reality the gTLD is closed and the apparently competitive 
products are being offered by a single entity"

They are speculating, without citation to any evidence or authority, that 
consumers "may" be confused as to some aspect or quality of the TLD service, 
but that has nothing to do with confusion as to the source of that service.  
They are speculating that the marketing of such TLDs will be confusing, when 
there is no factual basis whatsoever for such speculation.  Web users have had 
long exposure to generic domain names used by myriad businesses, including 
well-known brands, throughout the world for more than 20 years, with absolutely 
no confusion ever documented as far as I am aware.  That evidence ought to 
trump the blank speculation even of well-respected trademark academics.

Furthermore, they do not address why Apple Computer should get to own .apple or 
Microsoft should get to own .windows (among many other examples of 'generic' 
dictionary words that are trademarks, and that will be closed TLDs), and 
exclude anyone else from registering domains in that TLD, even if they want to 
refer to the fruit or to the glass building component.  They do not address how 
consumer confusion in that case would logically be any different than the 
consumer confusion they posit.

Finally, it must be noted that the annual McCarthy Symposium, probably not 
coincidentally held just a few days ago, counts on Microsoft as its major 
sponsor.  And of course Microsoft has become one of the most outspoken critics 
of so-called closed generic TLDs, quite curiously despite its own applications 
for .docs, .windows and other 'closed generic' TLDs.

Given this apparent conflict of interest, the blatantly faulty premise in its 
core reasoning, and the misguided speculation as to future consumer 
expectations that appears central to their argument, this one page statement 
leaves a lot of questions and is far from persuasive, imho.

This is not a trademark issue, but a competition issue.  It is also an issue of 
fairness given that closed business models have been accepted by the community 
since 2006, and many companies have invested heavily in reliance on the fact 
that such models are not prohibited by ICANN's rules.  All companies had the 
same opportunity to make such investments.  The primary voices arguing against 
these models now are surrogates for those who passed on the opportunity (and, 
curiously, Microsoft), those who are competing in contention sets with closed 
business models, and those who want to sell unrestricted domain names and fear 
disruption to the traditional domain name business model on which they have 
built their business.  Those patently self-interested concerns are not the sort 
of concerns that should make any difference to ICANN at this point in the new 
TLD program, or to anyone else in the world.

We should all care much more about the problem of .sport and .sports, for 
example, coexisting as ICANN appears set to allow.  That seems to have a much 
higher likelihood of massive consumer confusion than does the operation of 
closed TLDs.

Best,
Mike

Mike Rodenbaugh
RODENBAUGH LAW
tel/fax:  +1.415.738.8087
http://rodenbaugh.com

From: owner-bc-gnso@xxxxxxxxx<mailto:owner-bc-gnso@xxxxxxxxx> 
[mailto:owner-bc-gnso@xxxxxxxxx] On Behalf Of Phil Corwin
Sent: Friday, March 01, 2013 4:29 PM
To: Steve DelBianco; bc - GNSO list
Subject: [bc-gnso] RE: Contention sets for new gTLDs

"Unbelievably, they did not consider the singular and plural versions of key 
words to be confusingly similar."

Unbelievable indeed.  How about .dumb and .dumber?

Meanwhile the leading trademark authority in the United States, Professor 
Thomas McCarthy,  has just filed a statement opposing closed generic gTLDs as 
being inconsistent with trademark law and its goals -- 
http://forum.icann.org/lists/comments-closed-generic-05feb13/msg00034.html --

"Trademark law in every country in the world forbids individuals to gain 
exclusive
property rights in generic names of products. One of the primary rationales for 
this rule is to
prevent a single person or company from gaining an unfair competitive advantage 
in the
marketplace. Private ownership of generic language is not consistent with free 
enterprise and
fair competition in an open economy. If ICANN were to approve closed, generic 
gTLDs, these
important goals would be undermined...

Transparency and consumer choice are goals of the trademark system of every 
country in
the world. In our view, these values are threatened by closed, generic gTLDs. 
Indeed, should
these types of new gTLDs be approved, consumers may mistakenly believe they are 
using a
gTLD that allows for competition, when in reality the gTLD is closed and the 
apparently
competitive products are being offered by a single entity. This would allow the 
owner of the
generic gTLD to gain exclusive recognition as the provider of a generic 
service, something that
is prohibited by Trademark law."

How will that reflect on ICANN and the new gTLD program?

Philip S. Corwin, Founding Principal
Virtualaw LLC
1155 F Street, NW
Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/cell

Twitter: @VlawDC

"Luck is the residue of design" -- Branch Rickey

From: owner-bc-gnso@xxxxxxxxx<mailto:owner-bc-gnso@xxxxxxxxx> 
[mailto:owner-bc-gnso@xxxxxxxxx] On Behalf Of Steve DelBianco
Sent: Friday, March 01, 2013 6:50 PM
To: bc - GNSO list
Subject: [bc-gnso] Update: Contention sets for new gTLDs

Wanted you all to see this.   I think it will reflect poorly on ICANN's 
expansion of TLDs.

ICANN hired an international expert panel to scour 1900 new TLD strings and 
determine which were confusingly similar, so they could be combines in the same 
contention set.

This is to ensure we don't delegate 2 TLD strings that would confuse Internet 
users because they are too similar.  I expected, for example, that the 
applications received for .hotel and .hotels would be in the same contention 
set, since it would be confusing for users to have both TLDs out there.  (It 
would increase the cost of defensive registrations, too, since hotels would 
have to buy domains in both TLDs.  )

After several months of careful study, ICANN's experts published their 
contention sets yesterday. 
(link<http://www.icann.org/en/news/announcements/announcement-26feb13-en.htm>)

They "identified" 230 "exact match contention sets" where multiple applicants 
sought the exact same string.

And they found just 2 "non-exact match contention sets"  (unicom and unicorm; 
hoteis and hotels )

Unbelievably, they did not consider the singular and plural versions of key 
words to be confusingly similar.

This means we will get new TLDs for both the singular and plural versions of 
keywords such as:

ACCOUNTANT ACCOUNTANTS
AUTO  AUTOS
CAR CARS
CAREER CAREERS
COUPON COUPONS
CRUISE CRUISES
DEAL DEALS
FAN FANS
GAME GAMES
GIFT GIFTS
HOME HOMES
HOTEL HOTELS
HOTEL HOTELES
KID KIDS
LOAN LOANS
MARKET MARKETS
NEW NEWS
PET PETS
PHOTO PHOTOS
REVIEW REVIEWS
SPORT SPORTS
TOUR TOURS
WEB WEBS
WORK WORKS

What are the implications for applicants?   Well, let's take an example.  The 2 
Applicants for .GIFT just got a huge gift from ICANN when they were not placed 
in the same contention set as the 2 applicants for .GIFTS

One of the 2 .GIFT guys must prevail in their "singular" contention set.   They 
can then proceed to delegation, as they planned.  Or they can negotiate to be 
bought-out by the winning applicant from the plural contention set ( .GIFTS ).

In other words, many applicants dodged a bullet by escaping from contention 
with their singular/plural form competitors.   My guess is they want to explore 
ways to monetize their good fortune.

 --
Steve DelBianco
Executive Director
NetChoice
http://www.NetChoice.org and http://blog.netchoice.org
+1.202.420.7482




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