[gnso-irtp-b-jun09] FW: [ga] Proposed ICANN "Expedited Transfer Reversal Policy" could disrupt secondary market for domain names

[Marika Konings <marika.konings@xxxxxxxxx>]

For your information.

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From: George Kirikos <gkirikos@xxxxxxxxx>
Date: Sat, 29 May 2010 12:12:06 -0700
To: GNSO GA Mailing List <ga@xxxxxxxxxxxxxx>
Subject: [ga] Proposed ICANN "Expedited Transfer Reversal Policy" could
disrupt secondary market for domain names


Hi folks,

ICANN, in typical fashion, released an important policy report today (a
Saturday during the US Memorial holiday long weekend) that folks might not
notice until it's too late. It's regarding the work from the Inter-Registrar
Transfer Policy Working Group, and the report is at:


http://www.icann.org/en/announcemen...-29may10-en.htm

What's especially of concern is the proposed "Expedited Transfer Reversal
Policy" (ETRP, see Annex C of the PDF, page 49) which would permit the
registrant at the "losing" registrar to undo a transfer for up to 6 months
after a transfer. There is currently no mechanism to dispute the proposed
ETRP.

This proposal would create great uncertainty in the secondary market for
domain names, as it means a "transfer" isn't considered final for up to 6
months after a purchase, assuming one changes registrars during a
transaction, which is almost always the case.

Here's the typical pattern of a purchase. Example.com is registered at RegA,
and you want to buy the domain name, but transfer to RegB during the
transaction (RegB might be your "home" registrar (Tucows for me), or might
be Moniker who does escrows, etc.). At present, the seller would get paid
immediately after the domain name transfers from RegA to RegB, and you'd
have control of the domain name at your preferred registrar (RegB). If there
was a dispute, it would go to court, etc., and RegB would await a court
ruling. The good faith buyer is definitely protected.

Under ETRP, though, it would be a nightmare. How would the buyer know for
sure that he/she has control and ownership of the domain name, when the
seller could simply undo the transfer for up to 6 months??!!?? The seller
would end up with both the cash AND the domain name, and the domain name
would be at RegA (a registrar you don't want the domain name to be at). You
as the buyer would then need to take the seller to court, and the relevant
jurisdiction would no longer even be that of RegB (your preferred
registrar), but would be that of RegA.

A Moniker or other company that uses their own registrar to ensure a secure
transfer would not be able to help at all, because they are "RegB." All the
power reverts to RegA (the original "losing" registrar). Not only that, the
registrant at RegA indemnifies RegA itself, so RegA doesn't even care if
they are "stealing" back a legitimately purchased domain.

One approach to try to "solve" this problem, as a legitimate buyer, would be
to transfer the domain name at RegA first. So, for example, if the domain
name is at GoDaddy or NSI, you would do an internal change of registrant
transfer, keeping the name at that registrar. However, then you are stuck
for 60 days, as most of these registrars have been trying to hold the domain
name hostage for that amount of time, to get extra renewals, etc. So, for 60
days you are in limbo at a registrar that you don't like, and one that is
probably not in the legal jurisdiction you want to be in (e.g. GoDaddy =
Arizona jurisdiction, which would not be good). During that 60 day period,
do you really have full control of the domain name? I would say "No",
because you (as the legitimate buyer) would face the possibility of the
transfer being undone by a registrar that you don't want to be at.

Anyhow, this is a very messed up proposal. If you look at DailyChanges.com
or RegistrarStats.com, you'd quickly see that transfers make up roughly the
same number of daily transactions as new registrations. So, it's very
important that any changes that would have such a major impact on the
secondary market for domain names be well thought out.

If one looks at the composition of those who were on the workgroup:


https://st.icann.org/irtp-partb/index.cgi

(see the bottom) it appears most do not even understand the grave impact
such changes would have on the secondary market (which is probably greater
in economic value than the primary market). I'm all for fighting domain
hijacking, but this "solution" is far worse than the problem it is trying to
solve. There needs to be a secure and predictable procedure for the
irrevocable transfer of a domain name to a legitimate buyer, yet ICANN is
now making the process less predictable and more risky for the buyer. The
legitimate buyer would face at least 60 days (and up to 6 months) of risk
without due process if the proposal is accepted.

What's even more appalling is that ICANN didn't even open up a comment
period yet, so that folks could get their opinions on the record! The
comment period won't begin until July 5th, and will last only 20 days. This
is silly, given that it costs $0 to open up the comment period now.

In the meantime, I encourage folks to contact their registrars to make sure
that your voices are heard, and perhaps blog about the issue if you have a
blog, etc.

Sincerely,

George Kirikos
http://www.leap.com/


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