Post-Expiration Domain Name Recovery comment

[Marika Konings <marika.konings@xxxxxxxxx>]

Submitted on behalf of HMA:

I write this comment because I am the victim of Godaddy's post-expiration 
procedures which resulted in an unwanted loss of valuable domains and the 
business related to them. Because of my experience, I would like to refer 
specifically to Godaddy and outline why their transfer clause should be 
declared illegal. Here is what happened to me in summary:

I had a few domains that were about to expire and because of unforeseen 
problems I had no credit card for renewal payment. I therefore attempted well 
in advance to transfer domains out to another registrar. However, I got stuck 
in Godaddy's illegal 60 day lock that they trigger upon WHOIS updates. I then 
was forced to renew domains at Godaddy and opened up a Paypal account in order 
to do so, only to find out that Godaddy solely processes Paypal accounts 
'backed by credit card', a detail that they conceal. Because of these 
unforeseen problems I ran out of time to renew domains before expiry. Godaddy 
had then renewed one of my domains that had expiry before the others on their 
own account (!) but had the other ones not renewed although they appeared to be 
renewed as well on the misleading WHOIS records that Godaddy generates. I found 
out later about this mistake while domains had entered auto grace period. I 
then attempted again to transfer-out domains to another registrar, however 
Godaddy ignored all requests. Godaddy also refused to accept Paypal email 
payment which was readily available to them. Godaddy's customer support had 
repeatedly stated that domains get deleted, i.e. I was reassured that at least 
30 days more would remain to recover the domains out of Redemption Period. I 
then attempted to resolve the payment issues with Godaddy and their customer 
support gave the impression of handling my Paypal payment dispute. However, 
they delayed the confirmed pending request about it and auctioned off my 
domains. Godaddy refused my request of reversion of the third party transfer 
although it was easily possible to do within the first three days. Godaddy was 
wrong regarding the Paypal payment terms and even had changed them in their 
Terms of Service AFTER the incidence occurred.

Post-expiry domain auctions are common practice by many major registrars but 
implementation of related clauses in the terms of service of each registrar 
vary significantly. Some registrars may have acceptable clauses in compliance 
with the principle that ICANN provisions can be amended under the condition 
that it is explicitly agreed upon by the registrant. However, other registrars 
are apparently violating ICANN policies and even other law. In comparison of 
all major registrars, Godaddy has by far the most expropriating transfer clause 
in their registration agreement because they have no opt-in or opt-out 
mechanism and their transfer clause consists of a non-explanatory half sentence 
claiming they may transfer the domain to another registrant on their sole 
discretion.

Godaddy's transfer clause which can be found in their registration agreement 
reads:

If You do not redeem Your domain name prior to the end of the 30 day redemption 
period Go Daddy may, at its sole discretion, delete Your domain name or 
transfer it to another registrant on Your behalf.

Besides that they misrepresent the term 'redemption period', Godaddy lacks 
explanation and definition for their transfer clause which by itself is 
ambiguous, out of context, not self-explanatory and therefore cannot be easily 
understood by the registrant. Godaddy does not ask for permission with a 
standard phrase like "you agree that..." but rather states execution of a right 
that they already assume to have, thereby it is unlikely that the registrant 
understands or notices that he is authorizing Godaddy for something.

It is said that Godaddy has a worldwide market share of 20-30% of all the major 
GLTDs. Taking into account that virtually all meaningful words are registered 
as domain names, Godaddy acts similar to a monopoly. Godaddy is an ever growing 
registrar and their success appears to be the direct result of unfair business 
practices. There seems to be an element of anti-trust concern with current post 
expiry auctions as practiced by the large registrars, in particular by Godaddy. 
They become the registry themselves by not releasing domains to the registry 
through deletion but reassigning them on their own.

My strong concern is that all ongoing discussion leads away from the question 
of enforcement against ongoing and occurred violation. The question of EDDP 
compliance had been brought forward in the 'GNSO Issues Report on 
Post-Expiration Domain Name Recovery' but to my knowledge has never been 
seriously addressed. Apparently, any future consensus policy on post-expiration 
issues is also drafted with a view to assess the current questionable business 
practices by some registrars a "grey area" rather than focusing on enforcement 
of existing ICANN rules. I.e., a pretext is established for the registrars that 
protects them. ICANN has the sad reputation of letting the domain industry do 
what they want.

Godaddy's transfer clause in their registration agreement should be assessed a 
violation of ICANN consensus policy because the EDDP clearly states under 
3.7.5.3 that domains must be deleted. Other registrars use to provide at a 
minimum for an opt-out mechanism for their transfer clause, thereby the 
unaltered EDDP post-expiry provision remains as an element of choice for the 
registrant. Because Godaddy does not provide this choice for their registrants 
it should account to a violation of ICANN consensus policy and be subject to 
persecution.

The question of compliance of direct transfer clauses with the EDDP had already 
been directed to ICANN for determination since at least April of 2007, 
http://gnso.icann.org/mailing-lists/archives/ga/msg06431.html 
<http://gnso.icann.org/mailing-lists/archives/ga/msg06431.html>  . ICANN's 
contractual compliance department had apparently ignored this request. Jon 
Nevett of Network Solutions had addressed the request and stated that an 
"opt-out mechanism" and "share on sale proceeds" would be mandatory. These two 
core elements can be found in the transfer clause stipulation of almost all 
major registrars, however not at Godaddy.

The transfer clause term was introduced into Godaddy's registration agreement 
at the end of 2004 before they commenced their domain auction. However, many 
registrants like me had signed up with Godaddy before that point of time when 
there was no transfer clause in Godaddy's agreement. The RAA states that:

" ...a Registrar 'shall provide notice to each new registrant describing the 
details of their deletion and auto-renewal policy', including any changes made 
to this policy during the term of the registration agreement."

Godaddy had never informed their registrants about the newly added transfer 
clause. It therefore appears that Godaddy has auctioned off domains from 
registrants who were never informed and asked for consent about the newly added 
transfer clause and therefore these cases should be considered as subject of 
RAA violation.

Post-expiry transfer clauses with the purpose of auctioning domains off for the 
benefit of the registrar create a conflict of interest situation, they are 
prone to undermine the concept and purpose of a registry, they require the 
instrument of a so called "direct transfer" and they may collide with general 
civil law. I am not a legal professional and cannot give a legal opinion on 
these subject matters. However, a discussion of the transfer clause 
implementation as can be found in the registration agreement of the registrar 
Network Solutions -which appears to be competently drafted by a legal 
professional- should help to outline these points. Network Solutions' transfer 
clause can be found at 
http://www.networksolutions.com/legal/static-service-agreement.jsp 
<http://www.networksolutions.com/legal/static-service-agreement.jsp>  under 
SCHEDULE A, 14. While Network Solutions has a comprehensive stipulation of 
their transfer terms, Godaddy only provides for half a sentence without any 
kind of accompanying explanation.

Network Solutions expands their registration agreement with provision of the 
operation of a so called "Direct Transfer", i.e. a registrar initiated transfer 
request. They ask their registrant customers for consent through use of "you 
agree that... " phrases whenever required. Network Solutions also states that 
they will change WHOIS entry for expired domains, i.e. they apparently become 
the administrative contact. Godaddy in contrast does not expand their framework 
for these additional operations that would be required to process a third party 
transfer under "formal correctness". It appears that without the consent of the 
registrant for a "direct transfer", Godaddy would need to ask the registrant to 
either assign Godaddy as administrative contact or have the losing registrant 
execute the transfer manually upon request. Godaddy's lack of "direct transfer" 
stipulation should account at least indirectly to violation of ICANN rules.

Network Solutions provides for participation on sale proceeds for the losing 
registrant. Although they only pay out 20% or less on sale proceeds, they may 
be in a position to formally declare the legal act of transfer a "trade" on 
behalf of the losing registrant. Godaddy however does not have any kind of 
compensation for the losing registrant. It appears that classification of the 
legal act of Godaddy's direct transfer accounts to a "gift" because there is no 
compensation at all. However, gifts require special attention in order to 
become legally valid. Some information can be found at 
http://en.wikipedia.org/wiki/Gift_(law <http://en.wikipedia.org/wiki/Gift_(law> 
) . Registrars that sell off domains for their own exclusive benefit without 
opt-out mechanism may collide with gift law because a gift cannot be promised 
for the future, a gift must be delivered by the grantor (i.e. the registrant 
would need to manually process the transfer to a new registrant that he knows) 
and, depending on the jurisdiction of the registrar, there would be formal 
requirement like notary public, etc.

While Network Solutions appears to have its direct transfer clause legally 
realized through the means of setting up a "domain broker wrapper" and while 
they expand the ICANN framework for so called "direct transfers", Godaddy in 
contrast seems to utilize a "power of attorney wrapper" because they state that 
they transfer the domain "on Your behalf". However, there appear to be various 
shortcomings with this particular implementation. A power of attorney must 
serve a particular purpose that is known to the principal. Godaddy does not 
state what the transfer is good for, i.e. they conceal the auction. A power of 
attorney cannot grant "super rights" that replace those of the principal. 
Godaddy effectively takes possession of the registrant's domain and -in 
violation of the requirement that the agent must be loyal and act in the 
interest of the principal- they sell the domain for their own exclusive benefit.

In summary, post-expiry transfer clauses appear to be a complicated legal 
subject area that requires critical expansion and circumvention work in order 
to adapt to the framework of an ICANN accredited registrar. So called "direct 
transfers" collide with the concept of a registry because the registrar 
effectively carries out transfer operations and the meaning of WHOIS records 
becomes a farce. The benefit of post-expiry auctions virtually exists only for 
the registrar and actually only results out of the forgetfulness or 
indifference of the registrants to what happens with their expiring domains. In 
other words, the registrars are exploiting an unintended situation rather than 
adding a valuable service to the domain industry. It is questionable if there 
is need for post-expiry auctions; registrants should trade their domains before 
expiry or decide to renew them if they desire to trade them.

There may be valid argumentation that a fair post-expiry domain market that is 
transparent and allows for choice of auction provider should not be prevented. 
However, taking into account that post-expiry auctions are only commercially 
interesting for the registrars because they charge a disproportional commission 
due to their current advantage of becoming the only auction provider, it 
appears likely that registrars would shift their post-expiry practices to new 
kinds of overcharging activities. Any new consensus policy that attempts to 
expand for regulation of transfer clauses while at the same time intends to 
protect registrants may be contradictory in itself. Most of all, circumvention 
practices will go on as long as there is no real enforcement. Even in case of a 
well drafted new EDDP, registrars like Godaddy may simply establish their shady 
renewal practices and auction sales before expiry, i.e. a registrant will 
likely lose his domain before it formally expires.