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Username: Phil Berent
Date/Time: Fri, October 27, 2000 at 9:18 PM GMT
Browser: Microsoft Internet Explorer V5.0 using Windows 98
Score: 5
Subject: Critique of JVTeam Application

Message:
 

 
Introduction

This Critique of the JVTeam’s proposal is a statement on behalf of the competing Affinity Internet, Inc/ bizTRAC team.

We maintain that the JVTeam application for the .biz TLD is incomplete and unworkable and should therefore be rejected. Further if the application is approved we see the results as being, for the reasons stated below, just as if another unrestricted “.com” was created with all the cyberhoarding, cybersquatting and domain name speculation problems which that implies.

Specifically the application has the following problems and omissions:
(1) The JVTeam Application is Incomplete – No Charter is Included
(2) A “loose” Charter would be very difficult to use as the basis for determining arbitration disputes.
(3) A “tight” Charter would not meet desirable objectives.
(4) It would be very difficult for a potential complainant to know whether a given site did or did not infringe the Charter. Therefore many registrations violating the Charter would remain unchallenged.
(5) This means that the Charter would have no “teeth”. This, together with the low cost of registration, would encourage frivolous registrations. This would turn the new TLD into another “.com.”
(6) A loose Charter would be “an invitation to litigation” by those who can afford it.
(7) This is a proposal for an “unsponsored restricted TLD”. As such, the proposal has no mechanism for reflecting the interests of the effected constituencies.
(8) It is doubtful whether the JVTeam has created a viable business plan.

These points are explained in detail below.

JVTeam’s Approach

JVTeam use the basic premise that UDRP should be extended to cover instances where an individual registers an SLD but where the registration does not conform to the “Charter” for that TLD.  Their idea is that improper registrations will then be deterred by the possibility of arbitration and that if such registrations do occur they can be reversed through the arbitration process.

The UDRP has been shown to have many benefits (and we also support an extended version of this policy) for trademark disputes. We believe, however, that their application is incomplete and, that if they were to complete it, the un-workability of their approach would become apparent. We assert this for the following reasons:

(1) The JVTeam Application is Incomplete – No Charter is Included

JVTeam has put together a detailed “Description of TLD Policies” of close to 50 pages. However nowhere within that document are their polices truly given. They state that a complainant will be able to challenge a registration through the arbitration process if the registration “failed to meet the criteria set forth in the applicable Rules Of Eligibility For Restricted TLD (the applicable “TLD Charter”)”.  However, nowhere do they give details of what this Charter will actually contain.  The Charter IS effectively the rules of management of the TLD and should therefore be the heart of a proposal for a restricted TLD . Differences in the Charter would very markedly affect the workings and the value of the proposed TLD. As the Charter is not presented we therefore assert that the application is materially incomplete.

Prior to posting this analysis we requested (on this notice board) that JVTeam should present the proposed Charter for this TLD and received no response. We conjecture that the JVTeam did not explicitly present a Charter, or respond to our request, because of the intrinsic difficulties of this approach and the fact that any proposed form of Charter could be easily challenged. Specifically:

(2) A “loose” Charter would be very difficult to use as the basis for determining arbitration disputes.

In their application the JVTeam makes only two statements which hint as to what the Charter might contain:
(i) “The TLD shall be restricted to any individual, organization, or entity that desires to advertise their business and/or conduct commercial activities on the Internet.”
(ii) The registrant will be required to state that “the name is reasonably related to the registrant’s business, and that the domain name will be used for commercial purposes only”

These statements are contradictory as the first one talks about “desire”, which seems to imply that it would be O.K. to register a domain before I have a business up and running. The second statement would seem to imply that the registrant needs to be already engaged in business. In either case, if the Charter were indeed to be worded in these “loose” terms it would be almost impossible for an arbitrator to determine the merits of any given case. If I were to buy “flowers.biz” I could legitimately claim that I “desire” to set up an on-line flower service. Just because I don’t get round to it (and the site remains inactive) by the time a complainant challenges my registration, doesn’t mean that my desire wasn’t genuine. Even if I offered to sell the name to a potential buyer (which has been used in some arbitration cases as evidence of bad faith) I would be hard to show that I did not initially “desire” to really establish a business.

If the second statement “reasonably related etc” is used as the basis of the Charter then this would make it impossible for a business just in the idea stage to register a name. This could of course be changed to “reasonably related to the registrants intended business etc”. However the problems would then be the same as with statement (i). In any case even the “reasonably related” criteria as stated would be very difficult to decide fairly in most arbitration cases.

A  prospective complainant would therefore be faced with an impossible task, when deciding whether to pursue arbitration proceedings, of trying to determine if a certain domain is or is not “reasonably related to the business” of another company which might be privately held and might be in another country or even on another continent.

The point is that where is relatively easy to determine whether there was bad faith in a trademark infringement case (and even this is not always easy) it is impossible to effectively determine whether someone intended or desired at the time of registration to use a given registration “for business purposes”, such desires or intentions are not therefore the appropriate subject for an arbitration dispute. 

(3) A “tight” Charter would not meet desirable objectives.

There are many forms of tightly controlled Charter for which arbitration could be used. For example it would be possible to specify a Charter that required that a web site name could only be the same as the name of an existing registered trademark, or of an existing business with a certain level of revenues, and so on. Using this type “tight” Charter it would be relatively easy to determine whether a given registration did or did not infringe the rules. However this type of tight charter would not allow for the participation of start-up business. In many cases being able to “lock in” an appropriate name is a vital step in setting up a new business on the web and a Charter restricted to existing businesses would therefore fail to provide an important element necessary for a new domain.

(4) It would be very difficult for a potential complainant to know whether a given site did or did not infringe the Charter. Therefore many registrations violating the Charter would remain unchallenged.

It is relatively easy to determine whether someone has infringed my trademark or is using a site in bad faith to try to capture some for my business. However, it is close to impossible in many cases to determine (without hiring a private investigator) whether a given SLD is closely “related to the registrant’s business”. It is completely impossible to determine whether the registrant “desires” to engage in a business activity related to that name.

Even if a “tight” Charter were specified it would be impossible for a complainant to know, without considerable investigation, whether the registrant of a given site did or did note meet the specified criteria at the time of registration.

For these reasons in many cases a potential complainant would chose to avoid the costs of investigation and arbitration and many (if not most) registrations violating the Charter would be likely to go unchallenged

(5) This means that the Charter would have no “teeth”. This, together with the low cost of registration, would encourage frivolous registrations. This would turn the new TLD into another “.com.”

As the application cost under the JVTeam Proposal is likely to be less than $30 per year and it would be very difficult to prove Charter Infringement, many people will register names either with the intention of speculating and selling them, or with vague or uncertain plans to set up a business at a future date. In other words the problems of cyber hoarding and domain name speculation are likely to be as bad as they are for the .com space where far less than 30% of names registered are being actively used.

(6) A loose Charter would be “an invitation to litigation” by those who can afford it.

Arbitration is not costless. Although the proceedings themselves are relatively cheap, in a “loose” Charter environment there would be a big advantage to hiring legal services to challenge or defend a given registration. This would give large companies with deep pockets trying to win or defend a name a big advantage over small businesses.

(7) This is a proposal for an “unsponsored restricted TLD”. As such, the proposal has no mechanism for reflecting the interests of the effected constituencies.

In the “New TLD Application Instructions” ICANN clearly states that “because restricted TLDs require definition and implementation of policies concerning naming restrictions, which are most appropriately addressed by subsets of the global Internet community, proposals for restricted TLDs should ordinarily provide for a sponsoring organization”.

The need for a sponsoring organization is clear in the case of a .biz TLD. Several constituencies will have an interest in the policies used to run the TLD. Among others these are: the business community, the registrar community, the intellectual property community, the consumer community and so on. It may take several iterations before a set of policies is developed which adequately reflects the concerns and interests of these groups. In addition, it should be possible to modify policies on an ongoing basis to meet the needs of these constituencies. The sponsoring organization provides a mechanism whereby the views and requirements of those that are served by the TLD may be transformed into policy.

The JVTeam proposal has no sponsoring organization and therefore has no mechanism by which this can be achieved.

(8) It is doubtful whether the JVTeam has created a viable business plan.

JVTeam’s plan for the .biz registry specifies that their operation will lose money for the first four years. They project losses of approximately $20MM in the fourth year of operations under their expected scenario. It is impossible to predict what other registries will be created or how technology will change over this period and it is certainly impossible to say with certainty that there will still be a place for a .biz registry at the levels of demand projected 8 or 10 years from now. It may therefore be difficult for JVTeam to maintain commitment to this project in the long term if the revenues don’t turn around, as they foresee, after year 4 or if it becomes apparent before that time that they will not do so.
       
     

 


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