Comment on .COM & RZMA Agreements

["Michael D. Palage" <michael@xxxxxxxxxx>]

Dear ICANN Board,

 

I respectfully submit this comment in connection with the proposed
amendments to the .COM Registry Agreement and the new RZMA. Sadly, the
majority of the comments submitted to date are misguided rants, seeking to
have the contract cancelled or the fees reduced.  These are options that are
simply outside the scope of the current ICANN Board's purview based upon
previous contractual negotiations.  However, there are a couple of areas in
which ICANN Board can and should act.

 

Since the creation of ICANN, Verisign and its predecessor (NSI) have always
had preferential terms when it comes to gTLD Registry Agreements beginning
with the very first Registry Agreement that bundled the .COM, .ORG and .NET
TLDs into a single contract. In order for ICANN to separate these TLDs into
three separate contract, ICANN had to give Verisign a presumptive right of
renewal in the .COM TLD.  Since then, VeriSign has always had preferential
contract terms when negotiating with ICANN, including during my term on the
ICANN Board 2003-2006 when there was a fundamental shift in how ICANN
received it funding from the contracting parties. Therefore, I was deeply
concerned when ICANN announced the proposed terms of this "extension" to
2012 agreement Registry Agreement with over two years still left on this
contract.  Every other legacy gTLD operator has been forced to sign a new
Registry Agreement that mirrors the template agreement (and associated
enhanced safeguards) signed by over 1,000 new gTLD registry operators.

 

ICANN is no longer a humble technical coordinating body, circa 1999.
Whether it likes it or not, it has become the de facto regulator for a
global billion dollar market. And when the regulator with monopoly control
over the an essential facility (see CRA report 2009) provides favorable
contractual terms to a the dominant provider in that market that raises
serious competition concerns.  In addition it potentially exposes ICANN to
claims of contributory liability regarding harm to third parties when
certain consumer safeguards are not imposed on that dominant market
provider. The potential harm to consumers and businesses are clearly and
articulately set forth in the INTA comments submitted to ICANN by Lori
Schulman. 

 

Therefore, I recommend for the Board to decline extending the 2012 Registry
Agreement until 2024 and to begin negotiations with VeriSign to enter into a
new contract mirroring the baseline template that every new gTLD applicant
has signed and which a growing number of other legacy gTLD operators have
signed. 

 

As noted above, ICANN since its very creation has been working to get out of
bundled contracts with VeriSign (and its predecessor NSI), therefore it
makes no sense that ICANN would agree to sync the .COM and RZMA agreements
together even in just their terms. The comments provided by ICANN's Akram
Atallah on the "inextricably intertwined" nature of the .COM and RZM
functions actually is support for why these functions should be separated as
it represents a single point of failure.  I respect the ICANN's Board
decision in wanting to finalize this RMZA to remove any obstacle in
connection with the IANA transition. However, the provisions regarding
potential claims of intellectual property rights are deeply troubling for
the reasons set forth below.

 

The joint announcement by VRSN and ICANN, makes specific reference to "work
product." This is a legal term of art usually referring to protection
afforded under copyright law. See
http://www.ntia.doc.gov/files/ntia/publications/root_zone_administrator_prop
osal-relatedtoiana_functionsste-final.pdf

 

Second, the DNSSEC Practice Statement for the Root Zone ZSK operator, see
http://www.root-dnssec.org/wp-content/uploads/2010/06/vrsn-dps-00.txt
contains the following Copyright Notice:

 

   Copyright 2010 by VeriSign, Inc., and by Internet Corporation for

   Assigned Names and Numbers.  This work is based on the Certification

   Practice Statement, Copyright 1996-2004 by VeriSign, Inc. Used by

   Permission.  All Rights Reserved.

 

Historically, VRSN (and its predecessor NSI) had previously sought to
leverage copyright law to extend its grip over certain domain name
activities.  By way of example when the US was seeking to synchronize US
copyright law with European copyright law regarding the sui generis
protection of database compilations in the late 90s, see
http://www.techlawjournal.com/intelpro/19990523.htm The local congressman
from Virginia was very active on this topic and even proposed his own bill.

 

Congressman Bliley also submitted letters to ICANN and NTIA raising
intellectual property claims regarding certain domain name functions.  See
this response from NTIA to the Congress (see
https://www.ntia.doc.gov/other-publication/1999/department-commerce-response
-letter-chairman-committee-commerce-united-states ) and this response from
ICANN to the Congressman denying any potential copyright claims in the data
(see 

https://www.icann.org/resources/unthemed-pages/bliley-response-1999-07-08-en
)   

 

See this relevant excerpt from the ICANN communication to the Congressman:

 

Under current United States law, it is highly doubtful that collection by
registrars of this factual information gives rise to any enforceable
intellectual property rights. Under
<http://caselaw.findlaw.com/scripts/getcase.pl?navby=case&court=US&vol=499&i
nvol=340> Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S.
340 (1991), copyright may not be claimed in factual information itself, but
only in the selection, coordination, or arrangement of the information in a
sufficiently original way. It therefore violates no copyright for others to
use the registrar data for their own purposes according to their own
selection, coordination, and arrangement. Similarly, because the registrar
data has long been available to the public for the asking, both by Internet
tradition and by U.S. Government requirements, it would not seem to be
subject to legitimate claims of trade-secret rights.

 

Although not giving rise to intellectual-property rights under current U.S.
law, registrar data may be subject to claims of intellectual property rights
under the laws of other countries, or under future laws that may be enacted
in this country at the state or federal level. Claims under such laws, if
not accommodated to the Internet's needs, could complicate the efforts of
the technical community to ensure stable and reliable operation of the
Internet and the legitimate needs of the Internet user community for
information about domain names. Pending proposals for extending U.S.
intellectual-property law to cover databases, fortunately, take into account
these special operational needs of the Internet. For example, H.R. 1858 (the
Consumer and Investor Access to Information Act of 1999)
<http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_bills&do
cid=f:h1858ih.txt.pdf> , which protects publishers from others who seek to
compete unfairly by copying and selling the publishers' databases,
specifically excludes coverage of databases "incorporating information
collected or organized . . . to perform the function of addressing, routing,
transmitting, or storing Internet communications . . . ."

 

Now while the proposed RZMA does contain a provision disclaiming any
Intellectual Property claims in the underlying data (a good thing), the
remaining carve out regarding retention of rights is deeply troubling since
any Intellectual Property claims are not bound by
consultation/mediation/resolution. Instead, Section 7(g)(vi) provides that
either party may commence a "civil action" to "prevent or enjoin the breach
of any Intellectual Property Rights or confidentiality obligations of the
other Party". This represents another example of how ICANN has provided
preferential treatment to VeriSign. Almost every other agreement entered
into by ICANN contains a provision preventing a party from seeking
resolution before a court. In fact, ICANN has recently submitted an Appeal
to the Ninth Circuit in connection with the .AFRICA dispute arguing this
very point. Therefore, it makes no sense why ICANN would provide this
concession to VeriSign. 

 

The RZM functionality is too important for any one party (neither VeriSign
or ICANN) to claim any proprietary rights. This is a global resource and the
global internet community should be able to rely upon any qualified third
party undertaking this service if/when the global internet community lose
trust in either VeriSign or ICANN. 

 

Therefore, there should be a provision in the RZMA that specifically
prohibits either party ICANN or VRSN from making any intellectual property
claims to the processes involved in the signing/publishing of the root zone.
Notwithstanding VeriSign's competence to provide the RZM functions, if
VeriSign fails to waive any and all Intellectual Property Rights in
connection with the RZM functions, ICANN should serious consider allocating
the necessary financial resources from strategic reserve or auction proceeds
to ensure that there are NO proprietary rights associated with the RZM
functions.

 

Respectfully submitted,

 

Michael D. Palage

 

 

P.S. To all the VeriSign "commenters" demanding that the price of a .COM NOT
increase or be lowered, please refer to section 7.3 (d)(ii) of the current
agreement which states in relevant part:

 

(ii) Registry Operator shall be entitled to increase the Maximum Price
during the term of the Agreement due to the imposition of any new Consensus
Policy or documented extraordinary expense resulting from an attack or
threat of attack on the Security or Stability of the DNS, not to exceed the
smaller of the preceding year's Maximum Price or the highest price charged
during the preceding year, multiplied by 1.07.

 

Then look at when the proposed "implementation" of the Thick Whois
"Consensus Policy" is scheduled for, see
https://www.icann.org/resources/pages/thick-whois-2016-06-27-en  Under the
existing and proposed extended contract, VeriSign will be contractually
permitted to ask for a price increase of $0.55 per domain name year.  Now
ask you self this question, how do you think VeriSign shareholders will
reacted to them NOT asking for an increase that will bring in 69 million in
additional revenue/profit per year?  While everyone feared Google being the
deep pocket bidder in ICANN's auction of last resort, VeriSign's sole source
contract in connection with .COM and .NET shows why the 135 million for .WEB
was just a defensive drop in the bucket.