Closed generic statement [Suggested edits]

March 1, 2013

      Dear ALAC,

*The suggested changes is in BLUE.** *

*Suggested Changes to the Draft Statement*

In considering the matter of closed generic Top Level Domains (gTLDs),
ICANN is guided by The Affirmation of Commitments (AoC) between the United
States Department of Commerce (DOC) and ICANN clearly specify the promotion
of competition, consumer trust and consumer
choice.[1]<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftn1>It
is also worth noting that there are several issues that surface with
closed gTLDs and these include but are not limited to the following:

   1. Would the endorsement of “Closed Generic” Applications create a
   situation or a series of situations whether now or in the future that will
   restrict competition?
   2.  Would the endorsement of “Closed Generic” Applications create a
   situation where there is a dominant position within the market?
   3. Would the endorsement of the “Closed Generic” Applications create a
   restraint in trade of a particular market?
   4. Would ICANN be immune from anti-trust liability?

On 4th August 2012, a precedent was established in the *Manwin Licensing
International S.A.R.L., et al. v. ICM Registry, LLC, et al  *where
the* *Honorable
Philip S. Gutierrez, United States District Judge ruled that antitrust
claims could be filed over .xxx.  Under the *Sherman Act § 2, 15 U.S.C. § 2*
*[2]*<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftn2>monopolizing
trade is a felony. Under the circumstances where this trade
involves foreign nations such as generic TLD applications that have been
made by countries outside the US, then *Sherman Act § 7 (Foreign Trade
Antitrust Improvements Act of 1982), 15 U.S.C. § 6a* will apply in relation
to conduct involving trade or commerce with foreign nations.

On the whole, the ALAC does not believe that unrestricted closed generics
provide public benefit and would prefer that TLDs -- especially for strings
representing categories -- were not allocated in a way that would lock out
broad access to sub-domains. Some members of At-Large believe, on
principle, that all closed generics are harmful to the public good. Others
believe that, while not necessarily being beneficial to end users, closed
gTLDs should be allowed as simply being consistent with existing practise
for lower-level domains.

Traditionally, the prohibition and control provisions laid out in
competition rules basically aims to prevent cartelization and
monopolization in markets for goods and services. Such developments in
markets inevitably harm consumer welfare which competition rules aim to
protect. On the same token, there are instances where some agreement may
limit competition to allow for social and economic benefits to pass to the
other. In order to ensure that such agreements with a net effect of
increasing competition can be made, an exemption regime is regulated in
competition law and agreements between undertakings in the same level
(horizontal) and different levels (vertical) of the market may be left
exempt from the prohibition of the competition rules under an exemption
system, provided they are not cartel agreements which are, by nature, out
of the scope of exemption.

However, in developing this response to the Board's request, the ALAC found
the issue to be far more nuanced than the above hard positions would
suggest. There may be innovative business models that might allow a closed
TLD to be in the public interest. An example might be a registry that makes
2nd level names available at no cost to anyone, but retains legal control
over them. This is similar to the model used by Facebook and many blog
hosting sites. Allowance should be made for applicants interested in
widespread sub-domain distribution that do not require domain-name sales as
a source of revenue, or for other forms of sub-domain allocation.

Whether a generic-word string is used with its generic meaning or in some
other context may also be relevant. The fictitious but famous computer
manufacturer, Orange Computers Inc. using the TLD ".orange" might be
acceptable, while the same string used as a closed TLD by a California
Orange Growers Cooperative (and not allowing access to orange producers
from Florida or Mediterranean and South American countries) might well be
considered unacceptable.

Allowing this nuanced approach would likely involve a case by case review
of how a TLD will be used and how its sub-domains will be allocated.
Moreover, it would require a contractual commitment to not change that
model once the TLD is delegated.

In summary, the ALAC believes that completely uncontrolled use of generic
words as TLDs is not something that ICANN should be supporting. However,
some instances of generic word TLDs could be both reasonable and have very
strong benefits of just the sort that ICANN was seeking when the TLD space
was opened. Such uses should not be excluded *a*s long as it can be
established that they serve the public interest.

------------------------------

[1]<https://community.icann.org/pages/viewpage.action?pageId=40927847&focusedCommentId=40931544&#_ftnref1>Clauses
3 and 9.3 of the Affirmation of Commitment between the United
States Department of Commerce and the Internet Corporation for Assigned
Names and Numbers

Kind Regards,
Sala

Salanieta T. Tamanikaiwaimaro

Evan Leibovitch

Salanieta T. Tamanikaiwaimaro

Evan Leibovitch

Olivier MJ Crepin-Leblond

Salanieta T. Tamanikaiwaimaro

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