Thanks Jeff.  I would like to participate on the proposed Small Team on Auctions.

 

Best,

Paul

 

 

Taft /
 
Paul D. McGrady / Partner
Taft Stettinius & Hollister LLP
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All,

 

In preparation for Monday’s Working Group call, you have probably noticed that the topic of Auctions / Mechanisms of Last resort (Topic 35: “Auctions” for short) is listed as the last topic of discussion.

 

Leadership had a call on Friday (we now have 2 calls per week, in addition to the full working group 2 calls per week so that we can be prepared for the meetings.  During that call, Leadership reviewed each of the comments on Auctions. 

 

How to Move Forward:  Below you see my summary of the comments – which should not substitute for your review of the comments.  We would like to put together a small group to work on seeing if there is a way to take into consideration all of the comments to come up with a proposed solution that could address most of the comments while also keeping in mind the questions posed by the Board.  We would like to give 14 days for this group to see if they can come up with improvements to the recommendations.  If they can come up with a proposal, that will then be brought back to the full WG at that point in time.  Therefore, we are not inclined to cover Auctions in great detail on the call.

 

**Word of Caution:  For those that believe that if we cannot come to an agreement on this issue, that the ICANN Board will just adopt the status quo (namely, the way it was implemented in 2012), I would STRONGLY encourage you to read their comments – especially the first comment on asking the Working Group in essence to justify why the WG believes that funds generated from the resolution of contention sets should not be used to “benefit the global Internet community rather than competing applicants.”  Leadership believes that this is an implicit message from the Board that unless we can come up with a good reason to allow private auctions, it is not something that they look upon with favor.  We can be wrong of course, but this is what we read into their comments.

 

GENERAL OBSERVATIONS FROM COMMENTS

 

Some observations are as follows:

 

1. The only complete support was voiced by a few individuals.
2. The IPC viewed the recommendations as not ideal, but could in theory accept.  But that said they are not in favor of using sealed bids for brands (See Below).
3. A number of groups has no opinion, some of whom however, stated that that was because their own members had differing opinions.

 

4. ICANN Board Comments:

 

1. The Board encourages the PDP WG to provide a rationale why the resolution of contention sets should not be conducted in a way such that any net proceeds would benefit the global Internet community rather than other competing applicants.
2. If private resolution is allowed, they would like to know why we only bring some of the aspects of the private resolution into the program (i.e., some transparency requirements, intent, etc.).
3.  Wants to know if promises/statements in support of the notion of “bona fide” intent can be changed at a later time or is it just a promise/statement that covers that specific moment and time.
4. Concerned about subjectively trying to determine the state of mind of applicants – Wants the WG “to provide a clear problem statement of what types of behavior or abuse the requirement of bona fide applications is meant to address; then could then use such a statement to provide objective criteria for assessing the bona fide nature of an application.
5. Wants us to confirm that a statement of bona fide intent is required of ALL applications as opposed to just those in auctions. – Leadership believes intent was for ALL applications.
6. Board provides a hypothetical of an applicant that applies for 20 TLDs, but only intends on operating 5 of them. 

                                                    i.     Does that mean that for the 15 they don’t take that they were not made with a bona fide intent?

                                                   ii.     Does ICANN need to get all investors and those with controlling interests in every application to certify intent.

7. To SUM UP:  Wants more Objectivity.

 

5. After those comments, the rest of the comments are all over the place. I don’t mean that in a negative way, its just that they cover the wide range of the spectrum from:

 

1. Private Resolution of Contention Sets

                                                    i.     NCSG does not believe that parties should be able to pay each other for withdrawing apps – Not in Favor of Private Auctions

                                                   ii.     Galway Strategy Group – cites Board comments and believes private auctions will cause reputational harm to ICANN.

                                                  iii.     Article 19 does not support private auctions

                                                  iv.     ALAC concerned about gaming the process through private auctions and thus does not support them.

                                                   v.     GoDaddy not concerned with issues raised on private auction

 

2. Mechanism of the Last Resort Auction

                                                    i.     BRG (Brand Registry Group), BC and IPC do not supporting sealed bids

                                                   ii.     BC and ALAC prefer Vickrey Auction

                                                  iii.     Commercial and Noncommercial entities should not be in auction with each other – GAC

                                                  iv.     Concerned that the only way to change or withdraw their bid is to withdraw the entire application - RySG

 

3. “Bona Fide” Intentions

                                                    i.     Standard too vague – Article 19

                                                   ii.     Criteria provided are subjective and can be gamed (thus not predictable) – BC

                                                  iii.     Wants both ICANN and Evaluators to ask CQs on Bona Fide intentions – GoDaddy

                                                  iv.     Not sufficiently defined; neither are the punitive measures; Does not believe this addresses Board concerns - GAC

                                                   v.     Does not believe that bona fide intent is incredibly difficult to quantify – RySG

                                                  vi.     Bona Fide requirements are completely unenforceable – Galway Strategy Group

                                                vii.     Too Subjective – ALAC

 

**I have not included ICANN Org comments in this summary because in general they do not take a view on these issues, but rather ask detailed questions on implementing the bona fide intention aspect and whether this needs a specific evaluation, etc.  In other words, if we continue down the ‘Bona Fide” Intention path, then we will need to address these questions (or refer them to the IRT_).

 

 

 

 

 

 

Jeffrey J. Neuman Founder & CEO JJN Solutions, LLC p: +1.202.549.5079 E: jeff@jjnsolutions.com http://jjnsolutions.com