proposed Language for those Getting Applicant Support
All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to "game the system" by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? "If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received." Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss........... Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<http://www.comlaude.com/> [cid:image001.jpg@01D63DA3.235624E0] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com>
Five years seems like an eternity. How about two or three, instead? [image: Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com> wrote:
All,
On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation?
*“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”*
*Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit).*
Discuss………..
*Jeff Neuman*
Senior Vice President
*Com Laude | Valideus *1751 Pinnacle Drive
Suite 600, McLean
VA 22102, USA
M: +1.202.549.5079
D: +1.703.635.7514
E: *jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>* www.comlaude.com
------------------------------ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com <https://comlaude.com> _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<http://www.comlaude.com/> [cid:image001.jpg@01D63D8E.B0956740] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com> _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org<mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521.
We are limiting reimbursement to the second half of the contract, because during the first half of the contract change of control/assignments are not allowed (except normal corporate assignments). So if they are not allowed to do it, there is no need to put a provision in there asking for reimbursement. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com>; Jeff Neuman <jeff.neuman@comlaude.com> Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<http://www.comlaude.com/> [cid:image001.jpg@01D63E39.0F025F40] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com> _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org<mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com>
Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com>; Jeff Neuman <jeff.neuman@comlaude.com> Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<http://www.comlaude.com/> [cid:image001.jpg@01D63E39.9CC6A390] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com> _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org<mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://comlaude.com>
Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com>; Mike Rodenbaugh <mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> https://urldefense.com/v3/__http://www.comlaude.com__;!!DUT_TFPxUQ!Qet2CBGrq... <https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...> [cid:image003.jpg@01D63E32.829B96D0] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. 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Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com>; AAikman@lrrc.com; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...> [cid:image002.jpg@01D63E43.68B8F0D0] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. 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The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. For further information see www.comlaude.com<https://urldefense.com/v3/__https:/comlaude.com__;!!DUT_TFPxUQ!SL6RjS2ZZQgSK...> ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. 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For further information see www.comlaude.com<https://comlaude.com>
Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com>; AAikman@lrrc.com; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. 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Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com>; AAikman@lrrc.com; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...> [cid:image002.jpg@01D63E4C.0EBAFB60] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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I still think what you have is over-engineered and that this is not really such a problem that needs solving. I also think that restricting the applicant from transferring based on indefinite standards like “legitimate” or “in the ordinary course” can only cause problems as undoubtedly there will be some non-gaming reason that an applicant who received support will want to assign and that the restrictions will cause dispute and confusion especially as new gTLDs are supposedly so innovative and different than anything before. I think the better and more effective approach here and with most things in the application process is to just remove the incentive for “gaming”. It should hopefully be apparent to all by now that if f you don’t remove the incentives for bad or disfavored behavior and just try to prohibit it using indefinite standards that the very smart people in this industry will find a way to get around the prohibition, which is further exacerbated by a practically non-existent ICANN compliance function. Accordingly, I would propose the following. To disincentivize “gaming” of the applicant support program by applicants who are applying on behalf of third parties, or with the intent to immediately transfer ownership to third parties, applicants who receive financial support through the ASP Program will not be permitted to assign the relevant Registry Agreement within the first five (5) years of execution of the Registry Agreement unless they repay the repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Best regards, Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 9:54 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com>; AAikman@lrrc.com; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | http://www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> https://urldefense.com/v3/__http://www.comlaude.com__;!!DUT_TFPxUQ!VDgcIXGoE... <https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...> [cid:image002.jpg@01D63E58.8F9FD870] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. 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I like Marc's proposal. [image: Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com phone: +1 (415) 738-8087 On Tue, Jun 9, 2020 at 10:22 AM <trachtenbergm@gtlaw.com> wrote:
I still think what you have is over-engineered and that this is not really such a problem that needs solving. I also think that restricting the applicant from transferring based on indefinite standards like “legitimate” or “in the ordinary course” can only cause problems as undoubtedly there will be some non-gaming reason that an applicant who received support will want to assign and that the restrictions will cause dispute and confusion especially as new gTLDs are supposedly so innovative and different than anything before. I think the better and more effective approach here and with most things in the application process is to just remove the incentive for “gaming”. It should hopefully be apparent to all by now that if f you don’t remove the incentives for bad or disfavored behavior and just try to prohibit it using indefinite standards that the very smart people in this industry will find a way to get around the prohibition, which is further exacerbated by a practically non-existent ICANN compliance function.
Accordingly, I would propose the following.
To disincentivize “gaming” of the applicant support program by applicants who are applying on behalf of third parties, or with the intent to immediately transfer ownership to third parties, applicants who receive financial support through the ASP Program will not be permitted to assign the relevant Registry Agreement within the first five (5) years of execution of the Registry Agreement unless they repay the repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%).
Best regards,
*Marc H. Trachtenberg* Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com | www.gtlaw.com
[image: Greenberg Traurig]
*From:* Jeff Neuman [mailto:jeff.neuman@comlaude.com] *Sent:* Tuesday, June 9, 2020 9:54 AM *To:* Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com>; AAikman@lrrc.com; mike@rodenbaugh.com *Cc:* gnso-newgtld-wg@icann.org *Subject:* RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Thanks Marc. I have tried to work your language in.
Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules.
*“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). *
*Jeff Neuman*
Senior Vice President
*Com Laude | Valideus*
D: +1.703.635.7514
E: *jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>*
*From:* trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com> *Sent:* Tuesday, June 9, 2020 10:18 AM *To:* Jeff Neuman <jeff.neuman@comlaude.com>; AAikman@lrrc.com; mike@rodenbaugh.com *Cc:* gnso-newgtld-wg@icann.org *Subject:* RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments.
*Marc H. Trachtenberg* Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com | www.gtlaw.com
[image: Greenberg Traurig]
*From:* Jeff Neuman [mailto:jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>] *Sent:* Tuesday, June 9, 2020 8:51 AM *To:* Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com>; AAikman@lrrc.com; mike@rodenbaugh.com *Cc:* gnso-newgtld-wg@icann.org *Subject:* RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made.
The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term).
Do you have some alternative language that would work in this case that achieves what we are trying to achieve?
Thanks.
*Jeff Neuman*
Senior Vice President
*Com Laude | Valideus*
D: +1.703.635.7514
E: *jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>*
*From:* trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com> *Sent:* Tuesday, June 9, 2020 8:53 AM *To:* Jeff Neuman <jeff.neuman@comlaude.com>; AAikman@lrrc.com; mike@rodenbaugh.com *Cc:* gnso-newgtld-wg@icann.org *Subject:* RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well…
*Marc H. Trachtenberg* Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com | www.gtlaw.com
[image: Greenberg Traurig]
*From:* Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org <gnso-newgtld-wg-bounces@icann.org>] *On Behalf Of *Jeff Neuman *Sent:* Tuesday, June 9, 2020 7:40 AM *To:* Aikman-Scalese, Anne <AAikman@lrrc.com>; Mike Rodenbaugh < mike@rodenbaugh.com> *Cc:* gnso-newgtld-wg@icann.org *Subject:* Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
**EXTERNAL TO GT**
Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence:
*“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”*
*Jeff Neuman*
Senior Vice President
*Com Laude | Valideus*
D: +1.703.635.7514
E: *jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>*
*From:* Aikman-Scalese, Anne <AAikman@lrrc.com> *Sent:* Monday, June 8, 2020 3:17 PM *To:* Mike Rodenbaugh <mike@rodenbaugh.com>; Jeff Neuman < jeff.neuman@comlaude.com> *Cc:* gnso-newgtld-wg@icann.org *Subject:* RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
I like the five years.
The sentence that begins with “However” does not appear to be a complete sentence.
Why are we limiting the reimbursement provision to the second half of the contract?
Thanks,
Anne
*From:* Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> *On Behalf Of *Mike Rodenbaugh *Sent:* Monday, June 8, 2020 12:10 PM *To:* Jeff Neuman <jeff.neuman@comlaude.com> *Cc:* gnso-newgtld-wg@icann.org *Subject:* Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
*[EXTERNAL]* ------------------------------
Five years seems like an eternity. How about two or three, instead?
[image: Logo]
*Mike Rodenbaugh*
*address:*
548 Market Street, Box 55819
San Francisco, CA 94104
*email:*
mike@rodenbaugh.com
*phone:*
+1 (415) 738-8087
On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com> wrote:
All,
On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation?
*“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”*
*Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit).*
Discuss………..
*Jeff Neuman*
Senior Vice President
*Com Laude | Valideus *1751 Pinnacle Drive
Suite 600, McLean
VA 22102, USA
M: +1.202.549.5079
D: +1.703.635.7514
E: *jeff.neuman@comlaude.com <jeff.neuman@comlaude.com>* www.comlaude.com <https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...>
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Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman <jeff.neuman@comlaude.com> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com; Aikman-Scalese, Anne <AAikman@lrrc.com>; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Five years seems like an eternity. How about two or three, instead? [Logo] Mike Rodenbaugh address: 548 Market Street, Box 55819 San Francisco, CA 94104 email: mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> phone: +1 (415) 738-8087 On Mon, Jun 8, 2020 at 11:43 AM Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> wrote: All, On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation? “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit). Discuss……….. Jeff Neuman Senior Vice President Com Laude | Valideus 1751 Pinnacle Drive Suite 600, McLean VA 22102, USA M: +1.202.549.5079 D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> www.comlaude.com<https://urldefense.com/v3/__http:/www.comlaude.com/__;!!DUT_TFPxUQ!SL6RjS2ZZ...> [cid:image002.jpg@01D63E50.233A08C0] ________________________________ The contents of this email and any attachments are confidential to the intended recipient. 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The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ The contents of this email and any attachments are confidential to the intended recipient. They may not be disclosed, used by or copied in any way by anyone other than the intended recipient. If you have received this message in error, please return it to the sender (deleting the body of the email and attachments in your reply) and immediately and permanently delete it. Please note that the Com Laude Group does not accept any responsibility for viruses and it is your responsibility to scan or otherwise check this email and any attachments. The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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The Com Laude Group does not accept liability for statements which are clearly the sender's own and not made on behalf of the group or one of its member entities. The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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The Com Laude Group includes Nom-IQ Limited t/a Com Laude, a company registered in England and Wales with company number 5047655 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Valideus Limited, a company registered in England and Wales with company number 06181291 and registered office at 28-30 Little Russell Street, London, WC1A 2HN England; Demys Limited, a company registered in Scotland with company number SC197176, having its registered office at 33 Melville Street, Edinburgh, Lothian, EH3 7JF Scotland; Consonum, Inc. dba Com Laude USA and Valideus USA, headquartered at 1751 Pinnacle Drive, Suite 600, McLean, VA 22102, USA; Com Laude (Japan) Corporation, a company registered in Japan having its registered office at Suite 319,1-3-21 Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan. 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Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com>; trachtenbergm@gtlaw.com; mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Sent: Tuesday, June 9, 2020 7:54 AM To: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com; Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] _____ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Jeff Neuman [ <mailto:jeff.neuman@comlaude.com> mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Gnso-newgtld-wg [ <mailto:gnso-newgtld-wg-bounces@icann.org> mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com>; Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg < <mailto:gnso-newgtld-wg-bounces@icann.org> gnso-newgtld-wg-bounces@icann.org> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support ---------------------------------------------------------------------- If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate the information.
Not sure how I missed sending this to the list but please see below. Anne From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com>; alexander@schubert.berlin Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question. Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate. The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin<mailto:alexander@schubert.berlin>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521.
“I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate…” The problem is: As far as I understand the transfer of ownership can be easily facilitated in a way that it’s perfectly concealed: if you plan it upfront! Per today only ownership shares larger than 15% (please correct me if I am wrong) have to be reported. So all you need to do: You establish an applicant entity that is owned by 7 shell companies, each holding 14.29% ownership. In some jurisdictions shell companies cost next to nothing to establish, and almost no fees to annually renew. If you want to transfer ownership, you simply transfer the ownership of each of the 7 shell companies. This way the applicant entity has still the SAME 7 owners, none of which owns more than 15%. Sounds like a hell of administrative work, but in many poor countries it is not much difference to set up 1 plus 7 companies, instead of just one. The outside won’t know anything about the owner change, as the applicant entity is still owned by the same 7 companies. How far people go in that respect you can see in the list of ICANN accredited registrars (www.internic.net/alpha.html): 1020 (one thousand and twenty) LLCs, all owned by “dropcatch.com”; only set up and maintained to exercise “drop catching”: DropCatch.com 345 LLC DropCatch.com 346 LLC DropCatch.com 347 LLC DropCatch.com 348 LLC DropCatch.com 349 LLC DropCatch.com 350 LLC DropCatch.com 351 LLC DropCatch.com 352 LLC DropCatch.com 353 LLC DropCatch.com 354 LLC DropCatch.com 362 LLC ::::: ::::: IT GOES ON AND ON ! :::::::: ::::: Sparing you over a thousand rows here! ::::::::: ::::: DropCatch.com 1037 LLC DropCatch.com 1536 LLC DropCatch.com 1537 LLC DropCatch.com 1538 LLC DropCatch.com 1539 LLC DropCatch.com 1540 LLC DropCatch.com 1541 LLC DropCatch.com 1542 LLC DropCatch.com 1543 LLC DropCatch.com 1544 LLC DropCatch.com 1545 LLC They own 1,020 out of 2,450 accredited registrars. Probably even more through affiliates. It’s of course only ONE company – they need the accreditations so they have “more shots” when going to war over expired domains. Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Mittwoch, 10. Juni 2020 18:58 To: gnso-newgtld-wg@icann.org Subject: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Not sure how I missed sending this to the list but please see below. Anne From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> >; alexander@schubert.berlin <mailto:alexander@schubert.berlin> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question. Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate. The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin <mailto:alexander@schubert.berlin> ; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] _____ I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com> >; trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> ; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Sent: Tuesday, June 9, 2020 7:54 AM To: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com; Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] _____ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Jeff Neuman [ <mailto:jeff.neuman@comlaude.com> mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Gnso-newgtld-wg [ <mailto:gnso-newgtld-wg-bounces@icann.org> mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com>; Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg < <mailto:gnso-newgtld-wg-bounces@icann.org> gnso-newgtld-wg-bounces@icann.org> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support _____ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com <mailto:postmaster@gtlaw.com> , and do not use or disseminate the information. _____ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521.
Well, for some reason I thought the principals had to be disclosed in registry applications? From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 9:24 AM To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ “I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate…” The problem is: As far as I understand the transfer of ownership can be easily facilitated in a way that it’s perfectly concealed: if you plan it upfront! Per today only ownership shares larger than 15% (please correct me if I am wrong) have to be reported. So all you need to do: You establish an applicant entity that is owned by 7 shell companies, each holding 14.29% ownership. In some jurisdictions shell companies cost next to nothing to establish, and almost no fees to annually renew. If you want to transfer ownership, you simply transfer the ownership of each of the 7 shell companies. This way the applicant entity has still the SAME 7 owners, none of which owns more than 15%. Sounds like a hell of administrative work, but in many poor countries it is not much difference to set up 1 plus 7 companies, instead of just one. The outside won’t know anything about the owner change, as the applicant entity is still owned by the same 7 companies. How far people go in that respect you can see in the list of ICANN accredited registrars (www.internic.net/alpha.html<http://www.internic.net/alpha.html>): 1020 (one thousand and twenty) LLCs, all owned by “dropcatch.com”; only set up and maintained to exercise “drop catching”: DropCatch.com 345 LLC DropCatch.com 346 LLC DropCatch.com 347 LLC DropCatch.com 348 LLC DropCatch.com 349 LLC DropCatch.com 350 LLC DropCatch.com 351 LLC DropCatch.com 352 LLC DropCatch.com 353 LLC DropCatch.com 354 LLC DropCatch.com 362 LLC ::::: ::::: IT GOES ON AND ON ! :::::::: ::::: Sparing you over a thousand rows here! ::::::::: ::::: DropCatch.com 1037 LLC DropCatch.com 1536 LLC DropCatch.com 1537 LLC DropCatch.com 1538 LLC DropCatch.com 1539 LLC DropCatch.com 1540 LLC DropCatch.com 1541 LLC DropCatch.com 1542 LLC DropCatch.com 1543 LLC DropCatch.com 1544 LLC DropCatch.com 1545 LLC They own 1,020 out of 2,450 accredited registrars. Probably even more through affiliates. It’s of course only ONE company – they need the accreditations so they have “more shots” when going to war over expired domains. Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Mittwoch, 10. Juni 2020 18:58 To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Not sure how I missed sending this to the list but please see below. Anne From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; alexander@schubert.berlin<mailto:alexander@schubert.berlin> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question. Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate. The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin<mailto:alexander@schubert.berlin>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. 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Yes, all who own more than 15%! From: Aikman-Scalese, Anne [mailto:AAikman@lrrc.com] Sent: Mittwoch, 10. Juni 2020 19:29 To: alexander@schubert.berlin; gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Well, for some reason I thought the principals had to be disclosed in registry applications? From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 9:24 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support [EXTERNAL] _____ “I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate…” The problem is: As far as I understand the transfer of ownership can be easily facilitated in a way that it’s perfectly concealed: if you plan it upfront! Per today only ownership shares larger than 15% (please correct me if I am wrong) have to be reported. So all you need to do: You establish an applicant entity that is owned by 7 shell companies, each holding 14.29% ownership. In some jurisdictions shell companies cost next to nothing to establish, and almost no fees to annually renew. If you want to transfer ownership, you simply transfer the ownership of each of the 7 shell companies. This way the applicant entity has still the SAME 7 owners, none of which owns more than 15%. Sounds like a hell of administrative work, but in many poor countries it is not much difference to set up 1 plus 7 companies, instead of just one. The outside won’t know anything about the owner change, as the applicant entity is still owned by the same 7 companies. How far people go in that respect you can see in the list of ICANN accredited registrars (www.internic.net/alpha.html <http://www.internic.net/alpha.html> ): 1020 (one thousand and twenty) LLCs, all owned by “dropcatch.com”; only set up and maintained to exercise “drop catching”: DropCatch.com 345 LLC DropCatch.com 346 LLC DropCatch.com 347 LLC DropCatch.com 348 LLC DropCatch.com 349 LLC DropCatch.com 350 LLC DropCatch.com 351 LLC DropCatch.com 352 LLC DropCatch.com 353 LLC DropCatch.com 354 LLC DropCatch.com 362 LLC ::::: ::::: IT GOES ON AND ON ! :::::::: ::::: Sparing you over a thousand rows here! ::::::::: ::::: DropCatch.com 1037 LLC DropCatch.com 1536 LLC DropCatch.com 1537 LLC DropCatch.com 1538 LLC DropCatch.com 1539 LLC DropCatch.com 1540 LLC DropCatch.com 1541 LLC DropCatch.com 1542 LLC DropCatch.com 1543 LLC DropCatch.com 1544 LLC DropCatch.com 1545 LLC They own 1,020 out of 2,450 accredited registrars. Probably even more through affiliates. It’s of course only ONE company – they need the accreditations so they have “more shots” when going to war over expired domains. Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Mittwoch, 10. Juni 2020 18:58 To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Not sure how I missed sending this to the list but please see below. Anne From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> >; alexander@schubert.berlin <mailto:alexander@schubert.berlin> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question. Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate. The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin <mailto:alexander@schubert.berlin> ; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] _____ I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com> >; trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> ; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Sent: Tuesday, June 9, 2020 7:54 AM To: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com; Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] _____ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Jeff Neuman [ <mailto:jeff.neuman@comlaude.com> mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com < <mailto:trachtenbergm@gtlaw.com> trachtenbergm@gtlaw.com> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com>; <mailto:AAikman@lrrc.com> AAikman@lrrc.com; <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 <mailto:trac@gtlaw.com> trac@gtlaw.com | <http://www.gtlaw.com/> www.gtlaw.com From: Gnso-newgtld-wg [ <mailto:gnso-newgtld-wg-bounces@icann.org> mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com>; Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com From: Aikman-Scalese, Anne < <mailto:AAikman@lrrc.com> AAikman@lrrc.com> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh < <mailto:mike@rodenbaugh.com> mike@rodenbaugh.com>; Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg < <mailto:gnso-newgtld-wg-bounces@icann.org> gnso-newgtld-wg-bounces@icann.org> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman < <mailto:jeff.neuman@comlaude.com> jeff.neuman@comlaude.com> Cc: <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support _____ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com <mailto:postmaster@gtlaw.com> , and do not use or disseminate the information. _____ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. _____ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521.
And then you chain that thru shell companies and you have no meaningful information of officers. Not that shell companies are used in the business just to hide information; it also makes selling the asset easier which might attract more investment. That said, applicant support could be restrictive of this. Rubens
On 10 Jun 2020, at 13:35, Alexander Schubert <alexander@schubert.berlin> wrote:
Yes, all who own more than 15%!
<> From: Aikman-Scalese, Anne [mailto:AAikman@lrrc.com] Sent: Mittwoch, 10. Juni 2020 19:29 To: alexander@schubert.berlin; gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support
Well, for some reason I thought the principals had to be disclosed in registry applications?
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 9:24 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support
[EXTERNAL] “I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate…”
The problem is:
As far as I understand the transfer of ownership can be easily facilitated in a way that it’s perfectly concealed: if you plan it upfront!
Per today only ownership shares larger than 15% (please correct me if I am wrong) have to be reported. So all you need to do: You establish an applicant entity that is owned by 7 shell companies, each holding 14.29% ownership. In some jurisdictions shell companies cost next to nothing to establish, and almost no fees to annually renew. If you want to transfer ownership, you simply transfer the ownership of each of the 7 shell companies. This way the applicant entity has still the SAME 7 owners, none of which owns more than 15%. Sounds like a hell of administrative work, but in many poor countries it is not much difference to set up 1 plus 7 companies, instead of just one. The outside won’t know anything about the owner change, as the applicant entity is still owned by the same 7 companies.
How far people go in that respect you can see in the list of ICANN accredited registrars (www.internic.net/alpha.html <http://www.internic.net/alpha.html>): 1020 (one thousand and twenty) LLCs, all owned by “dropcatch.com”; only set up and maintained to exercise “drop catching”:
DropCatch.com 345 LLC DropCatch.com 346 LLC DropCatch.com 347 LLC DropCatch.com 348 LLC DropCatch.com 349 LLC DropCatch.com 350 LLC DropCatch.com 351 LLC DropCatch.com 352 LLC DropCatch.com 353 LLC DropCatch.com 354 LLC DropCatch.com 362 LLC ::::: ::::: IT GOES ON AND ON ! :::::::: ::::: Sparing you over a thousand rows here! ::::::::: ::::: DropCatch.com 1037 LLC DropCatch.com 1536 LLC DropCatch.com 1537 LLC DropCatch.com 1538 LLC DropCatch.com 1539 LLC DropCatch.com 1540 LLC DropCatch.com 1541 LLC DropCatch.com 1542 LLC DropCatch.com 1543 LLC DropCatch.com 1544 LLC DropCatch.com 1545 LLC
They own 1,020 out of 2,450 accredited registrars. Probably even more through affiliates. It’s of course only ONE company – they need the accreditations so they have “more shots” when going to war over expired domains.
Thanks,
Alexander
From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>] On Behalf Of Aikman-Scalese, Anne Sent: Mittwoch, 10. Juni 2020 18:58 To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support
Not sure how I missed sending this to the list but please see below. Anne
From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>>; alexander@schubert.berlin <mailto:alexander@schubert.berlin> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question.
Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate.
The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant.
Anne
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin <mailto:alexander@schubert.berlin>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
[EXTERNAL] I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects.
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com <mailto:trac@gtlaw.com> | www.gtlaw.com <http://www.gtlaw.com/>
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From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom.
I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop?
If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash.
If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck).
Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country?
In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings.
Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program?
THANKS,
Alexander
From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>>; trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Is that 3 years from winning the auction or three years from contract signing?
From: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com <mailto:AAikman@lrrc.com>>; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
[EXTERNAL] Thanks Marc. I have tried to work your language in.
Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules.
“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%).
Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>
From: trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com <mailto:AAikman@lrrc.com>; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments.
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com <mailto:trac@gtlaw.com> | www.gtlaw.com <http://www.gtlaw.com/>
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From: Jeff Neuman [mailto:jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com <mailto:AAikman@lrrc.com>; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made.
The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term).
Do you have some alternative language that would work in this case that achieves what we are trying to achieve?
Thanks.
Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>
From: trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com <mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com <mailto:AAikman@lrrc.com>; mike@rodenbaugh.com <mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well…
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com <mailto:trac@gtlaw.com> | www.gtlaw.com <http://www.gtlaw.com/>
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From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com <mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com <mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
*EXTERNAL TO GT*
Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence:
“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”
Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>
From: Aikman-Scalese, Anne <AAikman@lrrc.com <mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com <mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
I like the five years. The sentence that begins with “However” does not appear to be a complete sentence.
Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com <mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
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But the point is one would have to have special rules for Applicant Support, right? From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 9:36 AM To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Yes, all who own more than 15%! From: Aikman-Scalese, Anne [mailto:AAikman@lrrc.com] Sent: Mittwoch, 10. Juni 2020 19:29 To: alexander@schubert.berlin<mailto:alexander@schubert.berlin>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Well, for some reason I thought the principals had to be disclosed in registry applications? From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 9:24 AM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ “I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate…” The problem is: As far as I understand the transfer of ownership can be easily facilitated in a way that it’s perfectly concealed: if you plan it upfront! Per today only ownership shares larger than 15% (please correct me if I am wrong) have to be reported. So all you need to do: You establish an applicant entity that is owned by 7 shell companies, each holding 14.29% ownership. In some jurisdictions shell companies cost next to nothing to establish, and almost no fees to annually renew. If you want to transfer ownership, you simply transfer the ownership of each of the 7 shell companies. This way the applicant entity has still the SAME 7 owners, none of which owns more than 15%. Sounds like a hell of administrative work, but in many poor countries it is not much difference to set up 1 plus 7 companies, instead of just one. The outside won’t know anything about the owner change, as the applicant entity is still owned by the same 7 companies. How far people go in that respect you can see in the list of ICANN accredited registrars (www.internic.net/alpha.html<http://www.internic.net/alpha.html>): 1020 (one thousand and twenty) LLCs, all owned by “dropcatch.com”; only set up and maintained to exercise “drop catching”: DropCatch.com 345 LLC DropCatch.com 346 LLC DropCatch.com 347 LLC DropCatch.com 348 LLC DropCatch.com 349 LLC DropCatch.com 350 LLC DropCatch.com 351 LLC DropCatch.com 352 LLC DropCatch.com 353 LLC DropCatch.com 354 LLC DropCatch.com 362 LLC ::::: ::::: IT GOES ON AND ON ! :::::::: ::::: Sparing you over a thousand rows here! ::::::::: ::::: DropCatch.com 1037 LLC DropCatch.com 1536 LLC DropCatch.com 1537 LLC DropCatch.com 1538 LLC DropCatch.com 1539 LLC DropCatch.com 1540 LLC DropCatch.com 1541 LLC DropCatch.com 1542 LLC DropCatch.com 1543 LLC DropCatch.com 1544 LLC DropCatch.com 1545 LLC They own 1,020 out of 2,450 accredited registrars. Probably even more through affiliates. It’s of course only ONE company – they need the accreditations so they have “more shots” when going to war over expired domains. Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Mittwoch, 10. Juni 2020 18:58 To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] FW: proposed Language for those Getting Applicant Support Not sure how I missed sending this to the list but please see below. Anne From: Aikman-Scalese, Anne Sent: Wednesday, June 10, 2020 8:02 AM To: 'trachtenbergm@gtlaw.com' <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; alexander@schubert.berlin<mailto:alexander@schubert.berlin> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I don’t think the transfer discussion is at all “fruitless”. It is occurring in the context of policy relative to auction processes. The question of verification of a bona fide application deserving Applicant Support status and the nature of the support involved is actually a separate question. Assume we will deal with validity of Applicant Support criteria separately and that happens before you ever get to auction bidding. Right now we are discussing auctions and the % bid credit or multiplier for a VALID & VERIFIABLE Applicant Support application. I personally would support no transfer for the entire contract period unless there is an EBERO or other severe problem. Jeff is trying to strike a balance by saying that only certain circumstances merit transfer before the five year mark and was trying to respond to Marc’s suggestions. There is going to have to be some way to verify that there is no secret deal to transfer prior to the verification of Applicant Support status. I suppose folks are concerned about the possibility of a .web style transaction in this Applicant Support context. The simple way to deal with that is just to bar transfers and get rid of any “secondary market” except in situations of failure of the registry to be able to continue to operate. The notion that Applicant Support will only be a gaming mechanism needs to be addressed separately, e.g. application won’t qualify for Applicant Support if ownership and control is not transparent and cannot be verified based on the legal entity that is the Applicant. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Marc Trachtenberg via Gnso-newgtld-wg Sent: Wednesday, June 10, 2020 6:02 AM To: alexander@schubert.berlin<mailto:alexander@schubert.berlin>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom. I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop? If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash. If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states: “ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”. Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck). Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country? In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings. Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program? THANKS, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Is that 3 years from winning the auction or three years from contract signing? From: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support [EXTERNAL] ________________________________ Thanks Marc. I have tried to work your language in. Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules. “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments. Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Jeff Neuman [mailto:jeff.neuman@comlaude.com] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made. The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term). Do you have some alternative language that would work in this case that achieves what we are trying to achieve? Thanks. Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> <trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com>> Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>>; AAikman@lrrc.com<mailto:AAikman@lrrc.com>; mike@rodenbaugh.com<mailto:mike@rodenbaugh.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well… Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020 Mobile 773.677.3305 trac@gtlaw.com<mailto:trac@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> [Greenberg Traurig] From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>>; Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support *EXTERNAL TO GT* Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence: “If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.” Jeff Neuman Senior Vice President Com Laude | Valideus D: +1.703.635.7514 E: jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com> From: Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com<mailto:mike@rodenbaugh.com>>; Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support I like the five years. The sentence that begins with “However” does not appear to be a complete sentence. Why are we limiting the reimbursement provision to the second half of the contract? Thanks, Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com<mailto:jeff.neuman@comlaude.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521. ________________________________ This message and any attachments are intended only for the use of the individual or entity to which they are addressed. If the reader of this message or an attachment is not the intended recipient or the employee or agent responsible for delivering the message or attachment to the intended recipient you are hereby notified that any dissemination, distribution or copying of this message or any attachment is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to the sender. The information transmitted in this message and any attachments may be privileged, is intended only for the personal and confidential use of the intended recipients, and is covered by the Electronic Communications Privacy Act, 18 U.S.C. §2510-2521.
support to formulate the eligibility criteria…
Yes. CW
El 10 de junio de 2020 a las 15:01 Marc Trachtenberg via Gnso-newgtld-wg <gnso-newgtld-wg@icann.org> escribió:
I agree that this entire discussion is essentially fruitless and time should be focused on other more important aspects.
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com mailto:trac@gtlaw.com | www.gtlaw.com http://www.gtlaw.com/
[Greenberg Traurig]
From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Alexander Schubert Sent: Wednesday, June 10, 2020 7:10 AM To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Obviously the entire “flipping” issue (and hence measures against it) depends very much on the way we grant applicant support – and to whom.
I lost track; but do we enforce a connection between applicant entity and string? E.g.: an applicant from a country applying for their own language community? Or would we also support an applicant who just happens to be incorporated in a country that we deem worthy of support, but they could apply for commercial strings like .app or .shop?
If the latter; then I tend to not support Marc’s otherwise very intelligent solution – that the applicant has to repay the support if they sell the registry. Because if you manage to win a string that has a huge secondary market value – and you have flipped it to a third party: paying back applicant support is your least concern as you are flush with cash.
If we haven’t established the limitations (policies) around application support eligibility – then in my mind this entire discussion is essentially fruitless. Currently “2.5.4 Applicant Support” states:
“ICANN may put in place a fee reduction scheme for gTLD applicants from economies classified by the UN as least developed.”.
Oh well. So I find a couple of straw men in an underdeveloped country, rent an office, staff it with 2 (for almost zero cost as everything is inexpensive in that country, especially outside big cities), that “company” then outsources the application process to a U.S. “consultancy” (all quotation marks to highlight that they are only “so called”) – and that’s all you need to get applicant support and an auction multiplier? The consultancy might be the real beneficiary – but nobody knows: officially they are just the consultancy. Conveniently in these countries often ownership can be easily shielded from being identified (try to identify the owner of a company in a tax haven: good luck).
Instead of trying to fix this via policing efforts that investigate after the fact; why not creating eligibility criteria that will eliminate potential fraud right away? So my question is: would we want to grant applicant support for high value generic strings that have no association to the applicant’s community (example of association would be: geo, language, culture, etc)? In other words: shouldn’t we restrict applicant support to strings that are tied to the respective community? A tribe applying for their language. A city community applying for their city in their country?
In 2012 a lot of applicants artificially established their headquarters in countries which they have zero affiliation with. We don’t even have to fantasize of applicants sitting in the U.S. – but acting as company incorporated in tax havens: that happened already in 2012. With lots of strings.
Who would support to formulate the eligibility criteria in a way that there isn’t any incentive to abuse the applicant support program?
THANKS,
Alexander
From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Aikman-Scalese, Anne Sent: Dienstag, 9. Juni 2020 21:22 To: Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com >; trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com ; mike@rodenbaugh.com mailto:mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Is that 3 years from winning the auction or three years from contract signing?
From: Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com > Sent: Tuesday, June 9, 2020 7:54 AM To: trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com ; Aikman-Scalese, Anne <AAikman@lrrc.com mailto:AAikman@lrrc.com >; mike@rodenbaugh.com mailto:mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
[EXTERNAL]
---------------------------------------------
Thanks Marc. I have tried to work your language in.
Re: Highlighted language: How do we word allowing assignments/change of control through the normal course of business (changing corporate entities, death or retirement of owners, etc.). If we just use the standard, you can assign to parents or subs, then that will allow reverse triangular mergers which gets around the whole no assignment/change of control rules.
“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%).
Jeff Neuman
Senior Vice President
Com Laude | Valideus
D: +1.703.635.7514
E: jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com
From: trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com > Sent: Tuesday, June 9, 2020 10:18 AM To: Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com >; AAikman@lrrc.com mailto:AAikman@lrrc.com ; mike@rodenbaugh.com mailto:mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Personally I think that this is a bit of “tilting at windmills” and that if people want to “game” in this way then they will find a way. Instead of trying to prevent this gaming via indefinite standards that are subject to various reasonable interpretations and will almost certainly result in disputes, I think it would be better to reduce the prohibition on assignments to a shorter period like 2 or 3 years and then just make the applicant pay back the money as a condition of assignment which mitigates any benefit that the applicant and/or assignee would get. You could even make the condition payment of the benefit received plus x% as a disincentive for such behavior that would not prohibit all assignments.
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com mailto:trac@gtlaw.com | www.gtlaw.com http://www.gtlaw.com/
[Greenberg Traurig]
From: Jeff Neuman [mailto:jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com ] Sent: Tuesday, June 9, 2020 8:51 AM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com >; AAikman@lrrc.com mailto:AAikman@lrrc.com ; mike@rodenbaugh.com mailto:mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Thanks Marc for the comments. This was designed to set forth the principles as opposed to being the contract language, but your points are well made.
The context of this discussion is that some are worried that an applicant who gets applicant support (which may include a bid credit or multiplier in an auction) get the registry and flip it for financial gain to game the system. That is why the group wanted to prohibit assignment for a period of time. In the scheme of things, 5 years after a registry signs an agreement is not that long of a period, especially if you assume that most registries will likely not launch until 6 months to a year after they sign. However, as you note, there are some assignments/change of control that may be necessary and not intended to “game the system” (hence the term legitimate, but understand you concerns about that term).
Do you have some alternative language that would work in this case that achieves what we are trying to achieve?
Thanks.
Jeff Neuman
Senior Vice President
Com Laude | Valideus
D: +1.703.635.7514
E: jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com
From: trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com mailto:trachtenbergm@gtlaw.com > Sent: Tuesday, June 9, 2020 8:53 AM To: Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com >; AAikman@lrrc.com mailto:AAikman@lrrc.com ; mike@rodenbaugh.com mailto:mike@rodenbaugh.com Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
Sorry to be late to the party on this one. I echo Mike’s concerns that 5 years is a long time. Additionally, I am concerned with the use of “legitimate”. I understand the intent and the examples are helpful, but words like “legitimate” are almost certain to be disputed later. Also, there is no exchange that would involve financial gain (another term open to interpretation) which could be “legitimate”? And what about situations where the registry will otherwise fail if the RO does not sell? The RO should instead fail and the TLD should go through the ICANN process – this is a better outcome? I am also concerned with giving ICANN the ability to “reasonably” withhold its consent to an assignment. ICANN does not always act reasonably and when ICANN even arguably has discretion to make decisions things don’t always turn out so well…
Marc H. Trachtenberg Shareholder Greenberg Traurig, LLP | 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 Tel 312.456.1020
Mobile 773.677.3305
trac@gtlaw.com mailto:trac@gtlaw.com | www.gtlaw.com http://www.gtlaw.com/
[Greenberg Traurig]
From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org mailto:gnso-newgtld-wg-bounces@icann.org ] On Behalf Of Jeff Neuman Sent: Tuesday, June 9, 2020 7:40 AM To: Aikman-Scalese, Anne <AAikman@lrrc.com mailto:AAikman@lrrc.com >; Mike Rodenbaugh <mike@rodenbaugh.com mailto:mike@rodenbaugh.com > Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
*EXTERNAL TO GT*
Thanks Anne, you are correct that the However, sentence is not complete. So, please find the rest of the sentence:
“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.) shall be permitted. All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”
Jeff Neuman
Senior Vice President
Com Laude | Valideus
D: +1.703.635.7514
E: jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com
From: Aikman-Scalese, Anne <AAikman@lrrc.com mailto:AAikman@lrrc.com > Sent: Monday, June 8, 2020 3:17 PM To: Mike Rodenbaugh <mike@rodenbaugh.com mailto:mike@rodenbaugh.com >; Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com > Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
I like the five years.
The sentence that begins with “However” does not appear to be a complete sentence.
Why are we limiting the reimbursement provision to the second half of the contract?
Thanks,
Anne
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org mailto:gnso-newgtld-wg-bounces@icann.org > On Behalf Of Mike Rodenbaugh Sent: Monday, June 8, 2020 12:10 PM To: Jeff Neuman <jeff.neuman@comlaude.com mailto:jeff.neuman@comlaude.com > Cc: gnso-newgtld-wg@icann.org mailto:gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] proposed Language for those Getting Applicant Support
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Good evening: I have several concerns, not least that we have so little data about successful ASP applications that we are navigating blind. 1. The sole ASP discount on the application fee is such a minor element in the total investment cost of launching a new gTLD that I doubt that ASP alone creates sufficient leverage to influence the applicant's behaviour one way or another. 2. I have recommended several times that ICANN staff investigate and promote third party financing of ASP beneficiaries. I trust that is being done. 3. In the event that an ASP applicant is successful on the basis, also, of third party funding, then it should be absolutely out of the question to expose the parties to an 'auction'. That might be perceived as ICANN-esque institutional sabotage of the project. Not a good look. Thus, until these issues have been addressed and resolved I have no further comments and reserve my position entirely. Best regards to you all CW El 8 de junio de 2020 a las 20:43 Jeff Neuman <jeff.neuman@comlaude.com> escribió:
All,
On the call today, Susan raised a good point about applicants that get Applicant Support trying to “game the system” by immediately flipping their registries to a third party to make a profit. Although we would hope that those that take the time to go through the Applicant Support Program (ASP) and get approved would alone demonstrate that this is unlikely to happen. The process to get support is supposed to be vigorous and try to root out potential gaming. That said, I worked with Susan to draft the following language. Would this be acceptable as a Recommendation?
“If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than five (5) years. This restriction is in place to prevent gaming of the applicant support program whereby an applicant immediately transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, legitimate assignments (e.g., changing of ownership due to death or retirement, etc., assignments to subsidiaries, etc.). All assignments must have ICANN's consent, which consent may be reasonably withheld. In the event of a change of control after the first five (5) years but during the remaining first term of the registry agreement, the applicant should be required to repay the financial support that they received.”
Note: We would add this to Agreements for all that get Applicant Support, not just those that prevail at an auction (with the multiplier or other form of bid credit).
Discuss………..
Jeff Neuman
Senior Vice President
Com Laude | Valideus 1751 Pinnacle Drive
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participants (7)
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Aikman-Scalese, Anne -
Alexander Schubert -
Jeff Neuman -
mail＠christopherwilkinson.eu CW -
Mike Rodenbaugh -
Rubens Kuhl -
trachtenbergm＠gtlaw.com