Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 [signature_587102058] From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com> Cc: "gnso-newgtld-wg@icann.org" <gnso-newgtld-wg@icann.org> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com>; Julie Hedlund <julie.hedlund@icann.org>; gnso-newgtld-wg@icann.org Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Thanks Elaine. I agree that all of the proposals are currently on the table at this point. We will give it one more shot this week to discuss and see if we can get any sort of compromise. I feel really good about the compromises we have struck on a number of areas. In fact, other than Closed Generics, I don’t believe there are any topics where we haven’t been able to work through something that we all could live with. So, we are asking that all of you come to the meeting with the elements you can agree with. I believe Jim has made a very good proposal which combines many elements from all of our previous discussions. That’s not to say we cant make tweaks, but in reading through it again, it does allow for private resolution and the creation of Joint Ventures, it allows a time period for private auctions where applicants can agree to do so, and has transparency elements built in. There are many making the argument that there is no “evidence of a problem”, but we have heard from the group that there is a real perception of a problem. And for those that do not believe the perception is enough, Jim’s proposal importantly requires the disclosure of all data from private auctions. So there is no ban, but there is a ay to collect data. This was impossible in the last round because of the very tight non-disclosure agreements for the participants in the private auctions. Regardless of the solution going forward, we cannot allow all private resolutions of contention sets to take place behind closed doors. We MUST have data. Otherwise, we will be having this exact same argument after the next round and no data to analyze. Remember, we cannot let the perfect be the enemy of the good. Thanks. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com http://jjnsolutions.com<http://jjnsolutions.com/> From: Pruis, Elaine <epruis@verisign.com> Sent: Saturday, July 11, 2020 10:26 AM To: PMcGrady@taftlaw.com; Jeff Neuman <jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 [signature_587102058] From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
The only tweak I suggest to Jim's proposal is tp not only have string similarity by the time people have to decided on which resolution method to use and/or value to bid, but also string security and stability (like knowing whether .happyfaceemoji will be accepted) and name collisions (like knowing whether one applied to the next .corp). These are strong uncertainties regarding the asset value, which can be removed by analysis processes that are not prone to back and forth (like having Clarifying Questions), so more likely to be timely. Rubens
On 11 Jul 2020, at 14:49, Jeff Neuman <jeff@jjnsolutions.com> wrote:
Thanks Elaine. I agree that all of the proposals are currently on the table at this point. We will give it one more shot this week to discuss and see if we can get any sort of compromise.
I feel really good about the compromises we have struck on a number of areas. In fact, other than Closed Generics, I don’t believe there are any topics where we haven’t been able to work through something that we all could live with.
So, we are asking that all of you come to the meeting with the elements you can agree with. I believe Jim has made a very good proposal which combines many elements from all of our previous discussions. That’s not to say we cant make tweaks, but in reading through it again, it does allow for private resolution and the creation of Joint Ventures, it allows a time period for private auctions where applicants can agree to do so, and has transparency elements built in.
There are many making the argument that there is no “evidence of a problem”, but we have heard from the group that there is a real perception of a problem. And for those that do not believe the perception is enough, Jim’s proposal importantly requires the disclosure of all data from private auctions. So there is no ban, but there is a ay to collect data. This was impossible in the last round because of the very tight non-disclosure agreements for the participants in the private auctions. Regardless of the solution going forward, we cannot allow all private resolutions of contention sets to take place behind closed doors. We MUST have data. Otherwise, we will be having this exact same argument after the next round and no data to analyze.
Remember, we cannot let the perfect be the enemy of the good.
Thanks.
<image003.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 10:26 AM To: PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>; Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue.
Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com <mailto:epruis@verisign.com> 703.948.4672 <image004.png>
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jeff,
The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT!
Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again?
While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications.
We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about.
Best, Paul
From: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours.
<image005.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months.
The new text is the compromises contained because that it what you asked the group to do.
Original email from July 1 is posted immediately below.
From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions
In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal.
It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants.
Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program.
Proposed process: String Similarity evaluation completed On Reveal Day, all contention sets are announced (number and entities are revealed) A 90-day Resolution Period begins Members of a contention set may Form a JV Withdraw Find a creative private resolution Fail to resolve Members of a contention set may NOT Participate in a private auction or auction like mechanism. No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For 3rd Party Auctions All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. All auctions are to be conducted in an identical fashion using publicly available procedures. All auctions should be finalized as quickly as possible after the 90 day deadline. All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Auctions of Last Resort All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation.
Requirements: Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. The auction provider must agree to fully disclose all information about the auctions The auction provider must assert that all rules were followed before releasing auction funds All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review.
Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications.
On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> wrote:
Jim,
Can you highlight what differences (if any) are in your more refined proposal?
Thanks.
<image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door.
Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list.
Best, Paul
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From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1.
I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow.
Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program.
Compromises contained
Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. Parties in a contention set may opt for an ICANN administered 3rdParty Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: String Similarity evaluation completed On Reveal Day, ICANN announces contention sets including names of applicants. A 90-day Resolution Period begins Members of a contention set may Form a JV or other corporate structure Find a different creative resolution Withdraw Fail to resolve Members of a contention set may not Participate in a private auction or auction like mechanism. 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. For 3rd Party Auctions All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. All auctions are to be conducted in an identical fashion using publicly available procedures. All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Auctions of Last Resort If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rdParty Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation.
Requirements: Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. The auction provider and ICANN must assert that all rules were followed before releasing auction funds. All contention set resolutions including JVs, creative resolutions, 3rdParty Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review.
Jim Prendergast The Galway Strategy Group +1 202-285-3699
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Dear WG Members,
Please find below the proposed agenda for the WG meeting on Thursday, 09July 2020 at 20:00 UTC for 90 minutes.
Proposed Agenda:
Review Agenda/Updates to Statements of Interest Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw... <https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw...>. Also attached, please find the updated concerns/mitigation document and process flow. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... <https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz...> AOB
If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org <mailto:gnso-secs@icann.org>.
Best, Julie Julie Hedlund, Policy Director
_______________________________________________ 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 <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 <https://www.icann.org/privacy/policy>) and the website Terms of Service (https://www.icann.org/privacy/tos <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.
Thanks Jeff. I support your approach to the auction issues summarized below, especially since the Board perceives there is a problem and I think they provided some comment to that effect. Unfortunately will not be able to join the call tonight, but will listen to the recording. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of Jeff Neuman Sent: Saturday, July 11, 2020 10:49 AM To: Pruis, Elaine <epruis@verisign.com>; PMcGrady@taftlaw.com Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes [EXTERNAL] ________________________________ Thanks Elaine. I agree that all of the proposals are currently on the table at this point. We will give it one more shot this week to discuss and see if we can get any sort of compromise. I feel really good about the compromises we have struck on a number of areas. In fact, other than Closed Generics, I don’t believe there are any topics where we haven’t been able to work through something that we all could live with. So, we are asking that all of you come to the meeting with the elements you can agree with. I believe Jim has made a very good proposal which combines many elements from all of our previous discussions. That’s not to say we cant make tweaks, but in reading through it again, it does allow for private resolution and the creation of Joint Ventures, it allows a time period for private auctions where applicants can agree to do so, and has transparency elements built in. There are many making the argument that there is no “evidence of a problem”, but we have heard from the group that there is a real perception of a problem. And for those that do not believe the perception is enough, Jim’s proposal importantly requires the disclosure of all data from private auctions. So there is no ban, but there is a ay to collect data. This was impossible in the last round because of the very tight non-disclosure agreements for the participants in the private auctions. Regardless of the solution going forward, we cannot allow all private resolutions of contention sets to take place behind closed doors. We MUST have data. Otherwise, we will be having this exact same argument after the next round and no data to analyze. Remember, we cannot let the perfect be the enemy of the good. Thanks. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 10:26 AM To: PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>; Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 [signature_587102058] From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director ________________________________ 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.
It's not just the Board, but since they documented their perception, we can more easily refer to it. It's not just me that thinks that the problem, which was limited in 2012 because people haven't thought of the gaming strategy at application time, has the potential to become a much larger issue because the lose-to-profit strategy will be known at application time. I've heard the same from many people, over and over, not only in the WG discussions but also at direct interactions. It's like COVID-19: even if you haven't caught it, you know that it may happen and you act accordingly. Some may deny the problem exists and one denier died for that belief (https://www.nytimes.com/2020/07/12/us/30-year-old-covid-party-death.html <https://www.nytimes.com/2020/07/12/us/30-year-old-covid-party-death.html>), but most others prefer addressing the issue. Rubens
On 13 Jul 2020, at 13:14, Aikman-Scalese, Anne <AAikman@lrrc.com> wrote:
Thanks Jeff. I support your approach to the auction issues summarized below, especially since the Board perceives there is a problem and I think they provided some comment to that effect. Unfortunately will not be able to join the call tonight, but will listen to the recording. Anne
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jeff Neuman Sent: Saturday, July 11, 2020 10:49 AM To: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com>>; PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
[EXTERNAL] Thanks Elaine. I agree that all of the proposals are currently on the table at this point. We will give it one more shot this week to discuss and see if we can get any sort of compromise.
I feel really good about the compromises we have struck on a number of areas. In fact, other than Closed Generics, I don’t believe there are any topics where we haven’t been able to work through something that we all could live with.
So, we are asking that all of you come to the meeting with the elements you can agree with. I believe Jim has made a very good proposal which combines many elements from all of our previous discussions. That’s not to say we cant make tweaks, but in reading through it again, it does allow for private resolution and the creation of Joint Ventures, it allows a time period for private auctions where applicants can agree to do so, and has transparency elements built in.
There are many making the argument that there is no “evidence of a problem”, but we have heard from the group that there is a real perception of a problem. And for those that do not believe the perception is enough, Jim’s proposal importantly requires the disclosure of all data from private auctions. So there is no ban, but there is a ay to collect data. This was impossible in the last round because of the very tight non-disclosure agreements for the participants in the private auctions. Regardless of the solution going forward, we cannot allow all private resolutions of contention sets to take place behind closed doors. We MUST have data. Otherwise, we will be having this exact same argument after the next round and no data to analyze.
Remember, we cannot let the perfect be the enemy of the good.
Thanks.
<image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 10:26 AM To: PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>; Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue.
Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com <mailto:epruis@verisign.com> 703.948.4672 <image002.png>
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jeff,
The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT!
Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again?
While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications.
We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about.
Best, Paul
From: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours.
<image003.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months.
The new text is the compromises contained because that it what you asked the group to do.
Original email from July 1 is posted immediately below.
From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions
In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal.
It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants.
Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program.
Proposed process: String Similarity evaluation completed On Reveal Day, all contention sets are announced (number and entities are revealed) A 90-day Resolution Period begins Members of a contention set may Form a JV Withdraw Find a creative private resolution Fail to resolve Members of a contention set may NOT Participate in a private auction or auction like mechanism. No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For 3rd Party Auctions All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. All auctions are to be conducted in an identical fashion using publicly available procedures. All auctions should be finalized as quickly as possible after the 90 day deadline. All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Auctions of Last Resort All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation.
Requirements: Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. The auction provider must agree to fully disclose all information about the auctions The auction provider must assert that all rules were followed before releasing auction funds All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review.
Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications.
On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com>> wrote:
Jim,
Can you highlight what differences (if any) are in your more refined proposal?
Thanks.
<image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com <http://jjnsolutions.com/>
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door.
Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list.
Best, Paul
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From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1.
I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow.
Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program.
Compromises contained
Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. Parties in a contention set may opt for an ICANN administered 3rdParty Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: String Similarity evaluation completed On Reveal Day, ICANN announces contention sets including names of applicants. A 90-day Resolution Period begins Members of a contention set may Form a JV or other corporate structure Find a different creative resolution Withdraw Fail to resolve Members of a contention set may not Participate in a private auction or auction like mechanism. 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. For 3rd Party Auctions All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. All auctions are to be conducted in an identical fashion using publicly available procedures. All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Auctions of Last Resort If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rdParty Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation.
Requirements: Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. The auction provider and ICANN must assert that all rules were followed before releasing auction funds. All contention set resolutions including JVs, creative resolutions, 3rdParty Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review.
Jim Prendergast The Galway Strategy Group +1 202-285-3699
From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes
Dear WG Members,
Please find below the proposed agenda for the WG meeting on Thursday, 09July 2020 at 20:00 UTC for 90 minutes.
Proposed Agenda:
Review Agenda/Updates to Statements of Interest Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw... <https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw...>. Also attached, please find the updated concerns/mitigation document and process flow. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... <https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz...> AOB
If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org <mailto:gnso-secs@icann.org>.
Best, Julie Julie Hedlund, Policy Director
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+1 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 Rubens Kuhl Sent: Monday, July 13, 2020 1:53 PM To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes *EXTERNAL TO GT* It's not just the Board, but since they documented their perception, we can more easily refer to it. It's not just me that thinks that the problem, which was limited in 2012 because people haven't thought of the gaming strategy at application time, has the potential to become a much larger issue because the lose-to-profit strategy will be known at application time. I've heard the same from many people, over and over, not only in the WG discussions but also at direct interactions. It's like COVID-19: even if you haven't caught it, you know that it may happen and you act accordingly. Some may deny the problem exists and one denier died for that belief (https://urldefense.com/v3/__https://www.nytimes.com/2020/07/12/us/30-year-ol... ), but most others prefer addressing the issue. Rubens On 13 Jul 2020, at 13:14, Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> wrote: Thanks Jeff. I support your approach to the auction issues summarized below, especially since the Board perceives there is a problem and I think they provided some comment to that effect. Unfortunately will not be able to join the call tonight, but will listen to the recording. Anne From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jeff Neuman Sent: Saturday, July 11, 2020 10:49 AM To: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>>; PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes [EXTERNAL] ________________________________ Thanks Elaine. I agree that all of the proposals are currently on the table at this point. We will give it one more shot this week to discuss and see if we can get any sort of compromise. I feel really good about the compromises we have struck on a number of areas. In fact, other than Closed Generics, I don’t believe there are any topics where we haven’t been able to work through something that we all could live with. So, we are asking that all of you come to the meeting with the elements you can agree with. I believe Jim has made a very good proposal which combines many elements from all of our previous discussions. That’s not to say we cant make tweaks, but in reading through it again, it does allow for private resolution and the creation of Joint Ventures, it allows a time period for private auctions where applicants can agree to do so, and has transparency elements built in. There are many making the argument that there is no “evidence of a problem”, but we have heard from the group that there is a real perception of a problem. And for those that do not believe the perception is enough, Jim’s proposal importantly requires the disclosure of all data from private auctions. So there is no ban, but there is a ay to collect data. This was impossible in the last round because of the very tight non-disclosure agreements for the participants in the private auctions. Regardless of the solution going forward, we cannot allow all private resolutions of contention sets to take place behind closed doors. We MUST have data. Otherwise, we will be having this exact same argument after the next round and no data to analyze. Remember, we cannot let the perfect be the enemy of the good. Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> https://urldefense.com/v3/__http://jjnsolutions.com__;!!DUT_TFPxUQ!Sl3fiFo9W... <https://urldefense.com/v3/__http://jjnsolutions.com/__;!!DUT_TFPxUQ!Sl3fiFo9... > From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 10:26 AM To: PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>; Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image002.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image003.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> https://urldefense.com/v3/__http://jjnsolutions.com__;!!DUT_TFPxUQ!Sl3fiFo9W... <https://urldefense.com/v3/__http://jjnsolutions.com/__;!!DUT_TFPxUQ!Sl3fiFo9... > From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> https://urldefense.com/v3/__http://jjnsolutions.com__;!!DUT_TFPxUQ!Sl3fiFo9W... <https://urldefense.com/v3/__http://jjnsolutions.com/__;!!DUT_TFPxUQ!Sl3fiFo9... > From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://urldefense.com/v3/__https://www.taftlaw.com/general/subscribe__;!!DU... >. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://urldefense.com/v3/__https://www.taftlaw.com/general/coronavirus-covi... >. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rdParty Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rdParty Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rdParty Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://urldefense.com/v3/__https://docs.google.com/document/d/1vBckhFQCCQ-z... . Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://urldefense.com/v3/__https://docs.google.com/document/d/1X8F8zHkgMzQg... 4. 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Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. · “Perception” by who? · Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? · Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” · Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? · Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. · “Transparency and Accountability” to who? · Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins Ø From where did the 90-day deadline come? On its face it seems completely arbitrary. Ø Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. Ø Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. Ø Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. Ø What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. Ø This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. Ø What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. Ø Leaves no time to address wrong outcomes for string similarity * Members of a contention set may Ø “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV Ø This is a non-option for .brands whose trademarks are being squatted upon by another applicant Ø This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise Ø This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. Ø “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw Ø Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution Ø Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve Ø This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. Ø Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. Ø What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Ø Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. Ø Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. Ø Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter Ø Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). Ø What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com>; jeff@jjnsolutions.com Cc: gnso-newgtld-wg@icann.org Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 [signature_587102058] From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com> wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. · “Perception” by who? · Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? · Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” · Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? · Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. · “Transparency and Accountability” to who? · Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins Ø From where did the 90-day deadline come? On its face it seems completely arbitrary. Ø Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. Ø Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. Ø Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. Ø What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. Ø This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. Ø What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. Ø Leaves no time to address wrong outcomes for string similarity * Members of a contention set may Ø “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV Ø This is a non-option for .brands whose trademarks are being squatted upon by another applicant Ø This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise Ø This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. Ø “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw Ø Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution Ø Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve Ø This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. Ø Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. Ø What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Ø Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. Ø Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. Ø Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter Ø Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). Ø What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com>; jeff@jjnsolutions.com Cc: gnso-newgtld-wg@icann.org Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Hi Elaine, I wish there was a way to make the issues list shorter. Jim’s proposal touches on so many issues and undoes so much of the work of this WG over the last 4 years on so many sections of the AGB that there is no way to boil it down to an easy soundbite. If we are going to discuss, again, the rejected ideas of banning private auctions and Vickrey auctions before evaluation (and I see no reason why we would since these ideas are long dead in this WG), we will have to go through – in detail – the list of questions and concerns that I presented and any other questions and concerns raised by others. We should also go line by line through the draft report to see what other sections would have to be amended and then go through the 2012 AGB again to look for other consequences – intended or not. There isn’t any shortcut here I am afraid. Best, Paul From: Pruis, Elaine <epruis@verisign.com> Sent: Monday, July 13, 2020 10:33 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com> Cc: jeff@jjnsolutions.com; gnso-newgtld-wg@icann.org Subject: Re: RE: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. · “Perception” by who? · Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? · Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” · Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? · Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. · “Transparency and Accountability” to who? · Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins Ø From where did the 90-day deadline come? On its face it seems completely arbitrary. Ø Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. Ø Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. Ø Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. Ø What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. Ø This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. Ø What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. Ø Leaves no time to address wrong outcomes for string similarity * Members of a contention set may Ø “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV Ø This is a non-option for .brands whose trademarks are being squatted upon by another applicant Ø This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise Ø This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. Ø “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw Ø Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution Ø Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve Ø This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. Ø Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. Ø What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Ø Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. Ø Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. Ø Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter Ø Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). Ø What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Paul – I’m really stumped by your objection to adding more transparency to a portion of the program that not only concerns the Board, but the GAC, ALAC and several others. I’m sorry you were overwhelmed by the compromise proposal but compared the discussions we had the last few weeks on SPIRT, it’s quite simple. Since you have mischaracterized a key portion of it a few times, let me make it abundantly clear. My proposal still allows for your clients to get paid if they lose an auction. There is no ban. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of McGrady, Paul D. Sent: Monday, July 13, 2020 4:07 PM To: Pruis, Elaine <epruis@verisign.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Hi Elaine, I wish there was a way to make the issues list shorter. Jim’s proposal touches on so many issues and undoes so much of the work of this WG over the last 4 years on so many sections of the AGB that there is no way to boil it down to an easy soundbite. If we are going to discuss, again, the rejected ideas of banning private auctions and Vickrey auctions before evaluation (and I see no reason why we would since these ideas are long dead in this WG), we will have to go through – in detail – the list of questions and concerns that I presented and any other questions and concerns raised by others. We should also go line by line through the draft report to see what other sections would have to be amended and then go through the 2012 AGB again to look for other consequences – intended or not. There isn’t any shortcut here I am afraid. Best, Paul From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Monday, July 13, 2020 10:33 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Cc: jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: RE: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. * “Perception” by who? * Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? * Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” * Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? * Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. * “Transparency and Accountability” to who? * Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * From where did the 90-day deadline come? On its face it seems completely arbitrary. * Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. * Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. * Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. * What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. * This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. * What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. * Leaves no time to address wrong outcomes for string similarity * Members of a contention set may * “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV * This is a non-option for .brands whose trademarks are being squatted upon by another applicant * This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise * This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. * “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw * Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution * Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve * This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. * What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. * Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter * Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). * What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Hi Jim, I’m not opposed to transparency. I’m opposed to your proposal. As I said in my response, I think the transparency proposal Jeff made is best taken up within the discussion of the Guardrails, not in the context of your latest attempt to push everyone into early Vickrey auctions. As for your suggestion that I was “overwhelmed” by your proposal, I assure you I was not. I didn’t throw up my arms and say I was overwhelmed – I spent hours going through your proposal and came back with detailed comments which need to be addressed substantively. Suggesting that was somehow “overwhelmed” by giving detailed, substantive questions and comments to your various repackaged elements is a non sequitur. Yes, your proposal would allow payouts to those who end up in auctions, but many of those auctions would be unnecessary since there is little doubt that many contention sets would be eliminated by Objection processes, GAC Early Warnings, etc. etc. Your proposal does far more harm than good to the entire new gTLD process. Let’s build the Guardrails around the status quo and get this final report out. Best, Paul From: Jim Prendergast <jim@GALWAYSG.COM> Sent: Monday, July 13, 2020 4:41 PM To: McGrady, Paul D. <PMcGrady@taftlaw.com>; Pruis, Elaine <epruis@verisign.com> Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul – I’m really stumped by your objection to adding more transparency to a portion of the program that not only concerns the Board, but the GAC, ALAC and several others. I’m sorry you were overwhelmed by the compromise proposal but compared the discussions we had the last few weeks on SPIRT, it’s quite simple. Since you have mischaracterized a key portion of it a few times, let me make it abundantly clear. My proposal still allows for your clients to get paid if they lose an auction. There is no ban. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Monday, July 13, 2020 4:07 PM To: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Hi Elaine, I wish there was a way to make the issues list shorter. Jim’s proposal touches on so many issues and undoes so much of the work of this WG over the last 4 years on so many sections of the AGB that there is no way to boil it down to an easy soundbite. If we are going to discuss, again, the rejected ideas of banning private auctions and Vickrey auctions before evaluation (and I see no reason why we would since these ideas are long dead in this WG), we will have to go through – in detail – the list of questions and concerns that I presented and any other questions and concerns raised by others. We should also go line by line through the draft report to see what other sections would have to be amended and then go through the 2012 AGB again to look for other consequences – intended or not. There isn’t any shortcut here I am afraid. Best, Paul From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Monday, July 13, 2020 10:33 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Cc: jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: RE: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. * “Perception” by who? * Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? * Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” * Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? * Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. * “Transparency and Accountability” to who? * Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins Ø From where did the 90-day deadline come? On its face it seems completely arbitrary. Ø Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. Ø Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. Ø Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. Ø What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. Ø This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. Ø What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. Ø Leaves no time to address wrong outcomes for string similarity * Members of a contention set may Ø “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV Ø This is a non-option for .brands whose trademarks are being squatted upon by another applicant Ø This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise Ø This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. Ø “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw Ø Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution Ø Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve Ø This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. Ø Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. Ø What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Ø Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. Ø Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. Ø Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter Ø Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). Ø What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, subscribe here<https://www.taftlaw.com/general/subscribe>. For additional resources, visit Taft's COVID-19 Resource Toolkit<https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit>. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
Our call and the notion that Jim’s auction plans were “complicated”: Only for us in this group has we have all the iterations in our heads. For someone being presented the first time with the solution it is actually even more simple as what we had in 2012. * In 2012 we had a very complicated ICANN auction of last resort (time consuming, complicated rules, only few slots at a time). * Additionally we had quasi-industry standard “private auctions” conducted by one company. These were: o shrouded in secrecy o allowed portfolio applicants to shift revenues to other auctions (private and last resort) * In the next round there is an incentive to apply for all kinds of strings in order to hope to: o Lose a few on purpose to recoup all application fees and build a war chest o Then buy a few desirable strings with that war chest o Come out of the game with a profit AND a few free gTLDs * The board doesn’t like the idea – because the community doesn’t like it. This system is heavily stacked against: o single application applicants o Community priority applicants with a build-in disadvantage: having to stick with the restrictions even when losing CPE; thus not having the same access to capital (e.g. venture capital); but being up against folks that swim in VC money o “Community type” applicants (applicants that can’t go for community priority – but are still community based) o Public interest, non-profit applicants Jim put together elements we have discussed many times: * A super simple solution that addresses most concerns * Only for applications that are in contention a sealed bid has to be submitted (and they have to bid at some point of time anyways: so it’s not a redundant work). o For singular applicants that is 1 bid o You need to have a LOT of applications in the game to have to do that for more than say 5 applications. o In case someone has to do it for 25 applications: sorry mate, but we aren’t actively making the life of large scale portfolio applicants easier * After that you are DONE. It’s super easy – no more work required. If all members agree to distribute the proceeds within the contention set – then it’s a “private auction”. If at least one disagrees it becomes a “auction of last resort”: both are the same – just the way the funds are distributed are different. * Once the “auction” is due the members are requested to submit their deposit – once all deposits are in the winner will be determined (it’s just a reveal). * It’s super simple. “Private auction” doesn’t equal “secret auction”. And strategizing with auction proceeds: that’s exactly the concern the community and the board had. It will be eliminated. Most auctions will be pooled into one point of time. Only those strings that are held up (objection, etc) are slated for later dates. I personally will urge all of the communities that I organize applications for, to publically declare to only accept the ICANN auction of last resort. Anything else invites applications from tricksters who want to cash out. With nothing to gain tricksters will refrain from ICANN auctions. Jim’s proposal adequately addresses the board’s (community’s) concerns regarding gaming, revenue shifting, applying for stuff in the hope to get paid out, applying for a few more strings in order to “strategize”, etc. Remember the ICANN bylaws which the new gTLD program will have to adhere to: “Introducing and promoting competition in the registration of domain names where practicable and beneficial to the public interest as identified through the bottom-up, multistakeholder policy development process;” With “registration of domain names” in my mind 2nd level domains being meant, not gTLDs. So we should make new gTLDs available – but in a way that is beneficial to the public interest. Not just new gTLD land that is entirely empty or populated by scalpers (all domains parked, a waste land that is dead). Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Jim Prendergast Sent: Dienstag, 14. Juli 2020 00:41 To: McGrady, Paul D. <PMcGrady@taftlaw.com>; Pruis, Elaine <epruis@verisign.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul – I’m really stumped by your objection to adding more transparency to a portion of the program that not only concerns the Board, but the GAC, ALAC and several others. I’m sorry you were overwhelmed by the compromise proposal but compared the discussions we had the last few weeks on SPIRT, it’s quite simple. Since you have mischaracterized a key portion of it a few times, let me make it abundantly clear. My proposal still allows for your clients to get paid if they lose an auction. There is no ban. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of McGrady, Paul D. Sent: Monday, July 13, 2020 4:07 PM To: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com> > Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Hi Elaine, I wish there was a way to make the issues list shorter. Jim’s proposal touches on so many issues and undoes so much of the work of this WG over the last 4 years on so many sections of the AGB that there is no way to boil it down to an easy soundbite. If we are going to discuss, again, the rejected ideas of banning private auctions and Vickrey auctions before evaluation (and I see no reason why we would since these ideas are long dead in this WG), we will have to go through – in detail – the list of questions and concerns that I presented and any other questions and concerns raised by others. We should also go line by line through the draft report to see what other sections would have to be amended and then go through the 2012 AGB again to look for other consequences – intended or not. There isn’t any shortcut here I am afraid. Best, Paul From: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com> > Sent: Monday, July 13, 2020 10:33 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> > Cc: jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> ; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: RE: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> > wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. * “Perception” by who? * Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? * Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” * Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? * Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. * “Transparency and Accountability” to who? * Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * From where did the 90-day deadline come? On its face it seems completely arbitrary. * Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. * Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. * Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. * What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. * This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. * What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. * Leaves no time to address wrong outcomes for string similarity * Members of a contention set may * “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV * This is a non-option for .brands whose trademarks are being squatted upon by another applicant * This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise * This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. * “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw * Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution * Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve * This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. * What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. * Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter * Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). * What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com <mailto:epruis@verisign.com> > Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> >; jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com <mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> > Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> > Cc: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> " <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> > Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> > Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM> > Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> >; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org> >; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> <http://jjnsolutions.com/> http://jjnsolutions.com From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM> > Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> > Cc: McGrady, Paul D. <PMcGrady@taftlaw.com <mailto:PMcGrady@taftlaw.com> >; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org> >; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM> > Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> " <gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> > Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com <mailto:jeff@jjnsolutions.com> > wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> <http://jjnsolutions.com/> http://jjnsolutions.com From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM <mailto:jim@GALWAYSG.COM> >; Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org> >; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. Best, Paul To receive regular COVID-19 updates from Taft, <https://www.taftlaw.com/general/subscribe> subscribe here. For additional resources, visit Taft's COVID-19 <https://www.taftlaw.com/general/coronavirus-covid-19-resource-toolkit> Resource Toolkit. This message may contain information that is attorney-client privileged, attorney work product or otherwise confidential. If you are not an intended recipient, use and disclosure of this message are prohibited. If you received this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org <mailto:julie.hedlund@icann.org> >; gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTw.... Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZz... 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org <mailto:gnso-secs@icann.org> . Best, Julie Julie Hedlund, Policy Director
I’m quite overwhelmed too Elaine, certainly a lot of words. No surprise that I concur with much of the content in Paul’s email below. I appreciate the time and thought Jim has put into his proposal and the spirit of compromise in which it has been provided. I recall that you stated on a call recently that you could think of ’10 ways to game’ a proposal that was under discussion. I don’t recall the specifics but I remember your statement. I think if a few of us put our collective heads together we could think of 10 ways to game Jim’s proposal as well. I support Paul’s application terms and conditions as the preferred manner in which to address the issue of contention resolution, and as the basis for the policy recommendation. I also think Paul’s point about data collection for subsequent application rounds is also important moving forward. We’ve had many discussions about the mal-intent or frivolity from last round and, in my opinion, the evidence to substantiate this claim is at best anecdotal. 1. The applicant has a bona fide intention to run the registry if awarded. The “examiners” would be able to issue additional questions if it appears that the business plan is rudimentary or if there is evidence that the applicant does not really have the needed intent. Applicants would be able to supplement the record to assure “examiners.” 2. The application is not being submitted solely for the purpose of being able to participate in private auctions. So, how would these terms be policed? A. If an applicant does not actually launch the registry if awarded or sells it in the aftermarket within 2 years of delegation, that will be noted for purposes of any future rounds and could create a rebuttal presumption of non-intent for that applicant. B. If an applicant only “sells” applications in private auctions and does not actually proceed with any to contracting, that will be noted for purposes of any future rounds and could create a rebuttal presumption that the applicant is only participating in the new gTLD program to speculate on registries. From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Pruis, Elaine via Gnso-newgtld-wg Sent: Monday, July 13, 2020 8:33 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Forgive me. Today I’m a bit overwhelmed by so many words. I’m hearing -90 days is too short 120 days -you don’t want ICANN involved in contention resolution Community selected auction provider -You don’t want the private resolution to have transparency requirements This is a either or and I think transparency is important -You don’t want 200 competition authorities to review every deal Ok let’s have one or two then What else? Could you sum up any concerns I missed with a few bullet points please? No need to repeat “sweeping last minute proposal.” Thanks Elaine On Jul 12, 2020, at 8:09 PM, McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> wrote: Thanks Elaine. I’m sorry, but I am not going to be able to buy the fiction that there is a problem. I know that those proposing to eliminate private auctions really, really need those of us who do not see the need to do so to buy into the unnamed, undocumented, non-data supported non-problem. But, we just can’t do so. But, that has not stopped me from proposing very reasonable guardrails for applications. The Guardrail Compromise has been what this WG has been working on for the last 3-4 weeks, as Jeff informed the GAC. Let’s focus on getting to a real compromise. Jeff & Cheryl, the bottom line on the new, sweeping, and invasive proposal is that it is merely a repackaged and rebranded attempt to eliminate private auctions and force everyone into early Vickrey auctions. It is not, as advertised, a compromise proposal at all. The proposal has especially deleterious consequences for .brand applicants, community based applicants, applicants with limited funds that might not even have to face an auction if a competitive string was eliminated by evaluation, anyone who still takes public comments seriously, the GAC Early Warning mechanism’s meaningfulness, the list goes on and on. Below are some initial questions raised by the new, sweeping proposal. These are all serious questions and concerns and if the WG is actually going to go down the path of discussing, again, the elimination of private auctions and the forcing of everyone into early Vickrey auctions (both ideas that have been rejected over and over again by this WG), these questions and concerns need to be given adequate time to be discussed (again). _______________ Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. · “Perception” by who? · Is the “perception” of ICANN a GNSO WG function, or is that better left to ICANN Org? · Will ICANN’s invasion into private sector affairs “improve the perception of ICANN”? (I think there is a sweeping assumption in the sweeping proposal – one which I do not share – namely that by making it difficult/impossible for private resolutions to occur resulting in filling ICANN’s coffers with more money that have and will raid/use to influence pet projects, will somehow “improve the perception of ICANN.” I think when a GC finds out unless her company can run the tight 90-day gauntlet below she will be forced into another $300 million + round of ICANN-controlled auctions, her reaction is not going to be “well, not being able to work things out between parties is terrific! Hooray ICANN.” · Have we taken in any advice from ICANN Org’s public relations department that changing the status quo in a manner that gives ICANN even more influence on private sector actors in the DNS (including a already proposed and now re-proposed capital punishment right) will, in fact, “improve the perception of ICANN”? · Where is the “perception” concern coming from? The ICANN Board comments, which some are relying upon to try to ban private auctions as the sweeping proposal does, doesn’t mention anything about the Board feeling that ICANN was being mal-perceived by anyone nor did it task us with fixing any PR problems for them. · “Transparency and Accountability” to who? · Do we really want to expand ICANN’s ability to open up the full books, trade secrets, and business plans of all contracted and accredited parties? One could almost see this idea having some tiny little legs if ICANN were still a government contractor. But now that ICANN is a private sector actor acting in conjunction with non-governmental contracts with other private sector actors, there is no rational basis to force the kinds of invasions that the sweeping proposal suggests. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins Ø From where did the 90-day deadline come? On its face it seems completely arbitrary. Ø Was this based on an average of how long it took private sector actors to privately resolve contention sets in the last round? I don’t recall seeing any survey data on this or even hearing any anecdotal stories that would indicate that 90 days is sufficient. Ø Was this based on a survey of likely future applicants? I don’t recall seeing any such survey results. Ø Do we want to adopt a proposal that seems to help small, nimble players (private equity firms) or very large players in the domain name industry at the expense of any medium-large companies who happen to have adequate corporate governance? 90 days doesn’t even seem like enough time to identify and conduct due diligence on a JV or the like, much less get a deal to close (remember, once an application is withdrawn, it can’t be re-filed, so we are only talking about deals that can be identified, papered, pass corporate governance, be funded, and closed in 90 days). The timeframe suggested is highly unrealistic. Ø What about GAC Early warnings, GAC Advice, public comments, various objections, etc.? Will all of those be in and resolved within the 90 days of reveal? That is not how things worked last time and I don’t see anything in the draft report so far that indicates that this is how it will work in future rounds. To even consider this sweeping proposal, we would have to take a look at all of the other timelines or just reject the idea generally that the objection processes have any meaning. Ø This deadline excludes .brand applicants from using the Legal Rights Objection. It seems very unlikely that a .brand applicant that is in the middle of a trademark dispute triggered by reveal (and which would normally proceed to a Legal Rights Objection) (which has ZERO possibility of being resolved within the 90 days by the way) would, at the same time be negotiating a JV with a party that it believes is a top level squatter. All of this appears to be a last minute attack on .brand applicants. Ø What other objection processes would the sweeping proposal render void? There doesn’t seem to be any concern whatsoever about those in this last minute proposal. We would need to study each objection process to see how the 90 day deadline would affect them. Ø Leaves no time to address wrong outcomes for string similarity * Members of a contention set may Ø “…May…” Overarching question: where in the bylaws is ICANN granted such sweeping powers to insist on imposing itself into the private affairs, plans, and trade secrets of applicants and to limit their range of options? This is Mission creep writ large. * Form a JV Ø This is a non-option for .brands whose trademarks are being squatted upon by another applicant Ø This may be a non-option for non-profit entity applicants who may or may not be able to form JVs with other entities, non-profit or otherwise Ø This will not be an option for large sophisticated companies when the other party in the contention set is a small time actor or unknown or otherwise has a business model that is unappealing or shady. Ø “Form a JV” may solve some problems, but it is not a one size fits all * Withdraw Ø Not a solution. Partial ICANN refund does not return all of your sunk costs (lawyers, advisors, time to develop use cases, etc.). May sound great to large corporations with limitless resources, but not so great for medium/small entities with an innovative use case or for large corporations with good governance. * Find a creative private resolution Ø Glad to see this idea here, but what does it mean? How does it interact with the new power that is being proposed below for ICANN that enables ICANN to preclude private auctions or auction like mechanisms? * Fail to resolve Ø This may sound benign, but instead of giving the entire runway prior to auction of final resort to find a solution that was given in the 2012, the parties are put into a 90 day pressure cooker. This appears to be designed to calcify contention sets to ensure more end up in ICANN last resort auctions (since not everyone will be OK with the heavy-handed “3rd Party Sealed Bid” auction (a completely new concept suggested at the very end of this PDP by the way) suggested below. * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. Ø Here is the heart of it. We have spent 4 years not reaching consensus on eliminating private auctions. Yet, here it is again, surrounded by lots of other confusing elements. But, it is here. And, it is not supported. Ø What is an “auction like mechanism”? What is its scope? If a .brand applicant sends a demand letter to another entity in a contention set and they settle the matter with a settlement agreement in which the other entity withdraws its application and the .brand applicant pays some amount, is that an “auction like mechanism”? Why would we invite ICANN into private settlements of disputes? Why would we compromise our trademarks by agreeing to this? This is the second apparent attack on .brand applicants I’ve noted in this sweeping proposal. Is that a coincidence? * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. This section appears to be a repackaging of the prior section, so my questions and comments should be brought down into this section as well, including but not limited to pointing out that the timing involved is wildly impractical for any business with any sort of corporate governance in place. The timing also appears to misunderstand completely the role of public comment, GAC Early Warnings, Community Evaluation, and the Objection mechanisms that we have all worked so hard on these past 4 years. This single-minded distaste for private auctions is truly a tail that looks to upend the dog. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period For all the reasons mentioned above, advancing the timeline on the historic ICANN auction of last resort and the completely new 3rd Party Auctions simply doesn’t work. This is appears to be a final stab at advancing the timeline for the auctions of last resort adding a Vickrey element (an idea that has already been rejected by the WG) while throwing in the new 3rd Party Auctions concept (which itself is just a form of the accelerated Vickrey option). There simply isn’t bandwidth to re-litigate everything that the proponents of this last minute, sweeping proposal were unable to accomplish over the last four years. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. This is, essentially, a renamed version of the early “vickrey auction” which was rejected by the WG. The fact that the funds are dispersed to the losers who were forced into this option by a 90 day, arbitrary deadline (which essentially eliminates any real possibility of private solutions) is of little comfort. Further, how would an auction provider “attest” these requirements? What information is “all information”? Would this require the turning over of trade secrets to the auction vendor and the opposing party? * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. “May be delayed…” is of little comfort since public comment, GAC Early Warnings, Community Evaluations, and the outcome of Objection processes all have a bearing on the value of the TLD string and, in fact, whether or not a contention set even survives to auction. This latest forced Vickrey model (no matter what it is euphemistically named or marketed as) is in its essence the early Vickrey model that did not get consensus. * All auctions are to be conducted in an identical fashion using publicly available procedures. I have no idea what this means. What are the publicly available procedures and where can we find them? Is there a link? What is it that we are being asked to agree to? Does “identical fashion” mean at the same time on the same day? All of this last minute stuff is incredibly vague. * All auctions should be finalized as quickly as possible after the 90-day deadline. Why not? Everything else about this proposal is a ridiculous forced march. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. Ø Not only does this ignore all of the problems with the forced 90-day timing, this is also a giant leap from the suggestion Jeff made a few days ago about perhaps requiring disclosure of the financial results from private auctions. I wouldn’t mind seeing that chiseled away from this otherwise sweeping proposal and discussed in the context of guardrails, but discussing it in the context of the 90 day forced march is fruitless. Ø Does the losing applicant get a refund? If so, how much? If no, why not? * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. This paragraph clearly evidences why the sweeping proposal is nothing but an elimination of private auctions and a clever attempt to force everyone into an early Vickery auction. The only differences between the “3rd Party Auction” and the Auction of Las Resort is who gets the money, with one exception. There appears to be a veiled threat in not choosing auction of last resort as the auction of last resort winner “may proceed to evaluation and eventually the Transition to Delegation.” There is no mention of this next step for the “3rd Party Auction” winner, so it appears that those applications go into some sort of limbo? * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. What happens in the event of non-payment by the winner of either of the two versions of the resubmitted early Vickrey auctions? Bottom line is that this is all just a repackaging of the early vickrey option that the WG has already rejected. It is very late in the day to entertain a repackaging and rebranding of long rejected ideas. The WG should spend its time refining my proposed Guardrails. While I do not believe there is a problem to be solved here, my guardrails will ensure that anyone who might be applying without an intent to operate the registry is on notice not to do so. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets This is essentially another way to rephrase my Guardrail #2. I have no problem with the concept, of course, but I do not think it functions well in the heavy-handed context that is being proposed. * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. Ø Please see my comments above about how this would cripple settlement between a .brand applicant and another entity that the .brand applicant believes is a top level squatter Ø Why would someone become a JV partner with someone else if there was no financial benefit in doing so? This new requirement vitiates even the JV option (which while not useful for many applicants, at least it was something). Ø What does financial benefit mean? If the applicant withdraws because it knows it will lose the forced-march-early-Vickrey-auction, doesn’t it financially benefit from cutting its losses early? * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. These are the very same ridiculous punishments – capital punishment for registries - that the WG has already reviewed and rejected. Why are we even seeing this again? There is no way to repackage and rebrand these to make them palatable. These would also steep ICANN in litigation should it try to kill a registry operator. Even if this WG were inclined to grant ICANN the right to kill off registries for allegedly violating these requirements, we would need to spend weeks fleshing out what the punishments are and what the process (trial and appeal) would look like. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. This would bring the next round to a halt. Not only is this extreme overkill by any imagination, how long do the evaluators have to wait to hear back from 200+ competition authorities? Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Many others and myself do not agree that giving more power to ICANN to interfere in private matters of its contracted parties is automatically a benefit. I certainly do not agree that the brand new idea of grinding future rounds to a halt while 200+ competition authorities fail to respond to inquiries is a benefit to anyone except registries already in existence. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. At least the proponents of this late entry admit that they have no data from the last round to support their policy-making effort. We should at least attempt the Guardrails and, should an actual problem come into existence, then consider other options at that time. A heavy-handed solution for a non-problem based on non-data is not only misguided, it is obviously premature. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. At least the proponents of this late entry come clean and admit that it eliminated private auctions and that it is not somehow another form of them. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. All of this regulation and red tape is a very high price to pay for *possible* lower auction prices. A party involved in a private auction is free to walk away at any price point it likes. It doesn’t need an ICANN nanny to help it not bid too much. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. It may speed up the process, but at great cost to actually creating more entries, and therefore, competition in the domain name space. It also undoes all of our work on objections, GAC Early Warnings, etc. From: Pruis, Elaine <epruis@verisign.com<mailto:epruis@verisign.com>> Sent: Saturday, July 11, 2020 9:26 AM To: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Paul, I’m surprised by your comments. Especially surprising because of your concern that the WG conversation on closed generics was shut down prematurely, and you’ve been pushing for more conversation on that topic. What’s the hurry now with contention resolution? We’ve got a reasonable proposal to consider and discuss. It was sent to the list and introduced to the WG on the 11pm July 1st, where we agreed to table the conversation until Jeff was back and we would have enough time to dig into the details. Folks have had 10 days to study it, and many people prepared for the discussions that have been scheduled and delayed twice. The “discussed for months” aspects are the compromise positions proposed. It wraps in Kristina’s ask for creative resolution, Donna’s proposal to allow for auctions, your proposal for guardrails, Jeff’s proposal for transparency, the sealed bid auction proposal. It is not “last minute” any more than your guardrails are last minute. There not “rearranged”, they’re all included. We’re not forced to pick one, we can have them all. Continuing to deny there is a problem ignores the Board statement, CCTRT recommendations, and the GAC advice on the topic. Please let’s try to get to a compromise on this issue. Elaine Pruis Senior Director Naming Operations and Policy epruis@verisign.com<mailto:epruis@verisign.com> 703.948.4672 <image003.png> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> on behalf of "McGrady, Paul D." <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>> Date: Friday, July 10, 2020 at 9:27 AM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [EXTERNAL] Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jeff, The issue became moot because we ran out of time on the last call. Good job putting the finishing touches on the SPIRT! Regarding your email below, I was puzzled by Jim’s assertion that all of the substantive elements of his second version of his last minute proposal “are the same and have been discussed by this group for months.” I am not at all sure that this statement is accurate (as far as I know, the new ICANN-controlled-not-“auction of last resort”-mechanism appears to be new, sweepingly invasive, and suggested just a few days ago right as this PDP is winding down). Even so, if all of the substantive elements in Jim’s second version of the last minute proposal have been discussed by this group for months as Jim suggests, why are we taking this up again? While I will have more to say on the list regarding the flaws in Jim’s last minute plan (stay tuned), if what Jim says is accurate, discussing a mere repackaging of elements that “have been discussed by this group for months” and rejected doesn’t seem like a good use of anyone’s time. Bringing back old rejected ideas, rearranging them, and then presenting them as new, especially at the last minute, runs the risk of derailing our progress to tweaks to the status quo to address presumptive concerns about abusive applications. We will be far better served to continue our progress of the last several weeks and spend the majority of what time remains to look over and refine the guardrails to the status quo that I have suggested as a compromise position. And, it is a compromise position because many, many of us simply have yet to hear of a compelling problem that needs to be solved and believe the status quo is just fine. But, my guardrails are an olive branch to try to address whatever it is that a portion in this WG seem worried about. Best, Paul From: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Sent: Thursday, July 9, 2020 11:43 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: RE: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Paul – given Jim’s statements that his changes were for clarity and not substantive, I believe we can discuss it on the call in a few hours. <image004.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> https://urldefense.com/v3/__http://jjnsolutions.com__;!!N14HnBHF!oy61cPpaXvR... <https://urldefense.com/v3/__http:/jjnsolutions.com/__;!!N14HnBHF!o5eofGXwGkw...> From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Sent: Thursday, July 9, 2020 12:38 PM To: Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> Cc: McGrady, Paul D. <PMcGrady@taftlaw.com<mailto:PMcGrady@taftlaw.com>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes No substantive differences Jeff. Edits for clarity and more logical ordering. All the substantive elements are the same and have been discussed by this group for months. The new text is the compromises contained because that it what you asked the group to do. Original email from July 1 is posted immediately below. From: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>> Date: July 1, 2020 at 4:26:50 PM EDT To: "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>> Subject: [Gnso-newgtld-wg] Compromise proposal on Auctions In the interest of compromise and in hopes of not reverting to the 2012 rules and thereby ignoring the Board’s request that we make a recommendation on this issue, please consider this proposal to allow contention resolution via creative means as well as auctions, with guardrails and tweaks made to the well-received hybrid proposal. It is a blend of many of the compromise solutions proposed. It also accommodates those who do not want ICANN to end up with all auction proceeds but at the same time minimizes the entire pool of money committed, thereby not disadvantaging single applicants. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Proposed process: * String Similarity evaluation completed * On Reveal Day, all contention sets are announced (number and entities are revealed) * A 90-day Resolution Period begins * Members of a contention set may * Form a JV * Withdraw * Find a creative private resolution * Fail to resolve * Members of a contention set may NOT * Participate in a private auction or auction like mechanism. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period. * Agree to participate in a sealed bid “3rdParty Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * Agree to participate in an ICANN Auction of Last Resort using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place immediately after the 90 day Private Resolution Period * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider must attest that the participants fully disclosed all information and followed the rules before the funds are released to the losers. * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All auctions should be finalized as quickly as possible after the 90 day deadline. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was usually 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rdparty and ICANN Auction of Last Resort. * agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions * The auction provider must assert that all rules were followed before releasing auction funds * All contention set resolutions including creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be submitted by ICANN to relevant competition authorities for review. Benefits: Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity. Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. Private auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. Sealed bids tend to result in lower auction prices so decreased auctions proceeds to ICANN fund. Speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. On Jul 9, 2020, at 12:08 PM, Jeff Neuman <jeff@jjnsolutions.com<mailto:jeff@jjnsolutions.com>> wrote: Jim, Can you highlight what differences (if any) are in your more refined proposal? Thanks. <image001.png> Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com<mailto:Jeff@JJNSolutions.com> https://urldefense.com/v3/__http://jjnsolutions.com__;!!N14HnBHF!oy61cPpaXvR... <https://urldefense.com/v3/__http:/jjnsolutions.com/__;!!N14HnBHF!o5eofGXwGkw...> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of McGrady, Paul D. Sent: Thursday, July 9, 2020 11:34 AM To: Jim Prendergast <jim@GALWAYSG.COM<mailto:jim@GALWAYSG.COM>>; Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Thanks Jim. Your first proposal was a very complex 11th hour “solution” to a problem that has yet to be identified. Now, there is another version of the 11th hour submission. Respectfully, all of this proposed reengineering should have been introduced months ago instead of all the digging in that was done by opponents of private resolutions. The ideas in here are sweeping and we are trying to get a final report out of the door. Co-chairs, if there is an intention to take up version 2 of Jim’s proposal in the next call, I really must ask for more time than just a few hours before the call to dig through it. No one has time to unpack what the proposed changes to the last minute ideas here are, much less have time to understand the consequences and unintended consequences of the second last minute proposal. Since my additional safeguards build on the last 3-4 weeks of work by the WG, I am happy to address those on the next call if the agenda permits, but I don’t think it is fair to force a discussion of this new submission from Jim within less than 24 hours of it going out on the list. 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From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Jim Prendergast Sent: Wednesday, July 8, 2020 8:21 PM To: Julie Hedlund <julie.hedlund@icann.org<mailto:julie.hedlund@icann.org>>; gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1. I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow. Objective: Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program. Compromises contained Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring. * 90-day window to negotiate and announce those to ICANN. Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort. * Parties in a contention set may opt for an ICANN administered 3rd Party Auction where losers get paid as opposed to ICANN. Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set. * Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period. * While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur. Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant support. * Conducting all 3rd party Auctions at the same time eliminates this. Benefits of the Compromise Proposal: * Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process. * Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program. * Private Auctions are eliminated but applicants can still receive proceeds from a 3rd Party Auction if all applicants in a contention set agree. * Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions. * The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing. Proposed process: * String Similarity evaluation completed * On Reveal Day, ICANN announces contention sets including names of applicants. * A 90-day Resolution Period begins * Members of a contention set may * Form a JV or other corporate structure * Find a different creative resolution * Withdraw * Fail to resolve * Members of a contention set may not * Participate in a private auction or auction like mechanism. * 30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set. * If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed. * If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in. * As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process. * No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to: * Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment period and ICANN would have to approve. * Agree to participate in a sealed bid “3rd Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set. * If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund. * Auctions of Last Resort and 3rd Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place. * For 3rd Party Auctions * All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the participants fully disclosed all required information and followed the rules before the funds are released to the losers. * As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * All auctions are to be conducted in an identical fashion using publicly available procedures. * All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed. * Auctions of Last Resort * If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3rd Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections, CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period. * On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount. * Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation. * In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation. Requirements: * Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities): * They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets * During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD. * The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry: * has not submitted applications for the purpose of financially benefiting from the resolution of contention sets. * has not participated in an auction or auction like mechanisms outside of the ICANN 3rd Party and ICANN Auction of Last Resort. * Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved. * The auction provider must agree to fully disclose all information about the auctions as requested by ICANN. * The auction provider and ICANN must assert that all rules were followed before releasing auction funds. * All contention set resolutions including JVs, creative resolutions, 3rd Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review. Jim Prendergast The Galway Strategy Group +1 202-285-3699 From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Julie Hedlund Sent: Monday, July 6, 2020 2:50 PM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes Dear WG Members, Please find below the proposed agenda for the WG meeting on Thursday, 09 July 2020 at 20:00 UTC for 90 minutes. Proposed Agenda: 1. Review Agenda/Updates to Statements of Interest 2. Review the updated Predictability Framework, see: https://urldefense.com/v3/__https://docs.google.com/document/d/1vBckhFQCCQ-z... <https://urldefense.com/v3/__https:/docs.google.com/document/d/1vBckhFQCCQ-zy...>. Also attached, please find the updated concerns/mitigation document and process flow. 3. Review Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4: https://urldefense.com/v3/__https://docs.google.com/document/d/1X8F8zHkgMzQg... <https://urldefense.com/v3/__https:/docs.google.com/document/d/1X8F8zHkgMzQg2...> 4. AOB If you need a dial out or would like to submit an apology, please email gnso-secs@icann.org<mailto:gnso-secs@icann.org>. Best, Julie Julie Hedlund, Policy Director
On 13 Jul 2020, at 17:27, Austin, Donna via Gnso-newgtld-wg <gnso-newgtld-wg@icann.org> wrote:
I’m quite overwhelmed too Elaine, certainly a lot of words.
No surprise that I concur with much of the content in Paul’s email below.
I appreciate the time and thought Jim has put into his proposal and the spirit of compromise in which it has been provided. I recall that you stated on a call recently that you could think of ’10 ways to game’ a proposal that was under discussion. I don’t recall the specifics but I remember your statement. I think if a few of us put our collective heads together we could think of 10 ways to game Jim’s proposal as well.
I support Paul’s application terms and conditions as the preferred manner in which to address the issue of contention resolution, and as the basis for the policy recommendation. I also think Paul’s point about data collection for subsequent application rounds is also important moving forward. We’ve had many discussions about the mal-intent or frivolity from last round and, in my opinion, the evidence to substantiate this claim is at best anecdotal.
1. The applicant has a bona fide intention to run the registry if awarded. The “examiners” would be able to issue additional questions if it appears that the business plan is rudimentary or if there is evidence that the applicant does not really have the needed intent. Applicants would be able to supplement the record to assure “examiners.”
2. The application is not being submitted solely for the purpose of being able to participate in private auctions.
So, how would these terms be policed?
A. If an applicant does not actually launch the registry if awarded or sells it in the aftermarket within 2 years of delegation, that will be noted for purposes of any future rounds and could create a rebuttal presumption of non-intent for that applicant.
B. If an applicant only “sells” applications in private auctions and does not actually proceed with any to contracting, that will be noted for purposes of any future rounds and could create a rebuttal presumption that the applicant is only participating in the new gTLD program to speculate on registries.
This method of policing has one issue we are facing with our drop auctions(~200 a month): it allows for one party to get one bite at gaming the system. Even a one-time event is profitable, so what happens is that new gamers come into the system while the old ones are blocked, making a constant flow of gaming. In our case preventing would create too much friction, but the new gTLD application system is already not an instant buy system, so something more robust would be welcome. Rubens
participants (9)
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Aikman-Scalese, Anne -
Alexander Schubert -
Austin, Donna -
Jeff Neuman -
Jim Prendergast -
McGrady, Paul D. -
Pruis, Elaine -
Rubens Kuhl -
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