Hi folks, After yesterday's call, I did some additional research on some of the issues that were raised. Here's what I found (long message ahead, but it'll be worth it): 1. Several times it's been argued that if there was competition for Deloitte, or if Deloitte was replaced entirely with a less expensive provider, that might entail compensation to Deloitte for intellectual property, etc. It turns out that argument is not correct. When ICANN entered into agreements with IBM and Deloitte, Fadi Chehade blogged about it, see: https://www.icann.org/news/blog/concluding-the-series-of-trademark-clearingh... That page was hard to find (and I don't think was part of our working groups's institutional memory) given that it has moved from where it used to be; see contemporaneous reporting at: http://domainincite.com/11309-deloitte-confirmed-as-first-trademark-clearing... http://www.ebrandservices.com/icann-signs-tmca-with-deloitte-as.html and I don't believe appears in our PDP wiki. In particular, the announcement clearly states that "ICANN retains all intellectual property rights in the Trademark Clearinghouse data. (Note this is as between ICANN and Deloitte….)." This fact handles that argument. 2. In the same ICANN link as above, it was specifically stated that "Deloitte’s validation services are to be non-exclusive. ICANN may add additional validators after a threshold of minimum stability is met." I think it's clear, after 3+ years, that there's stability. Additional validators should be added, to drive down costs and fees, if the TMCH is retained (it might turn out that the TMCH is eliminated, due to our work; that's an open question). 3. In the same ICANN link as above, most crucially, it stated "ICANN may audit Deloitte’s performance (and revenues/costs) to confirm that the costs and fees for validation services are reasonable." Obviously, this should be done, if it hasn't been done already, and with immediacy, to inform our work and recommendations. This is a multi-million dollar per year contract, with apparently limited or no oversight, and my calculations (see below) suggest it can be replicated for multi-hundreds of thousands of dollars, at most. 4. Yesterday, it was brought up whether "costs" of the TMCH were even a complaint. The actual independent TMCH review should have been brought up, see: https://newgtlds.icann.org/en/reviews/tmch/revised-services-review-22feb17-e... where the survey responses were clear, see page 64 (bottom): "Fees and costs: Most registries and trademark owners felt that fees and the costs associated with working with the TMCH are too high." This is what the community has told us. We should not ignore it. Why are we paying for surveys, and not utilizing the results in followup work? I'm not an advocate for trademark holders, however I am an advocate for economic efficiency and eliminating waste and excess fees. This is low hanging fruit. 5. This is a question for the registry operators -- on page 45, it mentions that there's a one-time for of $5,000 per TLD to access the TMCH. Is that fee being paid to Deloitte, or is it being paid to IBM, or … ? (affects the calculations of what is "reasonable") With 1000+ new gTLDs, clearly this is another multi-million dollar cost, for a function which is mostly automated --- huge potential for cost savings. It's unclear if the actual cost is $5,000, by the way. I believe somewhere else I might have seen a figure of $7,000 per TLD, although perhaps that's an outdated fee. If someone has the definitive number, please post. 6. Unrelated to costs (but central to our work), on page 9 of the independent TMCH review, the top ten most frequently downloaded trademark strings are published, along with the trademark holders: 1. smart 15,198 Smart Communications, Daimler AG 2. forex 14,823 Forex Bank AB 3. hotel 14,690 Hotel Top Level Domain GMBH 4. one 14,205 American Acedemy of Opthamology 5. love 13,912 Cartier International AG, The Conde Nast Publications 6. cloud 13,821 individual 7. nyc 13,622 City of New York, NYC & Company 8. london 13,343 London & Partners 9. abc 13,331 LV Insurance Management Limited 10. luxury 13,125 ILUX Holdings While the EFF highlighted the example of "THE" in their excellent submission, I think the above data makes it clear that there are a lot of commonly used phrases that are generating notices, and/or being used in sunrise periods. In particular, none of the top 10 above are famous or fanciful marks like Verizon, Exxon, Google or Lego, or marks that are routinely subject of cybersquatting complaints. Rather, they are commonly used terms that should be open to many potential registrants. If there is a "deterrent" effect on registrants, it's clear that commonly used terms are ones that actual registrants are interested in, and not terms like "facebook" or "google" or "Verizon", given the stats above. Since the independent review has already crunched the numbers, and there were apparently no issues of confidentiality, our working group should be given access to the much larger set of top queries, perhaps the top 100 or even the top 500 or 1000, and not just the top 10. If we are to properly and deliberately weigh and consider the costs and benefits of the TMCH, measuring the "chilling effect" on commonly used terms, it makes sense to see which terms are generating the most claims notices. ICANN didn't have this data before the new gTLD program was launched. We do have it now, and this should affect our policymaking. Scaremongering about "what might happen" should be set aside, since we have facts as to what *did* happen, through experience. We can then also compare those top queries against sunrise registrations, and against the relevant marks themselves to check for 'gaming' behaviour, and thus measure the deleterious effects on other prospective registrants. Let's take a look at one of the above. The most obvious and striking example seems to be #3, "hotel" Using TMView (searching by Applicant Name), I see multiple registrations, some figurative and some word marks for that applicant, for hotel/hotels (singular/plural). (although, conceivably they could be using a registration in a country not part of TMView, so the below analysis could be open to challenge. But, stay with me...). Some of those marks include either the word "dot" or a "." in the marks. The TMCH criteria clearly state that: http://www.trademark-clearinghouse.com/content/registered-trademarks they won't accept marks that include a dot. Thus, the only remaining possibility from TMView is EM 007502891, which is a figurative mark: https://www.tmdn.org/tmview/get-detail?st13=EM500000007502891 Using the automated translation, into English, it's for: "Class 35: On line advertising on a computer network; Class 38: Provision of information relating to telecommunications., Class 45: Registration of domain names (legal services)." You'll notice the original proprietor details, Dirk Krischenowski, no stranger to the ICANN community. https://icannwiki.org/Dirk_Krischenowski http://domainincite.com/18613-berlin-ceo-prime-suspect-in-icann-data-breach Who, ironically, is a critic of the TMCH! https://www.thedomains.com/2014/03/31/berlin-dirk-krischenowski-blasts-icann... Using DomainTools paid version (NB: my paid subscription is running out soon, and I likely won't renew given egregious price increases -- perhaps ICANN or this working group should compensate those putting in the work for for their future research costs), I can see: a) hotel.black, registered currently by "Hotdom GMBH" listed for sale on Sedo for 2990 Euros: https://sedo.com/search/details/?language=us&domain=hotel.black Doesn't look like a "defensive" registration to prevent cybersquatting to me. HotDomain GMBH also owns hotelregistry.org, although the historical WHOIS for that shows "Hotel Top-Level-Domain GMBH" too, on the same street in Berlin. The page at: http://dotzon.com/dotzon/team/ shows both "Katrin Ohlmer" (currently listed for HotDom GMBH) and (here's a shocker) Dirk Krischenowski! The oldest archived WHOIS record for hotel.black is from 2014-08-15 (2 days after the creation date), and it's in the name of (wait for it….) Dirk Krischenowski (shocker, I know!). This was clearly registered in the Sunrise period, which began July 22, 2014: http://www.circleid.com/posts/20140625_afilias_announces_start_of_black_sunr... b) hotel.domains: Current registrant -- here's a shocker, it's (drum roll) Dirk Krischenowski !! And if you visit that website: https://hotel.domains/ you'll see a list of domains for sale: hotel.cologne EUR 15,000 hotel.partners $3,000 hotel.black $4,000 (remember, current registrant in WHOIS is slightly different, from above) and dozens more (singular and plural). I've posted screenshots (multiple, in order to make sure all the domains were visible) at: http://www.loffs.com/images/hoteldomains/ (ICANN staff might want to put them on our Wiki, so they're part of the record of this group) I leave it as an exercise to the reader to check how many of them were obtained via sunrise (grunt work at DomainTools), although the answer is likely very obvious to everyone, without even having to check. I argue, and stand with the EFF on this, that this is not consistent with the intended purpose of the TMCH, and demonstrates how it's wide open for abuse and gaming. The entire TMCH database, if it is to be retained, should be public and transparent, and dubious records should be able to be challenged easily. 7. I promised above to explore what the TMCH should cost. Here are some rough back of the envelope calculations and ideas. (a) if the audit of Deloitte's TMCH (which ICANN is allowed to do) was to be done properly, besides simply looking at accounting records, costs and revenues (which can be manipulated), one should look at how much time it takes to review each application. A proper audit would look at the date of submissions, and the date of approvasl, so that Deloitte can't "fudge" the numbers, and then also look at the volume of applications. This would then allow one to accurately gauge the time a human being spent to review each application (e.g. if 100 applications were reviewed in one day, by one human, one can then do the math and see how many minutes each one took, etc.) With a proper audit, this can't be gamed, since one can look for peak dates of applications, e.g. 1000 applications one day, all approved within 3 days later, to measure the peak rate of approvals. (b) Considering the nature of the application itself (there's a Youtube video at https://www.youtube.com/watch?v=aL0n_pNTVgE showing the process, and what's collected -- it's really not that much). I estimate that a reviewer would spend on average 5 minutes per application. That'd be 12 applications per hour, or 84 applications per 7 hour work day, or 420 per week, or 20,160 per 48 week year. For one person. We see from Deloitte's report, they've had approximately 28,549 applications. My rough calculations suggest that one or two people could easily handle the job. In fact, Deloitte's own website, where they list their team: http://trademark-clearinghouse.com/content/clearinghouse-team shows a very lean team, with only 3 validation experts, so that's the correct order of magnitude. Let's be generous, and pay these people $50/hour. If they can manage even just 5 applications per hour, then the actual verification costs are $10 each. And, to be clear, this is relatively "easy" grunt work that could done at lower cost with skilled workers from India, Russia, or other less expensive countries, instead of in Belgium. Of course, Deloitte's team includes a bunch of well compensated managers and overhead of that nature. In an efficient operation, those are eliminated. But, let's say the costs are tripled (that would include "real" costs like computers and justifiable overhead --- 6 or 7 figure salaries for managers doing very little don't count). That still makes it $30/each. If you look at the rest of their "team", they list 5 people handling invoicing??!?? That's shocking, and it's unclear why they have more people handling invoicing than are handling actual validation (the true "work" ICANN is looking for). Perhaps these are people doing invoicing for many other companies, and not just dedicated to the TMCH. Anyhow, I'll add 5% for invoicing/billing (really a part of overhead), given cloud invoicing tools these days. That'd take us to $31.50 (with generous assumptions to date). Note, many applications are for multiple years! It's clear that the validation/review costs are being generated year after year. Those essentially happen once at the beginning. So, this would reduce actual costs even more, to perhaps $10 to $15/year. Why are trademark owners paying $95 to $150 per years? Because they're dealing with a monopoly without oversight, and the monopolist is maximizing profits as any business would do in those circumstances. This cries out for competition, if the TMCH is even retained (unclear at this point, an open question). As I said above, I'm not an advocate for trademark holders, but it seems like they (and perhaps the registry operators too, if their fees are going to Deloitte) are getting a raw deal. We saw with competitive tenders that Neustar lost their numbers contract: https://www.bloomberg.com/news/articles/2015-03-26/neustar-loses-and-ericsso... For domain names, with new entrants, the cost of domain name registrations went from $35/yr at Network Solutions (monopoly) to under $10/yr these days for a .com at GoDaddy, etc. Afilias stuck with PIR for the .org backend after a tender process, but certainly at a much better cost: http://domainnamewire.com/2016/11/14/org-sticks-afilias-backend/ These are basic things that any business would do to save money, so it's unclear to me why some people within the ICANN community and/or this working group believe that $95 or $150 is a reasonable price for the TMCH, without even exploring alternative providers through a rebid process, or allowing multiple providers. Sincerely, George Kirikos 416-588-0269 http://www.leap.com/