GAC Advice on Private Auctions and ICANN Last-Resort Auctions
Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco
Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them. Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so. Best regards, Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:image002.png@01DAC31B.3A3E36A0] From: SubPro-IRT <subpro-irt-bounces@icann.org> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions *EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco ---------------------------------------------------------------------- If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate the information.
I am not in favor of private auctions but I have yet to hear of a way to make prevention operational. What do the lawyers among us have to say here? Sam L. Internet Elder, Internet Ecologist On Jun 20, 2024, 3:07 p.m., at 3:07 p.m., trachtenbergm@gtlaw.com wrote:
Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them.
Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so.
Best regards,
Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h>
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From: SubPro-IRT <subpro-irt-bounces@icann.org> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions
*EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco
---------------------------------------------------------------------- If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate the information.
I am a lawyer! But this is not a legal question – it is a policy question. Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:image002.png@01DAC31C.DDE3B7C0] From: Sam Lanfranco <samlanfranco@gmail.com> Sent: Thursday, June 20, 2024 2:16 PM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com> Cc: subpro-irt@icann.org Subject: RE: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions I am not in favor of private auctions but I have yet to hear of a way to make prevention operational. What do the lawyers among us have to say here? Sam L. Internet Elder, Internet Ecologist On Jun 20, 2024, at 3:07 p.m., trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> wrote: Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them. Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so. Best regards, Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> From: SubPro-IRT <subpro-irt-bounces@icann.org<mailto:subpro-irt-bounces@icann.org>> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org<mailto:subpro-irt@icann.org> Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions *EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information.
I am not sure this is the appropriate place to discuss these issues, but as a lawyer, it certainly is possible to prohibit private auctions if that was the ultimate decision made. Happens all the times with auctions with regulatory bodies where collusion is grounds for immediate disqualification. If the punishment for participation in private auctions were severe enough, it could be a significant deterrent. However, whether disallowing private auctions while at the same time allowing other forms of private resolution (like joint ventures) is possible, that is a whole other question. [cid:d574cb5f-ac8d-4637-be07-58923da90b9c] ________________________________ From: SubPro-IRT <subpro-irt-bounces@icann.org> on behalf of trachtenbergm--- via SubPro-IRT <subpro-irt@icann.org> Sent: Thursday, June 20, 2024 3:19 PM To: samlanfranco@gmail.com <samlanfranco@gmail.com> Cc: subpro-irt@icann.org <subpro-irt@icann.org> Subject: Re: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions I am a lawyer! But this is not a legal question – it is a policy question. Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:image002.png@01DAC31C.DDE3B7C0] From: Sam Lanfranco <samlanfranco@gmail.com> Sent: Thursday, June 20, 2024 2:16 PM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com> Cc: subpro-irt@icann.org Subject: RE: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions I am not in favor of private auctions but I have yet to hear of a way to make prevention operational. What do the lawyers among us have to say here? Sam L. Internet Elder, Internet Ecologist On Jun 20, 2024, at 3:07 p.m., trachtenbergm@gtlaw.com<mailto:trachtenbergm@gtlaw.com> wrote: Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them. Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so. Best regards, Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> From: SubPro-IRT <subpro-irt-bounces@icann.org<mailto:subpro-irt-bounces@icann.org>> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org<mailto:subpro-irt@icann.org> Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions *EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information.
Sam, I take your point that ICANN can't prohibit applicants from agreeing as to what they will bid in a mandated ICANN auction. Don't see how ICANN could stop them from doing that unless it's a requirement that the bidder certify that it has not made an agreement with any third party or affiliate as to the amount it will bid or what it will do with the gTLD if it wins the bid. An eligibility rule for participating in an ICANN auction? If breached, you lose and move to the next bidder? How would anyone find out? And when would they find out - years after launch? Anne Anne Aikman-Scalese GNSO Councilor NomCom Non-Voting 2022-2024 anneicanngnso@gmail.com On Thu, Jun 20, 2024 at 12:16 PM Sam Lanfranco <samlanfranco@gmail.com> wrote:
I am not in favor of private auctions but I have yet to hear of a way to make prevention operational.
What do the lawyers among us have to say here?
Sam L.
Internet Elder, Internet Ecologist On Jun 20, 2024, at 3:07 p.m., trachtenbergm@gtlaw.com wrote:
Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them.
Of course it is a different question of *how* to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so.
Best regards,
*Marc H. Trachtenberg * Shareholder
Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020
M +1 773.677.3305 trac@gtlaw.com <trachtenbergm@gtlaw.com> | www.gtlaw.com | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h>
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*From:* SubPro-IRT <subpro-irt-bounces@icann.org> *On Behalf Of *Sam Lanfranco *Sent:* Thursday, June 20, 2024 1:20 PM *To:* subpro-irt@icann.org *Subject:* [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions
**EXTERNAL TO GT**
Comment by Sam Lanfranco
I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets.
FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement.
SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender.
GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent.
My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place.
Sam Lanfranco
------------------------------ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate the information.
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I was considering, as we were al kvetching about the fees in another thread, that one concept that might be a creative method of isolating the contention set resolution _stuff_ might be to withhold any discounting refunds for the applications within those sets until the contention set is resolved, and isolate any fees associated with the remedy of the contention to being funded from that pool of moneys, isolated from the other applications. Here is an illustration hypothetical example of how this might work: Marc applies for .cryptoschmutz, I apply for .cryptoschmutz, and there are maybe eight others that apply for .cryptochmutz, for a population of 10 .cryptoschmutz TLD applications. We all paid a higher application fee, based upon ICANN's prediction that there would only be 1000 applications, and ICANN receives a thundering herd more than that, say 3000, to where the fee is reduced and a portion is eligible to be refunded. To keep it simple, let's use 50k as the refundable amount. Because we were all in a contention set, the refunds would be withheld, and there would be a pool of 10x50k, 500k available to use as the contention set resolution funding pool to cover any costs associated with the .cryptoschmutz TLD. Whatever occurs to narrow the pool of applicants to 1, any costs, legal or otherwise, are paid solely from that pool, and then 1/10 of any remainder is distributed to each applicant AFTER the contention set is addressed. So, let's say it cost 50k to resolve, then there is 450k remaining and that gets distributed as 45k each to the applicants. This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions. -Jothan Jothan Frakes Tel: +1.206-355-0230 On Thu, Jun 20, 2024 at 12:08 PM trachtenbergm--- via SubPro-IRT < subpro-irt@icann.org> wrote:
Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them.
Of course it is a different question of *how* to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so.
Best regards,
*Marc H. Trachtenberg * Shareholder
Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020
M +1 773.677.3305 trac@gtlaw.com <trachtenbergm@gtlaw.com> | www.gtlaw.com | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h>
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*From:* SubPro-IRT <subpro-irt-bounces@icann.org> *On Behalf Of *Sam Lanfranco *Sent:* Thursday, June 20, 2024 1:20 PM *To:* subpro-irt@icann.org *Subject:* [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions
**EXTERNAL TO GT**
Comment by Sam Lanfranco
I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets.
FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement.
SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender.
GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent.
My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place.
Sam Lanfranco ------------------------------ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com, and do not use or disseminate the information. _______________________________________________ SubPro-IRT mailing list SubPro-IRT@icann.org https://mm.icann.org/mailman/listinfo/subpro-irt
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Jothan writes: "This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions." Maybe those incentives help, but I am still at a loss as to the acceptable mechanisms for "... applicants rapidly arriving at contention set resolutions." Did the GAC discussion explore: How, if not an auction? Sam L. ________________________________ From: Jothan Frakes <jothan@jothan.com> Sent: Thursday, June 20, 2024 4:27 PM To: trachtenbergm@gtlaw.com <trachtenbergm@gtlaw.com> Cc: samlanfranco@gmail.com <samlanfranco@gmail.com>; subpro-irt@icann.org <subpro-irt@icann.org> Subject: Re: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions I was considering, as we were al kvetching about the fees in another thread, that one concept that might be a creative method of isolating the contention set resolution _stuff_ might be to withhold any discounting refunds for the applications within those sets until the contention set is resolved, and isolate any fees associated with the remedy of the contention to being funded from that pool of moneys, isolated from the other applications. Here is an illustration hypothetical example of how this might work: Marc applies for .cryptoschmutz, I apply for .cryptoschmutz, and there are maybe eight others that apply for .cryptochmutz, for a population of 10 .cryptoschmutz TLD applications. We all paid a higher application fee, based upon ICANN's prediction that there would only be 1000 applications, and ICANN receives a thundering herd more than that, say 3000, to where the fee is reduced and a portion is eligible to be refunded. To keep it simple, let's use 50k as the refundable amount. Because we were all in a contention set, the refunds would be withheld, and there would be a pool of 10x50k, 500k available to use as the contention set resolution funding pool to cover any costs associated with the .cryptoschmutz TLD. Whatever occurs to narrow the pool of applicants to 1, any costs, legal or otherwise, are paid solely from that pool, and then 1/10 of any remainder is distributed to each applicant AFTER the contention set is addressed. So, let's say it cost 50k to resolve, then there is 450k remaining and that gets distributed as 45k each to the applicants. This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions. -Jothan Jothan Frakes Tel: +1.206-355-0230 On Thu, Jun 20, 2024 at 12:08 PM trachtenbergm--- via SubPro-IRT <subpro-irt@icann.org<mailto:subpro-irt@icann.org>> wrote: Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them. Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so. Best regards, Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:ii_19037463a235b16b22] From: SubPro-IRT <subpro-irt-bounces@icann.org<mailto:subpro-irt-bounces@icann.org>> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org<mailto:subpro-irt@icann.org> Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions *EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. _______________________________________________ SubPro-IRT mailing list SubPro-IRT@icann.org<mailto:SubPro-IRT@icann.org> https://mm.icann.org/mailman/listinfo/subpro-irt _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
On Thu, Jun 20, 2024 at 5:09 PM Sam Lanfranco <samlanfranco@gmail.com> wrote:
Did the GAC discussion explore: How, if not an auction?
I am not sure that I saw anything other than proclamation of prohibitions, which happens from time to time, where the community or org or board gets the opportunity to adjust implementation approaches or reject the advisory when there is no practical manner to square the circle. This is why I was proposing some [hopefully] practical ideas that may work to potentially diminish contention in circumstances of applicants intentionally joining a contention set.
This seems overcomplicated and I also don’t think removes the incentives. Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:image002.png@01DAC350.04016050] From: Jothan Frakes <jothan@jothan.com> Sent: Thursday, June 20, 2024 3:27 PM To: Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com> Cc: samlanfranco@gmail.com; subpro-irt@icann.org Subject: Re: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions I was considering, as we were al kvetching about the fees in another thread, that one concept that might be a creative method of isolating the contention set resolution _stuff_ might be to withhold any discounting refunds for the applications within those sets until the contention set is resolved, and isolate any fees associated with the remedy of the contention to being funded from that pool of moneys, isolated from the other applications. Here is an illustration hypothetical example of how this might work: Marc applies for .cryptoschmutz, I apply for .cryptoschmutz, and there are maybe eight others that apply for .cryptochmutz, for a population of 10 .cryptoschmutz TLD applications. We all paid a higher application fee, based upon ICANN's prediction that there would only be 1000 applications, and ICANN receives a thundering herd more than that, say 3000, to where the fee is reduced and a portion is eligible to be refunded. To keep it simple, let's use 50k as the refundable amount. Because we were all in a contention set, the refunds would be withheld, and there would be a pool of 10x50k, 500k available to use as the contention set resolution funding pool to cover any costs associated with the .cryptoschmutz TLD. Whatever occurs to narrow the pool of applicants to 1, any costs, legal or otherwise, are paid solely from that pool, and then 1/10 of any remainder is distributed to each applicant AFTER the contention set is addressed. So, let's say it cost 50k to resolve, then there is 450k remaining and that gets distributed as 45k each to the applicants. This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions. -Jothan Jothan Frakes Tel: +1.206-355-0230 On Thu, Jun 20, 2024 at 12:08 PM trachtenbergm--- via SubPro-IRT <subpro-irt@icann.org<mailto:subpro-irt@icann.org>> wrote: Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those who have expressed interest in participating in them. Of course it is a different question of how to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so. Best regards, Marc H. Trachtenberg Shareholder Chair, Internet, Domain Name, e-Commerce and Social Media Practice Greenberg Traurig, LLP 77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 T +1 312.456.1020 M +1 773.677.3305 trac@gtlaw.com<mailto:trachtenbergm@gtlaw.com> | www.gtlaw.com<http://www.gtlaw.com/> | View GT Biography <https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h> [Greenberg Traurig Logo] [cid:image002.png@01DAC350.04016050] From: SubPro-IRT <subpro-irt-bounces@icann.org<mailto:subpro-irt-bounces@icann.org>> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 1:20 PM To: subpro-irt@icann.org<mailto:subpro-irt@icann.org> Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions *EXTERNAL TO GT* Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco ________________________________ If you are not an intended recipient of confidential and privileged information in this email, please delete it, notify us immediately at postmaster@gtlaw.com<mailto:postmaster@gtlaw.com>, and do not use or disseminate the information. _______________________________________________ SubPro-IRT mailing list SubPro-IRT@icann.org<mailto:SubPro-IRT@icann.org> https://mm.icann.org/mailman/listinfo/subpro-irt<https://urldefense.com/v3/__https:/mm.icann.org/mailman/listinfo/subpro-irt__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_emLfbp4Q$> _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy<https://urldefense.com/v3/__https:/www.icann.org/privacy/policy__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_f4DePVxw$>) and the website Terms of Service (https://www.icann.org/privacy/tos<https://urldefense.com/v3/__https:/www.icann.org/privacy/tos__;!!DUT_TFPxUQ!HXGzXfhh1pbpbJeH7QdHMtUvq70bEdtL0ABSYob0to5EynujmgFw7o9J9IdNuJl4ccLlJHjHO_dlw_MLfQ$>). 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Sam and colleagues Good evening. Well; we in the GAC just put our finger in the air, had another drink and then wrote this......(smile) Instead, we had an extended dialogue with ALAC, including an expert they worked with, discussions with GNSO, the Board and others. Not pretending this is easy, or that it could never be circumventing. Best Nigel From: SubPro-IRT <subpro-irt-bounces@icann.org> On Behalf Of Sam Lanfranco Sent: Thursday, June 20, 2024 7:20 PM To: subpro-irt@icann.org Subject: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions Comment by Sam Lanfranco I do not believe that the GAC understands the complexities in its advice with regard to not using auctions in the resolution of contention sets. FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement between contending parties, and the ICANN auction would just a formality in terms of a private agreement. SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing interests are a "form follows function" solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent. My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created auctions in the first place. Sam Lanfranco
participants (6)
-
Anne ICANN -
Hickson, Nigel (DSIT) -
Jeff Neuman -
Jothan Frakes -
Sam Lanfranco -
trachtenbergm@gtlaw.com