ICANN pushes off decision on closed generic top level domains, leaving many applications in limbo.
This week ICANN’s New gTLD Program Committee passed a resolution about so-called “closed generic” top level domain applications.
A closed generic is a generic term applied for by an entity that does not plan to offer second level registrations to any other entities. Amazon.com, for example, doesn’t intend to offer second level registrations for any of the strings it has applied for, including .kids, .wow, and .play.
The resolution basically states that any closed generic application can’t proceed to the contracting stage yet.
This will temporarily handle the GAC’s advice, while allowing other strings to move forward.
The practical implication of the committee’s decision is that:
Highly contested strings may be delayed.
A number of the closed generics are for strings with multiple applicants. Depending on how long it takes ICANN and the GAC to come to resolution, these strings may see delays throughout the process.
Even though most applicants for a string may be “open”, having an outlier will make a big difference. Auctions to resolve the contention sets – whether private or official ICANN ones – are unlikely to occur until the issue is resolved.
This leads to further decisions for competing applicants. Many applicants want to resolve contention sets before their initial evaluation so they can get more of their application fee back. But now they might have to wait until further in the process, which will result in a smaller refund if they back out. In other cases an open applicant might be facing its biggest challenge from a closed application, in which case it will need to guess what ICANN will ultimately decide so it can figure out whether or not to withdraw its application now.
Here are some implications if ICANN ends up nixing closed generics:
1. ICANN opens itself up to lawsuits.
Nobody likes having the rules of the game changed on them midstream.
On the flip side, I think allowing closed generics is less likely to result in legal action.
At a minimum, applicants for these closed strings will demand a full refund rather than a partial one.
But hey, that’s what the $100 million risk warchest is for, anyway.
2. Trademark holders may feel forced to make more defensive registrations.
It’s ironic that the GAC, which is basically representing trademark interests, is pushing to kill closed generics. Although companies don’t want to see their competitors “locking up” a string, it does significantly reduce the number of defensive registrations they may feel inclined to undertake.
Regardless of what ICANN ultimately decides, there’s one huge, gaping loophole that makes it all a moot point:
The complete lack of restrictions on pricing is a big loophole.
If I’m Amazon and want second level .cloud registrations all to myself, all I have to do is agree to make it “open” and then charge ridiculous prices. OK Microsoft, you want microsoft.cloud? Our annual registration fees are $10 million.
I don’t see ICANN reopening the discussion on pricing caps at this point in the game.