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Donuts loses appeal in .Web case

by — Policy & Law 3 Comments

Court of Appeals agrees that covenant not to sue is valid.

The United States Court of Appeals for the Ninth District has ruled against top level domain name company Donuts over the .Web domain name.

Donuts was one of the applicants for the .web domain name. Nu Dot Co won the auction for $135 million after Verisign (NASDAQ: VRSN) struck a deal with it to transfer the ICANN agreement for .web to it after the auction.

Donuts was upset that Nu Dot Co wouldn’t participate in a private auction for the domain name. Instead, Nu Dot Co pushed it to an ICANN “auction of last resort”. Had the auction been private, Donuts would have received about a $22.5 million payoff for losing.

Donuts went through ICANN’s normal appeals channels. When that failed, it sued ICANN in District court. The judge tossed out the suit because the application for new TLDs included a clause that the applicants would not sue ICANN. Donuts argued that this agreement not to sue is invalid.

The Appeals Court agreed with the lower court that the covenant not to sue was valid (pdf) in a decision published yesterday.

.Web still doesn’t have a green light, however. Afilias was the runner-up in the .Web auction and it is fighting the auction result through ICANN’s appeal processes.

While Donuts was upset about missing out on a payday by losing the auction, Afilias was upset that it didn’t win. Regardless of the outcome, both may benefit and get some satisfaction out of the delay they are causing Verisign. After all, Verisign did all it could to delay the launch of new top level domain names.

It will be interesting to see if Donuts’ strategy around .web changes when Akram Atallah takes over as CEO. Either way, Donuts’ fight against .web might be over. It will probably just hand the baton off to Afilias.

 

 

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Afilias plans to file IRP to halt .Web

by — Policy & Law 10 Comments

More slowdowns for .web domain name.

A lawyer for domain name registry Afilias says the company plans to file a Cooperative Engagement Process (CEP) and subsequent Independent Review Process (IRP) should ICANN move forward with delegating .Web to Nu Dot Co.

Nu Dot Co won the auction to operate .web for $135 million. It was bankrolled by Verisign (NASDAQ:VRSN), and Nu Dot Co had an agreement with Verisign to assign rights to the domain after it completed contracting.

Afilias was one of the companies that was upset; it was the runner-up in the auction.

Donuts pursued the matter as well. It was disappointed that Nu Dot Co forced an auction of last resort rather than a private auction in which Donuts would get to split the proceeds. After going through ICANN’s accountability processes it sued ICANN. A court tossed the case out because new TLD applicants agreed not to sue, but Donuts appealed.  The appeals court has yet to hand down its decision. Oral arguments will likely occur this fall.

Adding to the delays was the U.S. government, which launched an antitrust investigation into Verisign running what many people think is the best new top level domain. The government closed its investigation without taking action.

Afilias is asking ICANN to give it a 60 day “heads up” when it starts contracting with Nu Dot Co so that it can file for CEP.

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Department of Justice closes investigation on Verisign running .web

by — Policy & Law 3 Comments

Verisign believes ICANN will now sign the .web contract with Nu Dot Co, and then transfer the domain to Verisign.

Verisign has announced that the antitrust investigation into the company’s plans to run the .web domain name has been closed, apparently without taking action. In an SEC filing, the company stated:

As the Company previously disclosed, on January 18, 2017, the Company received a Civil Investigative Demand from the Antitrust Division of the United States Department of Justice (“DOJ”) requesting certain material related to the Company becoming the registry operator for the .web gTLD. On January 9, 2018, the DOJ notified the Company that this investigation was closed. Verisign previously announced on August 1, 2016, that it had provided funds for Nu Dot Co’s successful bid for the .web gTLD and the Company anticipates that Nu Dot Co will now seek to execute the .web Registry Agreement with ICANN and thereafter assign it to Verisign upon consent from ICANN.

Verisign backed Nu Do Co’s winning $135 million bid for .web. Other applicants for .web believe that ICANN incorrectly overlooked changes at Nu Dot Co and asked for the auction to be set aside. Runner-up Afilias asked ICANN to honor its second-place bid while Donuts wanted the result tossed with the hopes of having a private auction in which the losers split the proceeds.

Concurrently, the U.S. government looked into antitrust issues with the .com operator also running .web. It’s possible they were looking into if the company’s bid for .web was merely a way to quash the domain, which many new TLD operators think could be the best new TLD. It could have also looked into if owning .com and .web would allow Verisign to dominate the market (more than it already does with .com).

Despite the U.S. government’s clearance, there’s still a dark cloud over .web. Donuts sued ICANN and the case was thrown out but Donuts appealed. The appeals court is currently considering the matter.

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ICANN files response in Donuts lawsuit

by — Uncategorized 9 Comments

ICANN reiterates that Donuts agreed not to sue.

ICANN has filed its response in Donuts’ appeal of a lawsuit to the U.S. Court of Appeals, 9th District.

The lawsuit stems from the $135 million auction for .web. Donuts was one of seven applicants for the domain name. One applicant, Nu Dot Co, decided that it did not want to hold a private auction for the domain name, thus forcing ICANN to hold an “auction of last resort” for .web.

This was a big financial blow for Donuts. In a private auction, the losers split the proceeds. If a private auction concluded for $135 million, Donuts would have received over $20 million.

Donuts said that Nu Dot Co had a change of control that required updating its application. It turns out that Verisign struck a deal with Nu Dot Co to fund its auction in return for Nu Dot Co assigning rights to .web after it won and entered into a contract with ICANN.

Nu Dot Co denied any change of control. ICANN investigated and came to the same conclusion. It seems that the deal was similar to some others in which Nu Dot Co and Verisign agreed to a transfer deal that would take place after a contract was signed with ICANN.

After going through ICANN’s normal accountability mechanisms, Donuts sued. A district court rejected the claims because Donuts agreed not to sue ICANN when it applied for top level domain names. Donuts appealed.

In ICANN’s response, entered into the docket yesterday, the non-profit states:

Throughout the process, ICANN followed the letter and spirit of the agreed-upon procedures. [Donuts company] Ruby Glen, on the other hand, has taken several steps aimed at highjacking the process for its own financial gain, not the least being this lawsuit, which violates the parties’ agreement to resolve disagreements through alternative dispute resolution mechanisms, not litigation.

The answering brief says that Donuts brought up several new arguments in its appeal but argues that none of them apply to the case.

Even if ICANN prevails, the appeal will take a long time to resolve. The 9th circuit’s median time from filing a notice of appeal to disposition is 13.3 months.

Meanwhile, the Antitrust Division of the U.S. Department of Justice is still investigating Verisign’s plans to run .web.

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Donuts files opening brief in .Web appeal

by — Policy & Law 12 Comments

Company believes covenant not to sue is invalid.

New top level domain name company Donuts, through its company Ruby Glen, LLC, filed its opening brief (pdf) last week in an appeal over the .web domain name.

Donuts was one of the applicants for the .web domain name. Nu Dot Co won the auction for $135 million after Verisign struck a deal with it to transfer the ICANN agreement for .web to it after the auction.

The runner up in the auction was Afilias, not Donuts, but Donuts was upset that Nu Dot Co wouldn’t participate in a private auction for the domain name. Instead, Nu Dot Co pushed it to an ICANN “auction of last resort”. Had the auction been private, Donuts would have received about a $22.5 million payoff for losing. Click to continue reading…

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