FTC hits out at new gTLDs programme but swerves question over ‘.sucks’ pricing legality 28 May 15
The US Federal Trade Commission (FTC) has responded to ICANN’s referral of concerns over the pricing policies implemented in the ‘.sucks’ new gTLD – albeit without actually answering the specific central question that was posed.
On World Trademark Review, we previously reported on ICANN’s move to refer the Intellectual Property Constituency’s concerns over Vox Populi’s pricing policies for the ‘.sucks’ string, in which brand owners were being asked to pay a recommended $2,499 annual registration fee, to the FTC and Canada's Office of Consumer Affairs (OCA). The IPC letter, sent by Gregory S Shatan, partner at Abelman Frayne & Schwab and president of the ICANN stakeholder group, had hit out at the registry for charging “exorbitant sums” for brand owner registrations and turning the Trademark Clearinghouse, “which is meant to be a shield for brand owners against abuse, into a sword that unscrupulous registry operators are using against brand owners to maximise economic gain”.
In its referral to the FTC and OCA, ICANN specifically sought clarification on whether or not Vox Populi is violating any of the laws or regulations that those agencies enforce. Following ICANN’s move, Vox Populi Registry itself wrote to ICANN to challenge the referral, raising the spectre of legal action against the organisation.
All eyes, then, were on the FTC and OCA, and the former has now responded to ICANN’s request, as first reported by Domain Incite’s Kevin Murphy. However, the FTC’s chairwoman Edith Ramirez failed to directly answer ICANN’s question, instead taking the opportunity to comment on the new gTLD programme in more general terms.
While noting that she understands and appreciates the concerns that ICANN and Shatan conveyed about the ‘.sucks’ rollout, she notes that she is not able to comment about the existence of any pending investigations (stressing only that the FTC will take action where it has reason to believe that an entity has engaged in deceptive or unfair practices in violation of Section 5 of the FTC Act).
She then uses the concerns over ‘sucks’, as well as the “troubling tactics” used by other registries, as an opportunity to urge ICANN to do more to “address the concerns raised with respect to ‘.sucks’, as well as consumer protection issues more generally, on a broader basis”. She goes on to make a number of recommendations. First she urges ICANN to address the potential for customer confusion regarding new gTLDs (for example, she states: “My hope is that ICANN will… encourage the best practice of having all gTLD domain holders, including ‘.sucks’ holders, prominently identify themselves to the public on their individual websites so that people do not confuse an ‘activist’ site with a company-owned site.”). She then calls on ICANN to consider whether the current rights protection mechanisms adequately perform their intended function. Thirdly, she hit out at ICANN’s rejection of the GAC’s advice to verify the credentials of sensitive domains in highly regulated industries, arguing that a lax approach to registrations in highly regulated industries “increases the risk of consumer fraud because bad actors will not hesitate to make false representations about their credentials”.
On the face of it (and unless the FTC is indeed conducting an investigation that we don’t know about), this is good news for Vox Populi, the FTC voicing concerns about the gTLD programme in a wider sense, rather than about ‘.sucks’ itself.
For ICANN, the letter will be less welcome. In terms of the suggested courses of actions, it will likely sidestep these - for instance, the organisation will be able to argue that it is not in the business of dictating how people label their individual websites and, in terms of considering how effective the RPMs have been, it will point to the current review process that is being undertaken. However, by not providing a concrete answer to the question of whether Vox Populi is violating any laws, the FTC is leaving the issue open for further debate.
Offering his perspective, Nao Matsukata, president & chief executive officer of Fairwinds Partners, told World Trademark Review that the FTC has effectively given ‘.sucks’ the green light to proceed: “The FTC's response to ICANN on the Vox Populi matter provides three interesting insights into the United States government's view of ICANN and its policies. First, the FTC makes clear that Vox Populi is not violating any US laws at present, but that the FTC will continue to monitor and review the situation; second, the FTC clearly uses the letter as an opportunity to comment negatively about ICANN policies and rights protection mechanisms; and third, the letter makes crystal clear that the FTC supports the multistakeholder process. Of the three the most significant is the FTC's explicit support for the multistakeholder process. It calls upon ICANN and its community to work together in conjunction with the GAC to address the issues raised by the FTC in the letter. This letter is by far the most concrete expression of US Internet governance policy to date.”
The debate over '.sucks' will continue and, in the meantime, the sunrise closes tomorrow, meaning that we will soon be able to assess the extent of defensive registrations (subsequent to the posting of this blog, we have learnt that ‘.sucks’ has extended the sunrise until June 19, with general availability to start June 21).
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