Verisign Challenges ICANN’s Unilateral Amendment Rights in Proposed Contract

Verisign, a key player in the domain name industry and the registry operator for critical domains like .com and .net, has voiced strong objections to the inclusion of clauses granting ICANN (the Internet Corporation for Assigned Names and Numbers) the unilateral right to amend the proposed new registry agreement. Senior Vice Presidents at Verisign, Pat Kane and Richard Goshorn, articulated these concerns in a formal letter addressed to ICANN, highlighting the potential implications of such powers.

The core of Verisign’s argument revolves around the assertion that ICANN’s unilateral right to modify the new generic Top-Level Domain (gTLD) agreement remains a significant issue, despite some nuanced changes in the agreement’s latest iteration. This right, Verisign contends, grants ICANN excessive control and introduces uncertainty into the contractual relationship between the registry operator and ICANN.

Verisign’s concerns extend beyond the immediate impact on new TLD contracts. As the operator of .com and .net, the company has a vested interest in the stability and predictability of its existing agreements with ICANN. The worry is that the principles established in the new gTLD agreement could potentially be applied to the renewal or modification of these existing, crucial contracts.

Verisign fears that ICANN might extend these amendment powers beyond new gTLDs, applying them to all registry agreements upon renewal. They argue that standard provisions from other registry agreements are incorporated into renewal agreements under the existing registry agreements’ presumptive renewal clause. This potential for widespread application amplifies the concerns about ICANN’s unilateral control.

ICANN will undoubtedly argue that this broad authority, along with specific uses of this power to alter contracts, will become a standard feature of all registry agreements upon their renewal. Common clauses in other registry agreements are integrated into renewal agreements under the existing registry agreements’ presumptive renewal provision.

Verisign suggests that ICANN’s timing in introducing these contractual changes raises questions about fairness. The company highlights that these new powers are being introduced after thousands of applications for new TLDs have been submitted and millions of dollars have been paid to ICANN in application fees. This late-stage alteration of the agreement terms is seen as potentially detrimental to the applicants and their investment.

The fact that ICANN is modifying the contract at what is perceived as the last minute has become a recurring complaint from many aspiring new TLD operators. The investment required to apply for and launch a new TLD is substantial, and any late changes to the rules can significantly impact the viability of these projects.

To illustrate the potential consequences of ICANN’s unilateral amendment rights, Verisign provides several specific examples of how ICANN could use these powers to alter the contractual landscape without requiring the consent of the registry operators. These examples underscore the potential for significant changes to the operational environment of TLDs.

Here are some potential scenarios outlined by Verisign:

• Re-imposing a Ban on Cross-Ownership: ICANN could amend the agreement to prohibit cross-ownership between registries and registrars. This could force companies to divest assets or restructure their operations to comply with the new regulations.
• Restricting Closed TLD Operations: ICANN could determine that no new TLDs should be operated in a closed manner. This would prevent companies from using their TLDs exclusively for their own internal purposes or for a limited set of affiliated entities. This decision would impact brands that have invested in branded TLDs.
• Mandating Law Enforcement Database Checks: ICANN could require registries to screen registrants against law enforcement databases, with the costs borne by the registries. This would add a new layer of complexity and expense to the registration process. It raises data privacy questions and could significantly increase operational costs.
• Perpetuating and Increasing Fees for the Trademark Clearinghouse: ICANN could make the Trademark Clearinghouse permanent and increase its fees. The Trademark Clearinghouse is a mechanism designed to protect trademark holders from infringement in the domain name space. Making it permanent and raising fees would impact both trademark holders and domain name registrants.

Verisign dismisses the procedural requirements for amending the contract as mere “window dressing,” suggesting that they offer little real protection against ICANN’s unilateral actions. The company argues that these changes are the antithesis of the bottom-up policy development process that ICANN is supposed to champion. A bottom-up approach emphasizes community involvement and consensus-building in policy decisions.

The concerns raised by Verisign highlight a fundamental tension in the domain name industry: the balance of power between ICANN, as the governing body, and the various stakeholders, including registry operators, registrars, and domain name registrants. The debate over unilateral amendment rights underscores the need for transparency, fairness, and a robust process for resolving disputes within the ICANN framework. The future of the domain name system depends on a collaborative approach to governance that respects the interests of all parties involved.

This issue has sparked considerable debate within the internet governance community, with many expressing concerns about the potential impact on innovation and competition in the domain name market. The outcome of this debate will likely have significant implications for the future of the internet and the way domain names are managed.

The resolution of this issue requires careful consideration of the competing interests involved and a commitment to finding solutions that promote a stable, secure, and accessible internet for all.